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Massachusetts May Tax College Endowments

Filed in archive Philanthropy by Greg Cruey on May 11, 2008

Hard up for cash, the state legislaturelinks in Massachusetts is considering a plan to tax college and university endowments that are valued at more than a billion dollars, according to University Business.

The legislature's rationale is simple. All that money in one place makes the lawmakers question whether the state's universities are really non-profit. Nine universities in the state have endowments worth more than a billion dollars.

How much is a billion dollars?

Massachusetts May Tax College Endowments
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To imagine a billion dollars, picture a stack of hundred dollar bills about a kilometer high. That's over 39,000 feet - about 131 football fields, stacked end on end. A stack of Franklins 27 times as tall as Chicago's Sears Tower...

I said the rationale was simple. Actually, simplistic would be a better word. Non-profit status has to do with your purpose, your intentions as an institution. The lawmakers of Massachusetts seem to think that financial success somehow colors those intentions.

If the proposal under discussion becomes law, a 2.5% tax would be levied on the assessed value of an endowment over $1 billion. That means the Yale Endowment, worth about $22 billion at the moment, would fork over about $550 million to the state in a single year.

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Tags: endowments  Massachusetts  college  2008  massachusetts  college+endowments  massachusetts+college  aacca+u 

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