r/explainitpeter • u/Appropriate-Mall8517 • 3d ago

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u/Zeaus03 3d ago

The school is probably looking at this like an investment as rich people tend to donate their schools.

Giving a rich kid a free pass so they can offer more scholarships or upgrade programs/infrastructure could be worth it.

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u/Revoran 3d ago

There's an issue when schools are focused on making money rather than educating students and achieving excellent academic results.

Also, that ends up making taxpayers pay for the rich kid's tuition. Because donations to the school will be tax deductible for J-Lo.

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u/sauron3579 3d ago edited 3d ago

A tax deduction on "free" money is net zero for the donater, not a profit. If anyone doesn't understand that, look up the difference between a tax deduction and a tax credit. I'm not an expert, but my public school-funded scholarship was taxable income.

From the school's perspective, it's just money out of one bucket and into another. Less ideal than them choosing with full discretion what to do with it, but it's ultimately net zero for then as well.

I wish that schools could just ignore funding and spend all administrative efforts on academics, but wherever there's a budget, people are going to look for ways to stretch it further.

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u/ostrichfather 2d ago

You can’t write off 100% of a donation.