NAICU Washington Update

Extensive New Reporting Requirements on Foreign Gifts for Institutions Proposed

September 13, 2019

The Department of Education issued a request for comments on proposed guidelines regarding the collection of foreign gifts and contracts to colleges and universities.  As proposed, the guidelines would result in an increased compliance burden on colleges that receive such gifts.

The deadline for submitting comments is November 5.  Section 117 of the Higher Education Act (HEA) requires institutions of higher education to disclose the receipt of gifts and contracts from foreign entities with a value of $250,000 or more. The disclosure is reported to the Office of Student Financial Aid.

This new data collection comes as a result of Senate hearings earlier this year that looked at Confucius Institutes and the influence of China on U. S. education and research. Senators found the Department of Education out of compliance with enforcing its own rule and asked the Department to rework its information collection methods.

The Department’s response to “modernize” Section 117 is to broadly expand the scope and depth of the information collected from institutions. A draft list of questions outlines the details being requested.

The outline raises several concerns, particularly in the following areas:
  • The expansion of the definition of institution to include all campuses, entities, foundations and separate organizations related to the institution;
  • The reporting of all foreign gifts, contributions, or contracts, regardless of the amount, versus the threshold of $250,000 in current law;
  • The questioning of whether or not the financial contribution had any influence on teaching, staffing, educational materials, etc., and whether that influence was positive or negative;
  • Institutions will have no guarantee of confidentiality concerning the donation agreements, contracts, and restricted or conditional gift agreements and contracts with foreign sources they are submitting, including those gifts or agreements that include proprietary information institutions may be contractually obligated not to disclose;
  • The implied prohibition on anonymous gifts;
  • The lack of an exclusion for tuition payments from a foreign source as a gift;
  • The enforcement for compliance changed from civil action by the Attorney General to criminal action under federal fraud and false statements law; and
  • The estimated time to complete the reporting (10 hours per institution) is unreasonably low.
Because the request for comments is under the Paperwork Reduction Act, not the Higher Education Act regulatory process, it is unclear whether responses from the higher education community will be taken into consideration in how the new form and data collection is implemented.   

Congress is also looking at the issue of foreign gifts at colleges as it considers the HEA reauthorization.  The House Democrats’ 2018 Aim Higher Act amended Section 117 by lowering the reporting threshold from $250,000 to $100,000, and not allowing anonymous gifts. Rep. Scott Perry (R-PA), has introduced the Protecting Academic Integrity Act, which lowers the reporting threshold to $50,000, requires more detailed information on the contributor, asks for information on the intent of the gift, and calls for a GAO report on foreign gifts at colleges and universities.  

Other legislation and amendments are in the works to make a variety of changes to Section 117 reporting.