The proposed law has sparked controversy over reports of foreign gifts

Each year, the Department of Education sends a checklist to colleges and universities to ensure that they comply with various federal laws and regulations, including their environmental standards, Title IX and FERPA, the Family Education Rights and Privacy Act.

For many years, that checklist did not mention any reporting requirements for foreign gifts and contracts. As a result, many higher education institutions shut down in 2019 when the department launched an investigation into disagreements with college and university regulations.

Institutions are shaking up to bring their publishing practices into line, through gifts and contracts, and sometimes by hiring expensive auditors to turn every stone, says Deborah Altenberg, Associate Vice President of Public and Land-Grant Universities Research Policy and Public Affairs.

“I don’t think there was any bad intent, people were trying to avoid reporting in any way,” he said. “It was out of sight, out of mind for a lot of people.”

Now, three years later, lawmakers are trying to strengthen and clarify the reporting mandate for overseas grants. The bipartisan Innovation Act, which was passed in the House and Senate this spring, is intended to increase America’s competitiveness in the global economy, but it also contains language that would strengthen the Foreign Grants Transparency Act for higher education institutions.

The law requires individual faculty and staff members to report gifts from foreign entities, and the current reporting threshold for organizations should be reduced from $ 250,000 per gift to $ 50,000. President Biden House and the Senate have promised to resolve their differences and sign the bill.

Some experts say the general lack of under-reporting and transparency regarding foreign gifts has been a problem for decades, and that clearer, stricter regulations are a welcome step. The university’s relationship with Chinese-owned telecommunications company Huawei in 2018, funding from members of the Saudi royal family following the assassination of journalist Jamal Khashoggi, and public criticism of the university’s relationship with the Kremlin-linked oligarchs and institutes in the wake of Russia’s aggression in Ukraine have deepened concerns. Transparency in foreign payments.

“The current state of transparency and expression structures around higher education is quite poor,” said Dylan Headtler-Godette, a government affairs manager for a government-sponsored nonprofit project who specializes in foreign influences. “There is not enough insight and sunshine for who pays, how much and for what.”

Others feel differently. More than 20 higher education advocacy organizations have signed letters to Congress protesting the new move, arguing that they would impose an undue burden on organizations that are already struggling to understand and comply with current reporting laws.

“We agree that we have an obligation to report foreign gifts,” said Sarah Spritzer, associate vice president of public relations for the American Council on Education, a higher education lobbying group. “It’s confusing, there are still a lot of questions about what’s involved.”

A renewed interest in a long-dormant law

Reporting foreign gifts and contracts has been a legal requirement for colleges and universities since 1986, when it was described in Section 117 of the Higher Education Act. But the Department of Education began enforcing the law just a few years ago, when then-Education Secretary Betsy Davos ordered an investigation into the suspected non-compliance of a dozen institutions.

The department released its preliminary results in 2020, showing widespread failure to report foreign grants. Yale University, for example, did not report a foreign grant between 2012 and 2017; The other two organizations, whose names were revised in the report, failed to disclose $ 760 million and $ 1.2 billion in foreign gifts, respectively. ED has also launched a new online portal for reporting foreign gifts.

“Despite the fact that many universities have sophisticated and fully capable accounting systems, under-reporting remains a major problem,” the report concluded.

Since 2019, the department’s investigation has expanded to include 19 colleges and universities; Most of this is still ongoing. They primarily target elite universities such as Harvard and Yale, which the department claims failed to disclose $ 375 million in foreign contributions and contracts combined. However, they also include some public institutions, including the University of Maryland and Rutgers University.

Concerns over the influence of the Confucius Institute, and organizations affiliated with the Chinese Ministry of Education, have rekindled the Department of Education’s interest in Article 117. A 2019 report by the Senate Subcommittee on Investigation found that more than 70 percent of colleges and universities received $ 250,000. It failed to report from the institutes known as Hanban or more.

The study called foreign donations to U.S. colleges and universities a “black hole,” which states that institutions regularly fail to report foreign gifts and contracts despite legal requirements.

Spritzer said the problem is not that institutions are reluctant to make their foreign grants public, but rather that there is a lack of clear formal guidance from the government.

ACE wrote several letters to the Department of Education in 2019 requesting clarification. Spritzer said their questions – including how much information should be included outside the country of origin of each gift, how gifts should be reported in advance, and whether the law gives gifts to alumni organizations – were largely ignored.

“Schools are working very hard to comply with Section 117. They are trying to be transparent,” Spritzer said. “The Department of Education is not making it very easy.”

Altenberg says the sudden and intense monitoring of foreign funding in higher education was at least partly motivated by politics during the Trump administration.

“There was a lot of political pressure on the previous department [of Education] The staff, and they took a very hostile view of the interaction with the higher education community in establishing consent, ”he said.

In an email Inside higher edA current spokesman for the Department of Education acknowledged the confusion and frustration among higher education institutions in navigating the law.

“The Department acknowledges that there are concerns about how Section 117 reporting requirements have been addressed in the past and is committed to helping higher education institutions understand and comply with them,” the spokesman wrote.

‘Compliance is as strong as application’

Prior to 2018, the Foreign Payment section of the Higher Education Act was rarely applied. According to the 2019 Senate Inquiry Subcommittee, between 2004 and 2019, the government did not send a single reminder to U.S. higher education institutions about foreign gift reporting requirements.

“For decades, the Department of Education has not asked for those reports,” Spritzer said. “We had organizations who were concerned when the department began the investigation, who identified the money through internal audits that should have been reported, self-reported it and then slapped the investigation themselves.”

Hedtler-Gaudett said the government has thrown the ball into its own oversight responsibilities.

“Consent is just as strong as application,” he said. “The need for disclosure only works when there is a policeman on the beat to make sure it happens. And if not here’s a new product just for you!

Doug White, a philanthropist and author, says it is often the most ethical practice to err on the side of transparency when reporting on sources of funding.

“The bottom line is honesty,” he said. “Not everyone agrees that you should take a certain amount of money. That is not the goal. But you will have a record of exposing yourself to your pricing system. ”

More reporting, more problems?

Higher education lobbyists have opposed the provisions of the Innovation Act, which would lower the reporting threshold. They argue that this will significantly increase the reporting burden on institutions as well as the Department of Education, which Spritzer says has already struggled to keep up with the amount of foreign gifts reported above the current $ 250,000 threshold.

“If you’re trying to find a needle in a haystack, you’re not going to enlarge the haystack,” he said.

Hedtler-Gaudett said that the argument that strong reporting requirements would be difficult for the organization is the weakest.

“These companies already have to keep a very close track of all these things for their own accounting purposes,” he said. “I don’t think the argument flies.”

He added that while strengthening requirements under the Innovation Act is a step forward for transparency, the reality of foreign payments in colleges and universities presents a more complex problem than resolving the law.

“The need for a wider universe of expression by lowering the threshold and tightening enforcement will hopefully lead to more compliance, but I think it only addresses one aspect of the problem,” he said. “Sometimes grants or financial flows can come from an entity that looks completely innocent but actually has a very blurred line between that organization and the state actors.”

Lots of examples of this dark area. Over the years, the Massachusetts Institute of Technology has partnered with Moscow Technical University Skoltech and helped fund and establish it before Russia suspended its relations with Ukraine in February 2010 after suspending relations. Although Skoltech is not technically affiliated with the Kremlin, it is a product of the Skolkovo Foundation, led by Dmitry Medvedev, a close ally of Vladimir Putin and deputy chairman of the Russian Security Council, led by Russian oligarch Viktor Wexelberg.

White said the transparency of foreign grants is so important for higher education institutions that there is a “revolving door” between academia and politics, think tanks and industry that have a hand in the country’s governance system. White said a financial relationship with foreign donors could lead to conflicts of interest between those institutions and their leaders.

“There is a national interest in ensuring that money from foreign sources does not infiltrate the United States into power policy-making,” White said. “The source of the money and how it was spent – these things need to be known to the public, not just internally.”

For Spritzer, the Foreign Gift Report has a plus aspect of the proposed update of the Innovation Act: they will clarify expectations and give higher education stakeholders a seat at the table through the process of formulating negotiation rules. He and other higher education lobbyists still oppose the stricter requirement, but he is hopeful that a compromise can be reached.

“We want to partner with the US government and Congress to address national security concerns,” Spritzer said. “We don’t want to report just to report.”

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