If you are giving XP for spending cash to attain specific goals, and the player figures out a clever way to achieve that goal without spending the cash, are you going to withhold the XP? Tell them that reaching the goal is impossible without spending the cash? Anyone who has a major problem with railroaded plots think carefully before you answer.
If you want to encourage a behavior, you'll generally get the most success if you reward the behavior as directly as possible.
If you want to reward a character for establishing a school, give them XP for establishing a school. How they go about it (by politics, conquest, spending raw cash, or some combination) isn't as relevant as their accomplishing the goal.
I think the point here, is not the goal itself, which can of course be achieved if the character chooses to build a school himself with hs own hands, or tricks someone into building it, and which should probably merit its own kind of reward, but that the character is actually facing a choice.
See, given a goal in the game, the player will often strive to achieve that goal, earning XP on the way. Lots of players pursue goals relentlessly, and often have some strange understanding that "we
must achieve this goal, because the DM has prepared this." Whereas, squandering resources on non-personal agendas, forwarding the world, is actually a choice made by the player, with the money in his hand.
The player gets to decide: "Hmmmm.... new sword, or a great party (gains friends / reputation / influence with party crowd), or sponsor orphanage (gain other friends / reputation / influence), or buy the town guard new uniforms (could be handy when I next need to avoid the city goal). So it isn't a goal per se (such as ridding the westmark of trolls), but a means to encourage involvement in the game beyond killing things and taking their stuff, selling it and buying yet better stuff.
It isn't obvious that blowing 1000 gp on a party with the Mayor may be more beneficial to the character gamewise, and in the long term. Yet without the XP encouragement, few players will. Having a system which awards this behaviour, will encourage it.
It isn't the same as setting a goal: party with the mayor : XP reward. Few players are going to come with that suggestion on their lonesome (Dear DM: If I throw the Mayor a big birthday party, will my character earn XP?).
It is: Here's your share of the gold. What do you want to spend it on? You know you get XP for seeking to gain influence and increase your reputation by wasting it? But you get to choose how its wasted!
Conan: WENCHES!!! BEER!!! (hairy barbarians everywhere cheer)
Merlin: I sponsor a researcher at the Wizardry school.
Shadows: grease the wheels of the underworld by buying XXX for important senators.
Paladine: I give it all away to state orphanages!