What's more, is that a "C" at most ivies is equivalent to an "F" at any other school. You don't get big donations by failing out the mediocre children of presidents and senators.
I don't think that's exclusive to the Ivy League. People are paying money for college everywhere, and a lot of them can barely afford it. Thus, professors are hesitant to outright fail students. I say this as a former lecturer and teaching assistant at a non-Ivy.
Good point, I do suppose that's a growing issue everywhere, not just in the Ivy League.