April 14, 2013
In Friday’s New York Times, health economist Uwe Reinhardt writes a column about “The Governance of Nonprofit Hospitals.” He comments on the recent, much discussed, article by Steven Brill in Time magazine entitled “Bitter Pill: Why Medical Bills Are Killing Us.”
Every question Reinhardt and Brill raise could be asked about nonprofit colleges and universities. Reinhardt begins by noting the disclosure that is required of for-profit hospital corporations, and how easy it is, because of disclosure laws, to find out information about their finances and performance. And then he asks,
Is there anything like this transparency and public accountability in the nonprofit sector? Indeed, who actually owns these entities? To whom do they render account for the sizable real resources and finances under their control? And what benefits do they deliver in return for the exemption from income taxation they enjoy?
Those are fair questions, I believe. In higher education, we have much better disclosure today from public (state-sponsored) institutions than from independent ones. Why don’t these non-profits make much more information easily available about their finances and performance?
I especially like this question: “what benefits do they deliver in return for the exemption from income taxation they enjoy?” For higher education institutions, benefits would largely be gains in student learning. Why don’t independent institutions voluntarily disclose more information about what they know about student learning?