The Department of Education has released a new report that alleges “pervasive noncompliance by colleges and universities” in the reporting of foreign gifts and contracts totaling $250,000 or more as required by Section 117 of the Higher Education Act. The report claims to have uncovered approximately $6.5 billion in previously unreported funds and cites “[t]he threat of improper foreign influence in higher education” as a driving force behind the investigation.
ED first began efforts to revamp foreign gift reporting requirements in Fall 2019, and many of the sizeable proposed changes drew concern from the higher education community. NACUBO, in several comment letters led by the American Council on Education, pushed back on many of the expanded disclosures that ED proposed. In response, ED scaled back some of its reporting changes but moved ahead with others, and launched a new foreign gift reporting portal this summer. The higher education community had urged ED to delay implementation of the new requirements in light of the ongoing COVID-19 pandemic, but the department declined to do so.
Higher education advocates at many associations, including NACUBO, have raised concerns that ED’s reporting changes and investigative efforts into this issue have exceeded the scope of the existing legislative text of Section 117 without following the required rule-making processes. Additionally, many in the higher education community have repeatedly requested further conversations around and compliance guidance for Section 117 from the department that has gone almost entirely unheeded. While ED did list a number of “planned activities” at the end of its report to enforce greater foreign gift reporting compliance, no further compliance resources or guidance for institutions was issued.