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Thursday, April 26, 2012

For-profit colleges undermine traditional role of philanthropy | Johann Neem, Inside Higher Ed

Critics of recent efforts to regulate for-profit colleges have suggested that the Obama Administration is waging a “war” on for-profit universities.
The reality is exactly the opposite: the for-profit sector is challenging a centuries-old practice of separating philanthropy from business.
And so Neem begins his essay. And oh so right he is! Nearly every paragraph in his essay provides a compelling argument. Just check these key sentences (emphasis added):
Since the Elizabethan statute of charitable uses in 1601, Anglo-American law has sought to encourage charitable giving to promote the common good. The idea behind modern philanthropy is that nonprofits undertake services that are either inappropriate for market activity or would not be supported by the market. ...
In the modern era, tax incentives are one of the primary ways in which the state encourages nonprofit institutions, whether churches, local grassroots associations, large endowed philanthropies, or universities. ...
[P]ublic and nonprofit institutions become corrupted when profit becomes their goal rather than a means to fulfilling their mission. This has happened to some extent in American universities that invest in tangentially related programs like big-time sports. ...

The state must ensure that both public and nonprofit institutions remain true to their civic mission in return for the legal and financial benefits they receive. ...
Whether colleges are for-profit or not matters a lot. It affects their mission, their culture, their labor practices and, most important, the lessons they offer students. For-profit education implies that education is a commodity bought for the advantage it provides. ...
For-profits must be regulated as businesses. They are not charities, despite being subsidized heavily by public student loan dollars. In reality, in return for these public subsidies, for-profits should live by the same rules as other nonprofits. They should make the common good their primary goal and reinvest all revenue to fulfill their mission. ...
While the line between the for-profit and nonprofit sectors can be blurry at times, the differences between them are very real, of moral significance, and worthy of protection.
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