The overlooked effects caused by the actions of America’s elite.
Research shows that the old adage “one bad apple spoils the whole bunch” can be painfully true — and in the case of the Operation Varsity Blues college admissions scandal, Aunt Becky is not the only one to feel its devastating effects.
According to justice officials, William Singer’s “charity,” Key Worldwide Foundation, collected millions of dollars from the parents of affluent children to help them gain admission into elite universities around the country. This money was then used to bribe coaches and fake entrance exam scores.
Some of the scandal’s effects are obvious; the involved celebrities face massive fines and possible prison time and those who cannot afford to pay their way into top schools feel a deep mistrust of college admissions processes now more than ever. University fundraisers are already being impacted. Senator Ron Wyden of Oregon, the senior democrat on the senate finance committee, has vowed to submit legislation to eliminate tax breaks for donations made to colleges and universities before or during the enrollment of children of the donor’s family.
“The federal government shouldn’t be perpetuating this system by awarding tax breaks to these contributions, contributions that return to the donor a benefit of inestimable value,” Wyden said in a statement.
Unsurprisingly, colleges and universities moved to distance themselves from the scandal, but also pushed back against Wyden’s proposed legislation in the same breath.
In a statement issued in response to Wyden’s proposal, President and CEO of the National Association of College and University Business Officers Susan Whealler Johnston said, “While NACUBO shares in the public outrage, we cannot support knee-jerk reactions that inappropriately resume a lack of integrity in advancement, admissions and compliance at our nation’s institutions of higher education and threaten to cub charitable giving.”
However, the effects of this scandal have the potential to ripple beyond universities and hurt charities and organizations outside those ivory towers.
The Ripple Effect
Operation Varsity Blues will hurt more than the 33 parents charged so far in the Justice Department’s largest-ever college admissions scandal.
Research suggests that any scandal involving a charity decreases donors’ willingness to give to charities as a whole. In a recent article published in Review of Behavioral Economics, Professor Marco Palma, director of Texas A&M University’s Human Behavior Lab, and Zhicheng Xu, PhD, show that a charity’s donations will decrease if the charity becomes involved in a scandal or other reputation damaging situations. Their research suggests that a scandal in one charity can even cause a decrease in donations for other unrelated charities because it causes individuals to question the very nature of charities as a whole.
“Potential donors feel less guilty — even justified — about giving less or no money to the charities if they believe that they are misusing donations,” Palma said.
Charities are no strangers to scandal. In the past, many have come under fire after reports of where donations are actually spent were leaked. In 2011, a Chinese girl pretended to be the fundraising manager for Red Cross China. She posted pictures of herself with expensive sports cars and designer handbags online, leading to a public outcry and the questioning of Red Cross China’s use of donations. Despite denying any relationship with the girl, Red Cross China saw its reputation suffer.
Stories like this one happen often and their effects linger, causing a prolonged period of doubt and mistrust towards charities. This causes a decrease in donations to other charities and organizations, including those with legitimate intentions.
It is only natural that people want to feel like they are doing something good by donating to charities. The scientific term for this feeling is called “warm glow.” Unfortunately, even a small doubt about how a charities misuses donations can easily dispel this warm glow. Therefore, donors become hesitant to give away money if they are uncertain about where that money will go.
Palma and Xu’s research shows that people use charity-related scandals to justify not giving money to causes they believe in, even if those scandals are completely unrelated to the charity they considered donating to.
“People want to feel good about giving to charities,” Palma said. “But, if a charity is embroiled in a scandal, they lose that warm feeling that is associated with giving to charities.”
The involvement of celebrities in what we can expect to be long, drawn out court cases caused by Operation Varsity Blues will give this charity scandal relevancy for a long time. As more light is shone on the illegitimacy of Key Worldwide Foundation and the role it played in tampering with the admissions processes of some of the nation’s top universities, the reputations of these institutions and charities will inevitably be damaged.
Our trust in institutions is slowly eroding, and according to the Charities Aid Foundation only 48% of people believe charities to be trustworthy — that is a sharp decline from 51% in 2016.
Palma’s research hints at a way charities can help heal the damage caused by the Key Worldwide Foundation. He shows that legitimate organizations can differentiate themselves by being transparent about where donations are spent.
He believes that transparency of other leading charities might be able to remove the bad apple from the barrel and help them restore their credibility.