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The Myth of Nonprofit Higher Ed

March 18, 2019 in Economics

By Neal McCluskey

Neal McCluskey

If the
Varsity Blues
bribery and cheating scandal has done anything
positive, it has been to shine some light on a basic reality: very
little in higher education is truly nonprofit. It turns out some
analysts—and residents—of the ivory tower have been
making this point for years. But nothing elevates things in the
public consciousness like rich people—especially
celebrities
—behaving badly.

The specifics of the scandal involve outright fraud by people
outside of the ivory tower trying to get their kids into the
penthouse—elite institutions including Yale and UCLA. There
is no evidence of which I’m aware that the schools themselves
encouraged such fraud, though some employees, seeking to enrich
themselves, allegedly did. This was especially true of coaches,
including a former Georgetown University tennis coach who
reportedly
took in $2.7 million
to put kids on athletics admissions lists.
And even if the schools did not condone their behavior, these
individuals nonetheless illustrate something crucial about the
whole system: just because you work at a place with a nonprofit tax
designation doesn’t mean you cease to be self-interested.
Indeed, trying to maximize one’s happiness is a very human
thing to do.

Nothing elevates things
in the public consciousness like rich people-especially
celebrities-behaving badly.

Of course, all schools are populated by human beings, hence all
are inclined to maximize their profit: the benefits they get versus
their costs. As
the late Henry Manne
, who taught at Emory University, the
University of Wisconsin, George Mason University, and other
institutions, explains in his chapter—a reprint of
this 2014 essay
—in a new
book I co-edited
, the idea that people in organizations with
nonprofit tax status do not seek profit “is a hallowed and
egregious myth. Human nature does not change with the legal
structure of the employing organization. Managers of nonprofit
organizations are no less interested in maximizing personal utility
than are managers of for-profit firms.”

Varsity Blues has inspired people to pay new attention to the

many legal ways
putatively nonprofit institutions pursue
monetary gain through admissions. These include opening places to
less qualified children of
big donors
, and legacy admissions maintained with
continued financial commitment in mind
. And let’s face
it, presidential
pay in the millions
, and endowments
in the billions
, don’t exactly say “we just want to
break even.”

Despite a lot of …read more

Source: OP-EDS

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