New 'RIFA Act' Mandates Disclosure of University Investments in 'Foreign Adversaries': Non-Compliance Could Cost Millions, Starting 2025

The "Reporting on Investments in Foreign Adversaries Act" (RIFA Act) is a new law requiring big, private universities to tell the government – and the public – about their investments linked to countries or companies considered national security risks. This isn't about all investments, just those tied to "foreign countries of concern," which includes China and Russia, and can be expanded by the Secretary of Education. Think of it like this: if a university's endowment fund has money in companies from these places, they have to report it, starting with investments made in 2024.

Digging Into the Details

The RIFA Act focuses on transparency in how universities invest their money, especially when those investments might involve countries not always on the best terms with the U.S. The law, as stated in SEC. 2, requires "specified institutions"—basically, non-public universities with over $6 billion in assets or over $250 million invested in these "countries of concern"—to file an annual report detailing these investments. This report, due by July 31st each year, has to list every investment bought, sold, or held in the previous calendar year that's linked to a "foreign country or entity of concern." It also needs to put a dollar value on these holdings and any profits made from selling them. For example, if a university holds stock in a Chinese tech company, that needs to be disclosed, along with its value. If they sold shares in a Russian energy firm, that sale, and any profit, goes in the report. Even indirect investments through things like mutual funds count, unless the fund can prove it's clean of these concerning investments (SEC. 2).

Real-World Rollout and Potential Roadblocks

Starting May 31st of the year after this law is enacted, all these reports will be dumped into a searchable, public database. This means anyone—students, parents, journalists—can see where these big universities are putting their money. A designated "compliance officer" at each university is on the hook for making sure these reports are accurate (SEC. 2). The penalties for messing this up are steep. The Department of Education will investigate potential violations, and if an institution isn't complying, they could be forced to pay all the costs of the investigation, plus fines ranging from 50% to 200% of the value of the investments in question (SEC. 2). So, if a university "forgets" to report $10 million in investments, they could be looking at a fine of $5 million to $20 million. And if they keep messing up for three years straight, they lose access to federal student aid programs for at least two years (SEC. 2). That's a huge deal for any university.

The practical challenge here is in the details. Defining "foreign entity of concern" is partly tied to existing laws about research and competition (SEC. 2), but it could get tricky. Plus, universities with complex investment portfolios might find it a real headache to track every single investment that might fall under this law. While the goal is to protect national security by shining a light on potentially risky investments, the law could also create a significant administrative burden for universities, and it remains to be seen how this increased scrutiny might affect their investment strategies.