Legacy Admission Violates Tax Law

Legacy Admission, Legacy Admissions, Admission of Legacies

We firmly believe legacy admission is a violation of tax law (photo credit: David Emmerman).

Many argue that legacy admission, the practice by which colleges give preferential treatment to the progeny of alumni (and especially to the progeny of alumni donors), is unfair. Many argue that the practice favors the wealthy, the privileged — all to the detriment of middle and low-income young people who compete against these applicants for admission to these institutions. We don’t disagree. But calling things unfair sounds like a whole lot of whining to us and we’re not about whining. It never ceases to amaze us that these same critics of legacy admission don’t cite a much more compelling argument against the practice — that it violates the law. Specifically, we would argue that legacy admission is a violation of 26 U.S. Code § 170 of our tax code.

Legacy Admission Violates Tax Law

26 U.S. Code § 170 reads as follows: “There shall be allowed as a deduction any charitable contribution (as defined in subsection (c)) payment of which is made within the taxable year. A charitable contribution shall be allowable as a deduction only if verified under regulations prescribed by the Secretary.” One part of this code also states, “(C) no part of the net earnings of which inures to the benefit of any private shareholder or individual.”

In short, alumni make tax-deductible donations to their alma maters. In return for these donations, alumni should not receive anything in return. But, of course, the children of these alumni are receiving preferential treatment in admissions — which directly contradicts the stipulation in our tax code that “no part of the net earnings…insures to the benefit of any private shareholder or individual.”

Quid Pro Quo in Legacy Admissions

This quid pro quo argument against the practice of legacy admission is one we’ve been making for years, echoing the thoughts of a vocal opponent of the practice, Richard Kahlenberg of The Century Foundation. But we love it when other folks join in on the bandwagon. In order to end the practice of legacy admission, we’ve got to stop labeling it unfair and start labeling it unlawful. In a piece for “The Huffington Post” entitled “The New Tax Attack On Overly Elite College Endowments Has Potential Merit” by Terry Connelly, we don’t agree with some of his points (including his argument that Early Decision / Early Action policies cater to the rich) but his argument against legacy admission is one we hope resonates.

As Connelly writes under a blurb we absolutely love (“If There’s Quid Pro Quo, the IRS Should Say No”), “Add to these the children of ‘high-potential’ donors whose applicants are tracked through the admissions process by many elite-college ‘development offices.’ Such donors can strain the logical and legal limits of tax-deductible contributions by providing a quid of cash for a quo of admission for their progeny…Both public and private elite universities also have made no secret of their attempt to woo full-tuition paying foreign students who are not eligible for federal or state government tuition assistance ― and with respect to big state universities, out-of-state students whose families are wealthy enough to fund the travel and pay the much higher tuition rates that locals pay.” Well said indeed!

Hey hey, ho ho. If there’s quid pro quo, the IRS should say no! Hey hey, ho ho. Legacy admission has got to go. Can you hear the chants? We sure can. Maybe it’s time to take to the streets in opposition to the practice of legacy admission. But, of course, we don’t see that happening anytime soon.


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