In 2006, the endowments of Indiana University and Texas Christian University invested millions of dollars in a partnership, hoping to mint riches from oil, gas and coal.The partnership was formed by the Houston-based Quintana Capital Group, whose principals include Donald L. Evans, an influential Texan and longtime supporter of former President George W. Bush. Little more than a year earlier, Evans had left his Cabinet position as commerce secretary.Though the group had an impressive Texas pedigree, presidential cachet and ambitions for operations in the United States, the new partnership was established in the Cayman Islands. The founders promised their university and nonprofit investors that the partnership would try to avoid federal taxes by exploiting a loophole called "blocker corporations," which are typically established in tax havens around the world.A trove of millions of leaked documents from a Bermuda-based law firm, Appleby, reflects some of the tax wizardry used by American colleges and universities. Schools have increasingly turned to secretive offshore investments, the files show, which let them swell their endowments with blocker corporations and avoid scrutiny of ventures involving fossil fuels or other issues that could set off campus controversy.Buoyed by lucrative tax breaks, college endowments have amassed more than $500 billion nationwide. The wealth is concentrated in a small group of schools, tilting toward private institutions like those in the Ivy League and other highly selective colleges. About 11 percent of higher education institutions in the United States hold 74 percent of the money, according to an analysis in 2015 by the Congressional Research Service."It’s overwhelmingly weighted towards the 1 percent," said Dean Zerbe, former tax counsel to the Senate Finance Committee. "Most of the schools are the most elites in the country."The House Republican tax plan includes a 1.4 percent tax on the investment income of private colleges and universities with endowment assets of $250,000 or more per student. It would not apply to public schools. If passed, the new tax would affect about 70 elite private colleges, though it would not touch the type of offshore benefits the Texan partnership pursued.On Monday, 45 education groups declared their opposition to the bill in a letter to Kevin Brady, R-Texas, who chairs the House Ways and Means Committee.Tax ‘blockers’ College and university endowment earnings are usually tax-exempt. But as endowments have sought greater investment returns in recent years, they have shifted more of their money out of traditional holdings like U.S. equities to alternative, potentially more lucrative investments. These include private equity and hedge funds that frequently borrow money, opening them up to tax consequences.When schools earn income from enterprises unrelated to their core educational missions, they can be required to pay a tax that was intended to prevent nonprofits from competing unfairly with for-profit businesses.Establishing another corporate layer between private equity funds and endowments effectively blocks any taxable income from flowing to the endowments, the reason they are called blocker corporations. The tax is instead owed by the corporations, which are established in no-tax or low-tax jurisdictions like the Cayman Islands or the British Virgin Islands."Congress is essentially subsidizing nonprofits by allowing them to engage in these transactions," said Norman I. Silber, a law professor at Hofstra University and co-author of a paper on blocker corporations in 2015. "They’re allowing them to borrow so that they can build up their endowments."The use of blocker corporations has raised concerns among policymakers in recent years. That’s partly because they cost the U.S. Treasury millions of dollars, but also because they legitimize an opaque offshore network sometimes used for nefarious purposes."They’re not cheating. They’re not hiding money or disguising money," said Samuel Brunson, a law professor at Loyola University Chicago who has studied endowment taxation. "But they’re adding money to a system that allows people, if they want to hide their money, to do it." Not only do the universities benefit — so does the wealthy and influential private equity industry.Perhaps illustrating the sensitivity of the topic, officials at most of the college and university endowments that use blocker corporations, including Colgate, Dartmouth, Duke and Stanford, declined to comment specifically, citing long-standing policies against discussing their investments. Among them was Matt Kavgian, the director of strategic communications for Indiana University’s $2 billion endowment, which had invested $10 million with Quintana.An exception was the Quintana shareholder Texas Christian University, whose chief investment officer, Jim Hille, acknowledged that the $1.5 billion endowment had used blocker corporations. Hille said the decision to use one often came down to whether the expected return would offset the cost of establishing a blocker corporation.References to such corporations in the Appleby files, shared with the New York Times by the International Consortium of Investigative Journalists, which obtained them from the German newspaper Suddeutsche Zeitung, date at least to 2003. At that time, five elite schools — Columbia University, Dartmouth College, the University of Southern California, Stanford University and Johns Hopkins University — became partners in a Bermuda-based group called H&F Investors Blocker.H&F Investors Blocker was formed to invest with one of the largest private equity firms, Hellman & Friedman, in shares of Axel Springer, a German publisher of newspapers and magazines.Minutes from meetings at Appleby’s office in Hamilton, Bermuda, never mention tax avoidance or even explain why the word "blocker" is used in the partnership’s title. But an audit by Ernst & Young, contained in the minutes, shows that H&F Investors Blocker would owe no federal income tax.By 2008, the University of Texas system — whose endowment last year was $24.2 billion, behind Harvard’s ($34.5 billion) and Yale’s ($25.4 billion) — asked Appleby to set up a Cayman Islands company called TX Liquidity Capital so "certain tax advantages will accrue to the system," documents show.Colgate University, with an endowment worth $822 million last year, stood to benefit from blocker corporations in 2008 when it invested in Genstar Capital, a private equity fund specializing in leveraged buyouts, according to the records. One investor in that Cayman Islands partnership, called Genstar Capital Partners V HV, took pains to include a handwritten note near his signature: "elect to invest through the blocker." Other investors were Dartmouth, Stanford and a Duke fund called Gothic Corp.Shift in public attitudeWhile legal, blocker corporations are part of a system of endowment tax breaks fueling an undercurrent of populist anger. Many students across the country struggle under massive college debt. At the same time, critics say, some wealthy schools use these tax advantages to stockpile endowments that exceed the gross national product of entire countries.Last year, three influential Republican legislators, led by Sen. Orrin G. Hatch of Utah, sent a letter to 56 private universities with endowments of $1 billion or more, requesting information on "the numerous tax preferences" they enjoy. "Despite these large and growing endowments," the letter said, "many colleges and universities have raised tuition far in excess of inflation."So far, universities have mobilized lobbyists to emphasize the public benefits they deliver, beating back challenges to their tax breaks. But there is some evidence that the mood has shifted, according to Charlie Eaton, a professor at the University of California at Merced, who has studied endowment tax breaks."In some ways, the antielite and antiuniversity spirit of Trumpism could create a favorable environment on Capitol Hill for some kind of action on this," Eaton said. "That’s part of the reason universities urgently need to grapple with this. Because people genuinely feel that our elite universities have become islands of wealth."In a study this year, Eaton estimated that a trio of tax breaks benefiting universities costs federal taxpayers $19.6 billion a year. Taxpayers, many of them wealthy, get breaks when they donate to colleges. Tax-free municipal bonds allow schools to borrow money at low rates. And for the most part, endowment investment returns are tax-free.Controversial venturesMultiple Appleby documents offer a glimpse into the complex financial transactions and investments, some controversial, that university endowments engage in all over the world, aside from using blockers.Universities have been under pressure from both students and activists to shift to "green" investments in response to climate change, as well as to take social policy and global governance issues into account in investments.The Appleby records show that investment funds of Columbia and Duke, both ranked in the top 20 endowments, held shares as recently as 2015 in Ferrous Resources, registered in the Isle of Man. Its primary business is iron mining in Brazil.The company drew criticism there with a planned 300-mile pipeline to transport iron slurry from a mine in Minas Gerais to a port.The company, Ferrous Resources, declined to comment, except to say that the project had been discontinued.Columbia, which owned more than 8 million shares in Ferrous Resources, or 1.1 percent of the company, declined to comment. Various investment funds connected to Duke, which also declined to comment, held more than 2 million shares in the company.