You have /5 articles left.
Sign up for a free account or log in.

U.S. Secretary of Education Betsy DeVos

U.S. Department of Education

The Department of Education continues to step up its scrutiny of universities receiving foreign gifts and contracts. In going after Harvard and Yale Universities last week, the department sent a clear signal it was serious about enforcing the law, which requires colleges to report all gifts and contracts involving foreign sources valued at $250,000 or more.

The Education Department's new investigations into whether Harvard and Yale comply with reporting requirements follow other investigations launched over the past year into the disclosure of foreign funding at Cornell, Georgetown, Rutgers and Texas A&M Universities as well as Massachusetts Institute of Technology and the University of Maryland.

Department officials say the agency's efforts to enforce Section 117 of the Higher Education Act, which addresses disclosure of gifts and contracts, have led to the reporting of approximately $6.5 billion in previously undisclosed foreign money since last July 1.

Reed D. Rubinstein, the principal deputy general counsel at the department, has indicated that those efforts have "also revealed disturbing facts."

"One university received research funding from a Chinese multinational conglomerate to develop new algorithms and advance biometric security techniques for crowd surveillance capabilities," Rubinstein wrote in a Nov. 27 letter to the chairman of the U.S. Senate Permanent Committee on Investigations. "One university had multiple contracts with the Central Committee of the Communist Party of the People's Republic of China … Another university had a relationship with Kaspersky, a Russian company that has been banned from contracting with the U.S. Government."

College officials have pushed back, arguing that the Education Department's aggressive efforts may go beyond the scope of what the law requires. The college officials also say the department has taken an unnecessarily combative, rather than collegial, approach to enforcing a law that no one much paid attention to in the past.

Secretary of Education Betsy DeVos has not been swayed by the criticisms of the department's work.

“This is about transparency,” she said in a press release last week about the Harvard and Yale investigations. “If colleges and universities are accepting foreign money and gifts, their students, donors, and taxpayers deserve to know how much and from whom. Moreover, it’s what the law requires.”

She pointedly noted that the investigations have yielded results.

“Unfortunately, the more we dig, the more we find that too many are underreporting or not reporting at all,” she said in the release. “We will continue to hold colleges and universities accountable and work with them to ensure their reporting is full, accurate, and transparent, as required by the law.”

Many universities have in fact been lax in their reporting over the years. A 2019 report by the Senate Permanent Subcommittee on Investigations found that nearly 70 percent of colleges that received $250,000 or more in annual funding from Hanban, the Chinese government entity that funds the Confucius Institutes located at various American colleges and high schools, failed to report the funding. An increasing number of universities have closed these centers for Chinese language education and cultural programming, in response to pressure from congressional lawmakers.

Karen Peart, a Yale spokeswoman, said the university failed to submit required foreign gift reports for the years 2014 to 2017, an oversight that she said was corrected in November.

“Yale believes its reporting is now current and complete,” Peart said. She said Yale is preparing a response to the department's request for further information.

"Yale takes very seriously the importance of ensuring that funding from foreign sources does not in any way compromise American interests, and it respects the Education Department’s requirements about reporting of such funding," Peart said. "Yale also believes that a signal strength of American higher education has long been the quality of its international relationships and collaborations, which have helped our universities produce exceptional scholarship and research and exceptionally prepared graduates, to the direct benefit of the American people."

Terry Hartle, the senior vice president for government and public affairs at the American Council on Education, said the stepped-up enforcement of the reporting requirement, which was enshrined in law in 1986, is a new priority of the Trump administration. He said while colleges had stopped paying much attention to the law, the department bears culpability for the lax reporting, having never issued regulations to implement the law. He noted that the department only issued informal guidance in 1995 and 2004.​

“There’s no doubt that colleges and universities need to put more emphasis on Section 117 reporting,” Hartle said. “Having said that, there’s also very little doubt that the Department of Education would prefer to have an issue rather than to fix a problem.”

Hartle explained that higher education leaders have been eager to meet with department officials to discuss compliance but said their requests for meetings have been refused.

"We are very anxious to fully and completely comply with the letter and spirit of Section 117," he said. "The Department of Education could facilitate this enormously by engaging in conversations. They refuse to do that."

Instead, the department "has indicated that its approach to collecting data on 117 will be based on investigations rather than collaboration to get the data," Hartle said.

An Education Department official suggested the reporting requirements are not that complicated. 

"The facts do not provide the Department with a reasoned basis for concluding that Section 117 reporting is too complicated or difficult for higher education, with all of its intellectual and financial resources, to manage," the official said via email.

The Harvard and Yale Investigations

The department’s investigations into Harvard and Yale are notable for their expansive scope and focus on two of the country's most elite institutions.

In its letter to Yale, the Education Department asks for “all records of, regarding, or referencing gifts, contracts, and/or restricted or conditional gifts or contracts from or with a foreign source to the Institution” since August 2013, including “true copies” of contracts and donor agreements.

The letter also requests “a list of each program, activity, and/or person at the institution (e.g., an Islamic law program, a Confucius Institute, a research scientist funded in whole or substantial part by a foreign corporation, a foreign graduate student studying physics under a scholarship or other contractual arrangement with a foreign government, a fellow in a cultural studies program created by endowment or other gift by a foreign national) that is in whole or in substantial part directly funded or supported by and/or employed due to a gift, contract and/or restricted or conditional gift or contract with or from a foreign source” from Aug. 1, 2013, to the present.

Another line item asks Yale to list all gifts and contracts that have benefited specific entities of the university, including the Paul Tsai China Center at Yale Law School, the Jackson Institute of Global Affairs and the Kerry Initiative, a program founded by John Kerry, former secretary of state under President Obama. The letter asks throughout for information about "all" gifts and contracts, not just for those at or above the $250,000 threshold that typically triggers a reporting requirement.

"The letter speaks for itself," the Education Department official said. "We are requesting records of all foreign gifts and contracts, regardless of size."  

"Taking the words on the page at face value, it seems to me to be a dramatic expansion of the kinds of things that are typically reported or required to be reported under the statute," said Alex Hontos, a partner at the law firm Dorsey & Whitney, which represents a number of large academic institutions in government enforcement matters.

The letter to Harvard makes similarly expansive requests. The Education Department says in its letter it is “aware of information suggesting Harvard University lacks appropriate institutional controls and as a result, its statutory Section 117 reporting may not include and/or fully capture all reportable gifts, contracts and/or restricted and conditional gifts or contracts from or with foreign sources.”

The department cites as evidence for the alleged lack of appropriate controls the arrest last month of Charles Lieber, a Harvard professor and chair of the chemistry department, who was accused of failing to disclose payments of $50,000 a month he received in return for his participation in a Chinese government-sponsored talent recruitment program. The department's letter also cites a statement Harvard issued in September about a review of donations it received from the convicted sex offender Jeffrey Epstein, in which Harvard president Lawrence S. Bacow noted that Harvard's "decentralization makes such a review more complicated than it would be at some other institutions."

Harvard said last week that it is reviewing the Education Department’s notice of investigation and preparing a response.

Sending a Message

Meanwhile, the Education Department posted a notice in the Federal Register on Feb. 10 of a new form it proposes to use to collect information from universities about the foreign gifts and contracts they receive.

ACE and 29 other higher education groups had raised concerns that an earlier version of the proposed information collection request, or ICR, exceeded the scope of the department’s information-collecting authority under Section 117.

ACE said that while the Education Department has since “backed away from some of the more problematic provisions in the original ICR,” the association continues to have concerns.

“The new ICR … still includes the requirement to submit the names and addresses of anonymous individual donors, a provision ACE and others in the higher education community oppose,” ACE said in a Feb. 11 statement. “ED says it will protect the identity of such donors, but it is not clear that promise of confidentiality can be kept once the documents are in federal possession. ACE also opposes the requirement of supplying to ED true copies of contract and gift agreements that ED will now address under a separate rulemaking process, due to concerns over maintaining the confidentiality of these documents.”

Several universities investigated by the department said they had improved their processes for tracking and reporting gifts and contracts from foreign sources.

"In response to our recent review under the U.S. Department of Education, Rutgers has improved and clarified our procedures to ensure compliance with our foreign gift and contract disclosure requirements. All gifts received and contracts executed with foreign sources are reported semi-annually in accordance with the specified reporting timelines, deadlines, and financial thresholds," Rutgers said in a statement.

MIT said it identified ways to improve its foreign gift and contract reporting process more than a year ago.

"MIT’s reporting since January 2019 has been based on these improved processes," the university said in a statement. "The Institute is committed to working constructively with federal officials to address the department’s questions.”

Meanwhile, Texas A&M said it had actually overreported its foreign funding to the department by more than $2 million.

"Texas A&M has been praised by federal leaders for our fervent commitment to protecting our institution from intellectual property theft and undue foreign influence," a spokeswoman said.

It seems clear the federal scrutiny of gifts and contracts will not be going away any time soon. International collaborations in general -- and collaborations with China in particular -- are coming under increased scrutiny from lawmakers, who have raised alarm about the risk of foreign actors stealing research funded by American tax dollars. To a large degree, the newfound scrutiny of universities' foreign collaborations has been bipartisan in nature.

Indeed, U.S. senators Rob Portman, the chairman of the Senate's Permanent Subcommittee on Investigations and a Republican, and Tom Carper, the ranking member of the committee and a Democrat, issued a joint statement praising the Education Department's investigations last week.

"The fact that $6.5 billion in foreign gifts to U.S. institutions went unreported until now is shocking and unacceptable," they said. "We would urge the Department to also work with institutions to improve the reporting process to increase transparency and ensure that U.S. schools are in compliance going forward."

The Education Department official said DeVos is the first education secretary to hold colleges accountable for reporting.

"First, this is an issue of national security because, among other concerns, foreign money (from governments, government-run corporations/NGOs, and individuals) may come with 'strings attached' that compromise academic freedom," the official wrote. "These money streams raise serious questions about academic program/research integrity and the security of intellectual property. Second, colleges and universities are heavily subsidized by the American taxpayer. They must be held accountable [to] our American students, parents, and taxpayers, as well as the U.S. government, for complying with our laws, including transparency laws. Third, the vast underreporting in what is a very basic regulatory system suggests a potentially serious lack of internal financial controls -- this is very concerning in light of the fact that colleges and universities have extensive federal audit requirements and their failure or decision not to track foreign money could be a symptom of problems elsewhere as well."

Hontos, the lawyer with Dorsey & Whitney, said colleges, universities and academic research institutions should be prepared for such heightened scrutiny going forward.

"Certainly, if the United States government is going after Harvard and Yale and doing it in an open way, posting these kinds of open letters on a website and making a big splash about it, that’s really an effort by the government to send a message -- and that message is supposed to be heard throughout academia," he said.

Next Story

More from Fundraising