Jim Manzi asks "Is Harvard Just a Tax-Free Hedge Fund?," and finds the answer to be a resounding, "pretty much, yes." This is a short but highly recommended read; Manzi packs about three strong arguments into a page. (His argument is pretty close to one of the two pillars of my "There is no such thing as a non-profit" theory, which states that there is no such thing as a non-profit.*) I contend, for the record, that everything he says is equally true of all private colleges and universities, not just Harvard, and not just the big swingers in the endowment game. Now, I still don't support Massachusetts' endowment/golden egg tax, but I think it important to recognize the scam** Harvard et al. are pulling off.
* The other pillar being the belief that money is just one of many motivations. As a result people will pull the same kinds of shenanigans that anti-capitalists love to harp on whether their incentive is take the money and run or to able to brag about their do-goodery at their Bobo cocktail parties. Institutions are going to act pretty much the same whether the wealth, power and privilege they seek are of the greenback kind or not.
** Scam implies I would like to stop whatever they are doing. This is not the case. I'd prefer to have everyone else's capital gains and corporate income taxes lowered to make this situation less inconsistent. But tax policy is another point for another day.