Elite US universities face scrutiny over executive pay and tax-exempt status
Elite private universities in the US are facing scrutiny over executive pay and financial practices. Some institutions use deferred compensation to hide the full earnings of their top leaders. Meanwhile, political pressure grows as federal and local governments question their tax-exempt status and financial contributions. Federal lawmakers recently expanded a 21% excise tax on salaries over $1 million for nonprofit organisations. This move came as university leaders' pay rose by more than 50% over a decade. Some hospital executives at these institutions now earn over $15 million a year, often surpassing the pay of university presidents.
The University of Pennsylvania paid its former president, Amy Gutmann, nearly $23 million upon her departure. This included a $20 million deferred compensation payment. In the same year, Dr Larry Jameson earned over $5 million at the same university.
Harvard’s net assets have grown to about $62 billion, a 28% increase in recent years. The university also received around $670 million in government grants in fiscal year 2024, a 15% rise since 2020. Some of its federally supported patents now generate hundreds of millions in revenue. The Trump administration has demanded a list of these patents, while President Trump has repeatedly threatened to revoke the tax-exempt status of elite private universities.
Locally, Boston requested Harvard contribute about $14.6 million to city services through its Payment In Lieu of Tax program. The financial practices of top universities remain under close watch. Deferred compensation and high executive pay continue to draw criticism. At the same time, growing assets and government-funded innovations add to the debate over their tax-exempt status and public contributions.
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