Foreign Gift Reporting

U.S. colleges and universities that receive charitable gifts from a foreign source, the value of which is $250,000 or more within a calendar year, must file a disclosure report with the Secretary of the U.S. Department of Education twice a year. Additional disclosures are required for restricted or conditional gifts/contracts and for institutions that are owned or controlled by a foreign entity.

The reports are due on January 31 and July 31, whichever is sooner. The reporting requirements fall under the Section 117 of the Higher Education Act. This federal foreign gift reporting requirement was enacted more than thirty years ago. However, the Department of Education has never issued formal guidance for the requirement, leaving institutions to interpret the law on their own.

The Department of Education has an online reporting system through which institutions must submit their Section 117 information. That information is posted for the public on the Department's website. 

How to Report

Institutions must submit their foreign gift reports using the online reporting system, available at https://partners.ed.gov/ForeignGifts. See the Department’s fact sheet, specifically under Appendix A, to understand what information must be reported. Advancement staff should coordinate with their president/chancellor's, financial aid and/or chief financial officer's office when submitting the form.

Below is Section 117 of the Higher Education Act, which outlines the disclosure requirement and the information that institutions must include in their disclosure reports, along with additional resources. Background information and additional resources related to Section 117 can be found on the Department’s website.

Legislative and Regulatory Issues on Foreign Gift Reporting

In recent years, colleges and universities have faced increased scrutiny over foreign gifts because of national security concerns at the Department and in Congress as policymakers have grown more hawkish about foreign influence. Republicans of the House Education and Workforce Committee sent a letter to the Department of Education in April 2023 requesting information on if universities were complying with Section 117 and what steps the Biden Administration is taking to enforce it.

In May 2023, the Department of Education announced it is seeking public comments on the reporting requirements in Section 117 as the Department considers changes to the disclosures. The Department is soliciting information on whether the disclosures are necessary for the proper functioning of the Department and the compliance burden the disclosures pose on institutions, among other topics.

The Department is expected to make limited changes to the requirements and shift the primary responsibility for administering Section 117 from the Office of the General Counsel to Federal Student Aid. Despite encouragement from those in higher education, the Department declined to undertake a formal rulemaking process for Section 117, which would offer stakeholders a better opportunity to engage with the process and greater clarity for impacted institutions.

Higher education associations and institutions have sought further clarification of the rules for which formal regulations have never been issued. Guidance is needed with regard to:

  • gift reporting,
  • definition of a gift,
  • gifts to Institutionally Related Foundations and other affiliated entities,
  • restricted/conditional gift disclosure, and
  • filing missed or amended reports.

Without further clarification from the Department of Education, it is difficult, if not impossible, for colleges and universities to comply fully with the requirements of Section 117.

In 2021, Senators Marco Rubio (R-FL) and Kevin Cramer (R-ND) introduced Greater Insight into Foreign Transactions (GIFTS) in Higher Education Act (S. 2593), which would lower the threshold that requires U.S. colleges and universities to disclose foreign gifts or contracts from $250,000 to $50,000 for countries designated as foreign adversaries. The legislation would extend disclosure requirement to faculty and staff and instruct federal agencies to not send any federal funds to colleges or universities if they violate the disclosure requirements. As of May 2023, the bill had yet to be reintroduced in the 118th Congress.

Legislation to lower the reporting threshold and extend the disclosure requirements to faculty was also included in early versions of both chamber’s China competitiveness bills last Congress that ultimately became the CHIPS Act. Opponents of the change, which did not make it into the final package, argued lowering the reporting threshold to $100,000 (House version) or $50,000 (Senate version) would dramatically increase the compliance burden on colleges and universities and overwhelm the Section 117 reporting system. Policymakers are discussing assembling another China competitiveness bill in the 118th Congress where we could again see some members push for lowering the reporting threshold.

Resources

Section 117 of the Higher Education Act - Disclosure of Foreign Gifts

Whenever any institution is owned or controlled by a foreign source or receives a gift from or enters into a contract with a foreign source, the value of which is $250,000 or more, considered alone or in combination with all other gifts from or contracts with that foreign source within a calendar year, the institution shall file a disclosure report with the Secretary on January 31 or July 31, whichever is sooner.

Each report to the Secretary required by this section shall contain the following:

  1. For gifts received from or contracts entered into with a foreign source other than a foreign government, the aggregate dollar amount of such gifts and contacts attributable to a particular country. The country to which a gift is attributable si the country of citizenship, or if unknown, the principal residence for a foreign source who is a natural person, and the country of incorporation, or if unknown, the principal place of business, for a foreign source which is a legal entity.
  2. For gifts received from or contracts entered into with a foreign government, the aggregate amount of such gifts and contracts received from each foreign government.
  3. In the case of an institution which is owned or controlled by a foreign source, the identity of the foreign source, the date on which the foreign source assumed ownership or control, and any changes in program or structure resulting from the change in ownership or control.

Notwithstanding the provisions of subsection (b), whenever any institution receives a restricted or conditional gift or contract from a foreign source, the institution shall disclose the following:

  1. For such gifts received from or contracts entered into with a foreign source other than a foreign government, the amount, the date, and a description of such conditions or restrictions. The report shall also disclose the country of citizenship, or if unknown, the principal residence for a foreign source which is a natural person, and the country of incorporation, or if unknown, the principal place of business for a foreign source which is a legal entity.
  2. For gifts received from or contracts entered into with a foreign government, the amount, the date, a description of such conditions or restrictions, and the name of the foreign government.
  1. State Requirements

If an institution described under subsection (a) is within a State which has enacted requirements for public disclosure of gifts from or contracts with a foreign source that are substantially similar to the requirements of this section, a copy of the disclosure report filed with the State may be filed with the Secretary in lieu of a report required under subsection (a). The State in which the institution is located shall provide to the Secretary such assurances as the Secretary may require to establish that the institution has met the requirements for public disclosure under State law if the State report is filed.

2. Use of Other Federal Reports

If an institution receives a gift from, or enters into a contract with, a foreign source, where any other department, agency, or bureau of the executive branch requires a report containing requirements substantially similar to those required under this section, a copy of the report may be filed with the Secretary in lieu of a report required under subsection (a).

All disclosure reports required by this section shall be public records open to inspection and copying during business hours.

  1. Court Orders

Whenever it appears that an institution has failed to comply with the requirements of this section, including any rule or regulation promulgated under this section, a civil action may be brought by the Attorney General, at the request of the Secretary, in an appropriate district court of the United States, or the appropriate United States court of any territory or other place subject to the jurisdiction of the United States, to request such court to compel compliance with the requirements of this section

2. Costs

For knowing or willful failure to comply with the requirements of this section, including any rule or regulation promulgated thereunder, an institution shall pay to the Treasury of the United States the full costs to the United States of obtaining compliance, including all associated costs of investigation and enforcement.

The Secretary may promulgate regulations to carry out this section.

For the purpose of this section -

1. the term "contract" means any agreement for the acquisition by purchase, lease, or barter of property or services by the foreign source, for the direct benefit or use of either of the parties;

2. the term "foreign source" means-
     (A) a foreign government, including an agency of a foreign government;
     (B) a legal entity, governmental or otherwise, created solely under the laws of a foreign state or states;
     (C) an individual who is not a citizen or a national of the United States or a trust territory or protectorate thereof; and
     (D) an agent, including a subsidiary or affiliate of a foreign legal entity, acting on behalf of a foreign source;

3. the term "gift" means any gift of money or property;

4. the term "institution" means any institution, public or private, or, if a multicampus institution, any single campus of such institution, in any State, that-
     (A) is legally authorized within such State to provide a program of education beyond secondary school;
     (B) provides a program for which the institution awards a bachelor's degree (or provides not less than a 2-year program which is acceptable for full credit toward such a degree) or more advanced degrees; and
     (C) is accredited by a nationally recognized accrediting agency or association and to which institution Federal financial assistance is extended (directly or indirectly through another entity or  person), or which institution receives support from the extension of Federal financial assistance to  any of the institution's subunits; and

5. the term "restricted or conditional gift or contract" means any endowment, gift, grant, contract,  award, present, or property of any kind which includes provisions regarding-
     (A) the employment, assignment, or termination of faculty;
     (B) the establishment of departments, centers, research or lecture programs, or new faculty  positions;
     (C) the selection or admission of students; or
     (D) the award of grants, loans, scholarships, fellowships, or other forms of financial aid restricted to students of a specified country, religion, sex, ethnic origin, or political opinion.

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