Program for Research On Private Higher Education

U.S. non-profit organizations are increasingly under scrutiny regarding their status and thus eligibility for tax exemptions. The scrutiny ranges from very local government all the way to the heights of national government. Objects of the scrutiny range from small organizations to the financially mightiest universities, including Harvard and its 35 billion dollar endowment. Critics question whether some “charities” are really giving much away, especially as non-profits increasingly charge for services and generate revenues. The chief counter-case is that non-profits perform public service, notwithstanding some ambiguity about characteristics of non-profits and for profits..

Many When it comes to higher education, the scope and consequences of the debate is easily most weighty in the US. It is there that the wealthiest non-profit sector and the largest endowment flourish. It is also there that we see the strongest tradition that non-profits generate revenues, including from tuition and philanthropy both. Yet it is also true that a huge financial source for America’s non-profit sector, including in higher education, is government (through direct subsidies, aid to students, tax breaks, and so forth). But the growth of non-profit colleges and universities has been huge worldwide, and many of the institutions engage in practices that display for-profit characteristics. Thus, a major public policy issue is tax treatment of legally non-profit institutions. The private higher education sector often laments the lack of favorable tax treatment whereas critics take the opposite position.Debate is unsurprising given the rising stakes and self-interests, increased cross-sectoral ambiguity in activities, and also the fact that scholarship and the courts both have long had difficulty establishing clear-cut lines and criteria. Debate over non-profit and tax status is in fact not new but today in the US it is intensifying and it now has much greater relevance than before for much of the rest of the world.

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	Director: Daniel C. Levy