Tue 13 May 2008
Solid article in the Eagle about a silly idea.
Massachusetts lawmakers have caught the attention of Williams College leadership with a proposal to study taxing any private college’s endowment funds that exceed $1 billion.
Williams College’s various endowment funds total about $1.8 billion. If the proposal to assess a 2.5 percent tax on any endowment above the $1 billion mark were to become law, it would cost the college roughly $20 million.
This will never become law because Harvard is powerful enough to stop it. And does the Massachusetts legislature even have the power to tax non-profits? I doubt it, but perhaps our lawyer readers can comment. And, even if it did become law, it would be easy to get around, at least for Williams, by splitting the endowment into separate parts. The whole exercise is a poor excuse for preening demagoguery.
North Adams Mayor John Barrett III described the concept as “absolutely crazy. I don’t know who comes up with these ideas, but they should be locked up and put in a padded cell someplace.”
He pointed to the millions of dollars Williams has contributed to the construction of Williamstown Elementary School, Mount Greylock Regional High School and Mass MoCA in North Adams.
“It’s totally absurd to even be thinking about that — there are other ways to raise revenue,” Barrett added. “You’d only be hurting the college and the community.”
Williams spokesman James Kolesar said the proposal would hurt the entire community.
“This would be really bad not only for Williams College students but for the people and economies in the nearby communities,” he said. “And who would donate to the endowments when it would eventually be taxed away?”
Kolesar added that virtually all the endowment money spent by the college is spent locally on payroll, supplies, repairs and maintenance, and in donations to local community efforts. He said the college also donates $500,000 annually to local causes.
In addition, Williams College donated $1.8 million last December to the Sol Lewitt Gallery endowment fund at Mass MoCA.
1) Barrett may be the quintessential Massachusetts political hack, but at least he is our political hack.
2) Williams contributes $500,000 annually? That’s a bigger number than I would have guessed. I thought that Morty mentioned a figure closer to $200,000 at the Roads Scholars event in March. I think that the difference lies in the treatment of large “capital” gifts. The annual gifts are around $200,000 but then there are the not-uncommon big gifts, like $1.8 million to Mass MoCA. Including those gets us to $500,000 annually.
3) Why do we even bother with an alumni fund? Instead of getting my classmates to write checks to Williams, why don’t I just get them to write checks to Mass MoCA or MGRHS or North Adams Regional Hospital? (See links for my rants.) Have I really been railing about this for five years? Yes!
4) If you are Morty or Jim Kolesar or any senior Williams administrator that lives in the local area, uses the local hospital and sends your children to the local school, then spending millions of dollars from the College’s endowment to make these institutions better seems like a great idea. Objectively! Of course, this is ridiculous. None of this spending makes students more likely to choose Williams. Almost none of it makes great faculty more likely come or to stay at Williams. And, if you really wanted to attract/retain great faculty, it is 100 times cheaper to just show them the money.
|« Ephs at Hilton Head||1988 Yearbook: Page 214 »|
11 Responses to “Defending the Endowment”
You can follow this conversation by subscribing to the comment feed for this post
If a comment you submitted does not show up, please email us at eph at ephblog dot com. Please note that commenters are required to use a valid email address when submitting comments.