Rich U.S. Schools Defend Tax-Free Status, Spending of Endowments

The richest private U.S. universities, including Harvard and Yale, said a tax-exempt status is crucial to their endowments and the schools’ mission as academic and research institutions in response to an inquiry by U.S. lawmakers.

The Republican leadership of two congressional committees with oversight of tax policy asked the wealthiest 56 private colleges about their endowments -- with questions about financial aid, donations, investment returns and the cost to manage the funds. The deadline for the responses was April 1.

“We acknowledge that as a tax-exempt institution, we have been entrusted with a great responsibility to carry out the educational and charitable mission for which Yale was established,” Peter Salovey, Yale’s president, wrote in his response.
Record Values

The inquiry by the Senate Finance and House Ways and Means committees comes at a time when the cost of college has grown faster than inflation for decades. Some endowments have reached record values. Harvard said its fund was $37.6 billion and Yale was at $25.6 billion as of June 30. The growth is bolstered by both investment returns and fundraising, both of which are tax exempt. Some of the wealthiest colleges offer the most generous aid packages to low-income students.

Orrin Hatch “appreciates the universities’ cooperation and will thoroughly examine the responses to determine next steps,” said Aaron Fobes, a spokesman for Hatch, chairman of the Senate Finance committee.

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http://www.bloomberg.com/news/articles/2016-04-04/rich-u-s-schools-defend-tax-free-status-spending-of-endowments