The auditors at OpenTheBooks.com, a nonprofit government-spending watchdog which I direct, examined 10 universities—the Ivy League, plus Stanford and Northwestern. We found that during a five-year period from 2018-22 these wealthy universities collected $45 billion in taxpayer subsidies, special tax treatment, and federal payments. In fact, these universities collected a stunning $33 billion in federal contracts and grants. It therefore seems these schools are more federal contractors than educators—with federal payments exceeding undergraduate student tuition.
Additionally, the universities we surveyed profit handsomely from “nonprofit” tax breaks amounting to a benefit of roughly $12 billion. Wealthy universities pay only a 1.4% “excessive endowments” tax on their gains whereas wealthy individuals pay up to 23.4% on their capital gains.
The University of Pennsylvania, whose then-president (she resigned on Saturday), Liz Magill, seemed to smirk at the idea of being questioned by Congress, collected $3.7 billion in U.S. government grants and contracts, mostly for research, between 2018 and 2022. Over the same five-year period, Penn’s endowment ballooned to $21 billion from $13.4 billion.