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Business Officer Magazine

Ensuring Safe Passage

If your institution intends to follow the crowd, with an international itinerary, study up on compliance and other organizational requirements-and involve your fellow travelers in the details.

By Bob Lammey and Nancy Maguire

BOM_F2No doubt about it: Activities and initiatives abroad are on the rise. Institutions of all sizes and types are looking for ways to compete for the top students and identify additional revenue opportunities, and venturing abroad can accomplish these twin goals.

To avoid compliance problems created by projects abroad, Karen Kearney, managing director of global business services at Stanford University, Stanford, California, advises chief business officers to take a proactive approach. "You need to get it [the structure] right up front, as that will save a lot of headache down the road," she suggests.

Arthur Tyler, deputy chancellor and chief operating officer at Houston Community College, Houston, Texas, puts international activities in the same category as any other business engagement. While he doesn't have a silver-bullet solution to every problem that may arise, he believes that most issues can be avoided by integrating the resources that already exist on his home campus—or by employing resources that can be easily and economically obtained. 

Under a concept known as permanent establishment, your institution may be required to register itself with a local tax authority in a foreign country.

At Middlebury College, Middlebury, Vermont, Cheryl Mullins, the compensation and benefits manager, says that with the help of a global operations committee, Middlebury has put a structure in place on the home campus that "creates economies of scale with support so we're not reinventing the wheel each time there's a new project." Mullins co-chairs the institution's global operations committee.

Five-Step Framework

To create a structure for your institution's international activities, you need to begin at home base and build from the most basic level up. Start with the schools or departments where many international activities first originate, move to the provost or research office, go to central administration, and then jump all the way up to the universitywide level of strategy and resource planning.

Many institutions structure their home campus support with a framework that can come together in five steps as shown in the figure.

1. Develop a list of current international activities. This list, a critical first step in creating your compliance program, will enable your institution to strategically examine current global programs and provide valuable information that can be used by faculty and staff, particularly for countries where multiple university interests may converge. For example, after assembling a consolidated inventory of activities, Middlebury College discovered it was in a much better position to formally evaluate risks, Mullins says.

Stanford also places a high value on its international inventory. A database of overseas activity allows Kearney to view a proposal in the beginning phase of a project, in order to conduct outreach and raise awareness. 

An added benefit to this step: Assigning someone on your team the task of collecting information centrally can help with your financial reporting on Schedule F of Form 990, for the Report of Foreign Bank and Financial Accounts (FBAR), as well as other necessary filings. You will also enhance risk management through the central monitoring of activities by ensuring that emergency evacuation planning and insurance coverages (health, general liability, and even auto/travel) are sufficient to protect your institution's employees and reputation abroad.

As you undertake this process, ask the questions below. The answers will help provide your institution's leadership with a strategic perspective on where you are today and help you decide where you would like to be tomorrow:

  • What types of international activities benefit our students and reputation? Academic study abroad programs? Research and clinical studies? Recruiting in foreign countries? Partnering activities, such as exchange or joint-degree programs?
  • In what countries or regions do we want to expand our international presence in the short and long terms?
  • Are we looking to generate more revenue beyond just tuition from foreign students coming here?

2. Get buy-in from the top. To lay the groundwork for your international structure, you need to persuade your president, provost, executive vice president, chief financial officer, and general counsel to come on board. Armed with an outline of your plan, you can demonstrate to leaders how the institution will find the right balance between managing strategic initiatives and risks.

If employees often travel abroad on university business, you may want to consider asking a central office to manage outgoing visas.

Houston Community College makes this step a priority. Before international programs can move forward, senior leaders must vet them and the board must approve them. The chief business officer's role in the process, explains Tyler, is to "ensure the board that we will have a net profit at the end of the day."

To engage leaders, some institutions find it helpful to assemble a senior-level committee of faculty and staff to map out the strategic direction of international activities. Indiana Wesleyan University (IWU), Marion, Indiana, takes this approach. Its global initiatives council, which meets every quarter, is composed of senior administrative leaders and members from colleges engaged in international activities. Chief Financial Officer Duane Kilty attributes much of IWU's success with managing activities to the provost, who is "very engaged in international initiatives, as he wants to make sure we get it right."

3. Recruit knowledgeable contacts. To be successful, central administration needs to collaborate with schools and departments that have an international focus. To build a communication link, some institutions appoint a single contact in each school or department who keeps abreast of new and existing programs abroad. These individuals can also serve as the points of contact for gathering information about programs for the database.

 After their appointment, these contacts often represent their respective areas on a college-level committee, whose members collaborate and communicate with each other and with a central administration representative about planned and current activities. While some institutions appoint a finance or administrative person within the school or someone within the dean's office, you may want to consider a faculty member who  can assume a leadership role in representing all of the school's international interests.

For example, at Middlebury College, members of the global operations committee are a mix of academics and administrators who help bring together those "who know about activities early on with those who have technical expertise," Mullins says.

4. Extend administrative responsibilities. The support and expertise that representatives from central administrative teams provide at home should be available for activities abroad. "We need to have the same oversight of international programs that we have here in the United States," Tyler emphasizes.

This includes all areas with a vested interest in activities abroad, such as risk management, finance, general counsel, sponsored research, and human resources. Depending on the level of your international activity, you may need to supplement current staff knowledge in certain areas. For example, Stanford decided to invest in an additional staff person with international experience in the human resources department, as administrators wanted someone "who knows what questions to ask," Kearney says.

The general counsel's office may be able to help you navigate complex overseas laws and regulations. For example, under a concept known as permanent establishment, your institution may be required to register itself with a local tax authority in a foreign country. In general, conducting income-producing activity, having faculty and staff working abroad, hiring local workers, and using local facilities can contribute to having a permanent establishment or employer risks, and invoke the need for local country reporting and compliance requirements. 

5. Keep outside expertise on standby. You maintain an entire infrastructure on your home campus to manage U.S. laws and requirements; replicating that same model abroad for every country in which your institution operates isn't economically realistic. Third-party advice can help you answer day-to-day questions about international compensation and benefits, legal entity requirements, employee-versus-contractor classification laws, and other country-specific topics.

At Houston Community College, Tyler taps into the expertise of paid professionals who understand the foreign business environment, as well as his colleagues at other institutions. He explains that he recently queried a Texas university about its center in Doha, because speaking with institutions that are already on the ground provides him with valuable insights.

Metrics of Success After Year One

After your first year of implementing an international support model, you will have established international designees within central-administration departments and within each relevant school or department. Now you're ready to take your model to the next level with these steps:

Know Your Policies

Numerous policies that already exist in domestic form, such as your code of conduct, may also apply to international activities. These policies need to be modified for international activities. Here's a list of the areas in which to examine your current policies as they apply to international activities:

  • Signing contracts or obligating the institution.
  • Opening and maintaining bank accounts.
  • Making purchases.
  • Leasing or buying office space.
  • Hiring independent contractors.
  • Complying with export controls, the U.S. Office of Foreign Assets Control, and the Foreign Corrupt Practices Act.

Recommend that committees meet at least quarterly. While it's important that committees stay current, you don't want your international appointees to feel too overwhelmed about their potential time commitments. If your international activity requires an increased frequency, you can move the meetings to a monthly schedule.

Establish a process for answering questions and solving problems. This is essential. If central administration can't demonstrate the ability to support the schools with the international expertise and advice they need on a timely basis, the model will break down quickly.

Identify policies critical to risk. Numerous policies may apply to international activities, with some being more critical in the short term than others. Many of these may already exist in domestic form, such as your code of conduct, and may just need to be modified for international purposes.

You may want to examine your current policies in the following areas as they apply to international activities:

  • Signing contracts or obligating the institution.
  • Opening and maintaining bank accounts.
  • Making purchases.
  • Leasing or buying office space.
  • Hiring independent contractors.
  • Complying with export controls, the U.S. Office of Foreign Assets Control, and the Foreign Corrupt Practices Act.

Conduct basic training. Your goal here is to help central administration and school contacts identify program characteristics that produce risks—not to train them to have the answers. To identify characteristics that produce risks, they need to understand three elements: the basics about a project, such as where international activities are occurring; the types of activities, such as study abroad, sponsored research, or a university office; and the characteristics of a program, such as whether it produces income, employs foreign individuals, or requires real estate.

Being able to identify risk factors will enable staff to help categorize which programs are higher versus lower risk. For example, the highest level of risk relates to most forms of income-generating activity, such as collecting tuition from a local student recruited for degree, certificate, or training programs in country. Receipts of fees for any services, including those for health-related consultative activities, would also be considered high risk.

Three More Nice-to-Haves

If your central administration gets really ambitious with its international support structure, you can enhance your operations with three additional activities:

International Web site. In addition to fostering collaboration between your schools, an international Web site can spell out policies and procedures for international activities, provide forms and waivers, explain emergency and safety procedures, and offer external resources, such as links to Web sites for the U.S. Department of State, Centers for Disease Control, and the U.S. Treasury's Office of Foreign Assets Control. 

Security risk management. Depending on the amount of activity in areas of potential security risk, your institution may want to establish a means of evaluating security risks before initiating new programs abroad in countries considered high risk, especially where students may be traveling. This could be accomplished by using one or a combination of the following approaches, which are listed in order from most economical to greatest requirement of resources:

  • Purchasing or developing an online training video to be viewed by students and employees before traveling abroad.
  • Obtaining security risk management assessments specific to countries where the institution has significant programs or activities.
  • Engaging a risk management specialist who is familiar with a particular country's or region's insurance and evacuation processes.
  • Training current staff and administrators on security-risk matters so they can make security evaluations when considering a new program. This typically requires an on-site visit.
  • Hiring a security risk management professional who knows how to identify risks specific to foreign countries for travel and logistical safety matters.

Outgoing visa office. If employees often travel abroad on university business—even on a short-term basis—you may want to consider asking a central office to manage outgoing visas. Left to their own accord, employees often obtain the equivalent of a tourist or business visa to gain entry into a country, thereby putting themselves and the university at risk. Although easier for individuals to obtain, a tourist or business visa is considered illegal if the employee intends to work in the foreign country on university business, even on a short-term basis.

This function can also be outsourced to a third-party provider.

Structure Supports Risk Management

As foreign laws increase and regulations grow more complex, an international support structure becomes a critical element in your institution's risk management model. Without a structure at home to manage your activities abroad, the ship on which your institution ventures overseas could hit some turbulent waters.

Securing the commitment of senior leadership, building consensus internally, generating the right level of communication, and putting in place the expertise to answer questions are essential components that will help your institution steer clear of potential hazards.

Bob Lammey is senior director, higher education and nonprofits, High Street Partners Inc., Boston. Nancy Maguire is project management specialist, NACUBO.

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Add to Your Knowledge Base

Setting up programs and activities in a foreign country often triggers local reporting and compliance requirements, which vary greatly by country. Examples of ongoing reporting and compliance requirements that may be necessary on a monthly or quarterly basis include:

  • Preparing and filing monthly financial statements with local authorities.
  • Maintaining books and records in accordance with local generally accepted accounting principles in local currency.
  • Preparing, filing, and coordinating payment of relevant statutory taxes, typically including business taxes and foreign-entity income taxes.
  • Preparing and filing returns for value-added tax (VAT)/goods and services
    tax (GST) where applicable.
  • Filing employee payroll income taxes associated with the payroll of local nationals and foreign employees (expatriates and third-country nationals).
  • Computing statutory employees' and employer's social insurance contributions, and additional required contributions in compliance with local regulations.
  • Annual payroll filing and issuance of W-2 equivalent.
  • Bookkeeping obligation that all books and records are appropriately "available for inspection" by local authorities.

The above list is a just a sampling of the useful information that's available on the NACUBO International Resource Center (IRC) Web site. This online resource offers information in areas such as cash management, finance, human resources, legal, reporting and compliance, research compliance, and risk management. You'll also find country-specific data, checklists, and tools from a variety of institutions, and useful links and resources at

Over the past year, NACUBO has sponsored six webcasts covering a variety of international topics, such as compliance requirements, risk management, and support on the home campus. You can access the archived webcasts under the Distance Learning tab at

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