Top US universities use offshore funds to grow their huge endowments

[turbinetree]

More than 100 US universities and colleges have interests offshore where they pay little or no tax and seek to grow their already phenomenal riches away from public scrutiny, the Paradise Papers reveal.

With combined endowments of more than $500bn (£378bn), the leaked documents show universities have become big players in offshore games. In contrast to the stated mission of open discourse espoused by many prestigious seats of higher education, investments are frequently held in secret entities that help them minimize their contribution to the public purse.

Most contentiously, some of the offshore funds are invested in carbon-polluting industries, despite leading US universities playing a key role in the fight against climate change.

In total, 104 US universities and colleges are named in data from the law firm Appleby. They include Ivy League institutions such as Princeton, as well as some of America’s best-known state schools such as Rutgers in New Jersey and Ohio State.

Four of the top 10 schools by endowment are in the files: Columbia, Princeton, Stanford and the University of Pennsylvania. Between them, they have reserves of $73.7bn.

https://www.theguardian.com/news/2017/nov/08/us-universities-offshore-funds-endowments-fossil-fuels-paradise-papers

[LisaM]

1. I don't like how these universities are sitting on these endowments.

It's happening in both the public and private sector. University presidents have just become tools to raise more money for the university through endowments and capital spending programs, while the real academic stars of universities, the professors, are being shunted to the side and replaced with adjuncts who barely make a living wage.

It's really shameful.

[turbinetree]

3. What is remarkable is that a college, supposedly walks the walk, but hidden in the Cayman's is

talking the talk, like Northeastern

And as for professors, its like in all educational formats, they have presidents of universities making in some cases over 1 million a year, they have college coaches making over 1 million a year, up to 5 million a year, I think of Alabama and Michigan as prime examples, and then there is the marketing of the sports, including the CBS, ABC, ESPN, Fox costs going to the college and the NCAA................, are those millions going to pay wages, and lowering tuition costs?

I personally don't think so...................

http://www.stack.com/a/most-expensive-college-football-stadium-renovations

[LisaM]

4. The coach's salaries come from the athletic department - it's a different bucket.

I like college sports, and football programs raise huge revenue for school athletics, including women's teams (and in many cases, Iowa and Michigan being among them) the coaches spend inordinate amounts of time raising money for things like university hospitals, just look at Lloyd Carr and Mott Children's Hospital. I think that's separate.

However, university presidents are just rainmakers now, and very little of it benefits professors and it's also all being directed to STEM programs instead of the liberal arts. I even had a fairly academic friend who worked at a university (University of Washington) and she actually was more in favor of a university president who would bring in more money than the one favored by the actual professors who taught there.

I agree that many football coaches are overpaid (though, they are also on contracts that can expire in just a few years), but I don't think it's the exact same issue.

[Cicada]

2. University endowments are tax exempt wherever they are located

So I don’t view their ownership of foreign accounts as a way to avoid tax. It is true that they can avoid requirements to distribute each year a minimum percentage of their assets (is it 6%?)

Section 501(c)(3) spares educational organizations from tax on their investment income. Same for science, charity, etc

[Cicada]

5. I was wrong: tax avoidance is a factor

Universities to increase yield invest in funds which borrow money. I did not know that the borrowed funds cause the university endowments to owe tax. I am shocked and disappointed that such endowments use off shore tax havens to avoid the tax. This is so horrible it’s almost impossible to believe.