Tax officers eye colleges

October 6, 1995

Tax exemptions for United States non-profit groups, including prominent private colleges, are under scrutiny at both national and state level. Tim The Internal Revenue Service is stepping up its enforcement of possible tax violations.

Non-profit groups account for $1.1 million million in revenue a year, US News and World Report magazine reported. They include Harvard University, with a $7 billion endowment, the largest such fund in the US. Most non-profit organisations pay no tax on investment income.

Universities are not facing early visits from the tax officers, but "the non-profit community has sustained a slight black eye" recently, said Sheldon Steinbach, in the government affairs department of the American Council on Education, the umbrella group for higher education institutions in the US.

There have been a series of scandals involving fraud and embezzlement at charities like the United Way, at the Episcopal Church, and in the Common Fund, an institution set up by smaller colleges to pool their investments. High salaries earned by some staff may look as if they are excessive.

Harvard paid one money manager nearly $3 million in total compensation a year. This level of renumeration brought attention from the press and the Republican Congress, which is holding hearings this month into non-profit groups, in part to target political enemies. It may give the IRS new powers to sanction them if tax rules are broken.

At the local level, municipal authorities have often longingly eyed the tax-exempt property of colleges who in small towns may be the major employer. The city of Washington, Pennsylvania, is challenging the tax status of local Washington and Jefferson College in a lengthy court case.

Major colleges have traditionally paid local cities what is in effect an annual pay-off, in some cases running into millions of dollars.

* Boston University president John Silber once again topped the pay charts of presidents at private universities. He earned $564,020 in pay and benefits in 1994, though it was nearly $200,000 less than the year before, when he earned a substantial bonus.

Mr Silber, a very public figure who nearly won election as Massachusetts governor, has presided for a quarter of a century over a multi-school campus that is a huge corporate enterprise, explaining why he earned the most, analysts said. He has an $850 million annual budget and 29,000 students.

Six colleges pay their presidents more than $400,000, led by Adelphi University, New York, Rhodes College, Tennessee, Vanderbilt University, Tennessee, Hahnemann University, Pennyslvania, and Morehouse College, Georgia. Nine faculty members, all of them doctors taking fees from patients, earned more than $1 million.

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