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Public Investment in Private Higher Education: Estimating the Value of Nonprofit College and University Tax Exemptions

Few phenomena embody higher education’s social contract with the public more concretely than annual taxpayer support, through direct payments, grants, and contracts and indirectly through tax incentives, subsidies, and exemptions. This report offers a bottom-up methodology to estimate the public tax expenditure resulting from non-profits colleges and universities’ tax exemption. Its approach employs and expands on methodologies developed through comparable research on hospitals and the nonprofit sector more broadly in order to arrive at a methodology appropriate for estimating the public investment in individual private, non-profit schools Northeastern University provides a demonstration case for developing the underlying estimation techniques, the application of which we present at the federal, state, and local levels.