Why do universities grant honorary doctorates?

A longstanding MR reader writes to me:

My father will be granted
an honorary doctorate from a European university.  While he is
undoubtedly deserving of the honor (he is a well-known professor in his
field), I don't understand the European institution's incentives in
granting the doctorate.  My father in not from Europe, holds no degrees
from there, has never worked there, and is unlikely to attract others
to go there.  Outside of altruism, why is he being honored?  More
broadly, why would any university grant an honorary degree, especially
relatively high-status universities of the Stanford/MIT/Oxbridge ilk? 
Especially when conferred to non-academics, don't such degrees dilute
the brand value of the university?

I can think of a few reasons for honorary doctorates:

1. The recipient is a major donor or potential major donor or friend of major donors.

2. The awarding of the doctorate creates press releases and attracts attention for the university.  If the recipient is sufficiently prestigious, this involves no reputational cost for the granting institution and perhaps it creates slight reputational benefits.  The university also has some chance to make a favorable impression on famous people.

3. Awarding the degree signals the strength of interest groups within the university.  Some universities have squabbled over whether President Obama should be given an honorary degree.  Last year St. Ambrose, a Catholic school in Iowa, awarded an honorary degree to a "pro-abortion activist," as it was described.  In 1985 Oxford broke precedent and refused to award Margaret Thatcher an honorary degree, as the school had done with previous Prime Ministers.  They were upset that she had cut funding for British universities.

4. An honorary degree may spur student interest in the school and in the graduation ceremonies, such as when Knox College awarded Stephen Colbert an honorary degree in 2006.  Keep in mind that current students are often future donors, so you want to give them a ceremony to remember.

5. Honorary degrees are often a lure to attract commencement speakers.

Cambridge University has given honorary degrees to Albert Einstein, Nelson Mandela, Bill Gates, and now its roadsweeper.  I guess they don't want to seem intellectually elitist.  Yale gave Paul McCartney an honorary degree.

The UC system gave 700 honorary degrees to former Japanese-American students, namely the ones who were placed in concentration camps during WWII.  They thought this was the right thing to do and it may have garnered them points with some local Asian communities.

The question in my mind is the opposite of the reader's: why does anyone accept honorary degrees?  Maybe it's hard to say no.  David Schindler, a leading environmental scientist, has the right idea:

…there is a saturation limit. I've started to turn down about half of
the honorary degree invitations. I feel badly about it, but each one
takes at least three days, including travel, and I am starting to feel
anxious about the few years I have left to accomplish things that I
want to do.

The practice of honorary degrees dates back to medieval times.  The Archbishop of Canterbury has the power to award (non-honorary) degrees, in what I am not sure.

Al Lewis, who played Grampa Munster, claimed to have a Ph.d. in child psychology but it seems this was neither honorary nor real.


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