IJCR Commentary

Even as the fight for reform in higher education heats up and calls continue for oversight over federal money for higher education, the academy remains opposed to the most basic expectations of the non-profit world.

Recently, the Defense Department put forward a proposal requiring that grants made to higher education not exceed 20% in overhead costs. The presidents of the Association of American Universities, National Association of State Universities and Land-Grant Colleges and Council on Governmental Relations issued a joint statement criticizing the requirement and threatening not to adhere to it. Until now, universities have basically been given free reign to exceed their grant, piling on fixed costs that they then simply forward to the federal government. Overhead of 33%, 50%, and 70% are common.

In the rest of the non-profit world, even the 20% overhead allowed by the Defense Department is generally considered too high. Moreover, whatever guidelines a donor sets for a grant are not up for negotiation. One simply chooses whether to apply for a specific grant or not. Colleges and universities retain the multi-hundred dollar toilet seat mentality that government is itself trying to shed.

Only within the fiefdom of higher education do none of the common rules apply. In higher education, it seems, recipients set terms of grants and donors must meet the guidelines of an acceptable gift. This must change. Only when universities begin to understand that their funding is tied to product and that they are answerable to their funders, public and private, will true reform take place.