New Bill Requires Universities to Publicly Disclose Foreign Gifts and Contracts Over $5,000, Sets Up Enforcement and Penalties

A new piece of legislation, the "Disclose Getting Involved in Foreign Transactions Act" (or Disclose GIFT Act), is aiming to bring more transparency to foreign money flowing into American colleges and universities. The bill mandates that institutions receiving significant federal funding must implement policies requiring faculty and staff to report foreign gifts above a minimal value and foreign contracts worth $5,000 or more annually. It specifically targets institutions eligible for federal student aid (Title IV) that have also received over $50 million in federal research funds in recent years or get funding under Title VI.

Shining a Light on Foreign Funds

The core of the bill is mandatory disclosure. By July 31st each year, employees at covered institutions would need to report gifts from foreign sources (governments, entities, individuals) that exceed a 'minimal value' (which will likely be defined by regulation). More significantly, any contract with a foreign source valued at $5,000 or more, or even contracts with undetermined monetary value, must be reported. Crucially, any contract, regardless of value, with a designated "foreign country of concern" or "foreign entity of concern" must be disclosed, including the full contract text. This aims to create a clearer picture of financial relationships between university personnel and foreign entities, particularly those deemed potentially risky to U.S. interests.

Your Right to Know: The Public Database

Transparency isn't just internal under this act. Institutions must create and maintain a publicly accessible, searchable online database detailing these reported gifts and contracts. This database needs to be updated within 30 days of the report being received and must keep the information available for five years. Anyone could search this database by date, country, university department, and the name of the foreign source. The idea is to allow public scrutiny of foreign financial ties within academia.

Beyond the Bucks: Managing Risks

The Disclose GIFT Act goes beyond simple reporting. It requires these universities to establish and maintain a plan specifically designed to "identify and manage the potential risk of espionage" linked to these foreign gifts and contracts. While details of such plans aren't fully specified, the requirement points towards institutions needing proactive strategies to assess and mitigate security concerns arising from foreign funding or partnerships, especially those involving entities flagged as concerns by the U.S. government. Institutions also need to keep records of who made disclosures, likely to aid potential future investigations.

Putting Teeth into Transparency: Enforcement & Penalties

Failure to comply carries significant consequences. The Department of Education is tasked with investigating potential violations, and the Attorney General can pursue civil action against institutions that "knowingly or willfully" fail to report as required. If found non-compliant, universities must cover the government's investigation and enforcement costs. Fines are substantial: the greater of $250,000 or the unreported amount for a first offense, doubling to $500,000 or twice the unreported amount for subsequent violations. Perhaps the biggest stick is that institutions facing three civil actions for non-compliance become ineligible for federal student aid programs (like Pell Grants and federal student loans) for at least two years, a potentially devastating blow. To manage compliance, institutions must designate specific officers responsible for adherence.

Defining Concerns and Improving Oversight

The bill relies on existing legal definitions for "foreign country of concern" (referencing 10 U.S.C. 4872) and "foreign entity of concern" (referencing 42 U.S.C. 19221(a) and a list from the FY2019 National Defense Authorization Act), adding entities the Secretary of Education deems detrimental to national security. A single point of contact within the Dept. of Education will handle inquiries and maintain a public list of these concerning countries and entities. Additionally, the Comptroller General is directed to study how different government agencies can better coordinate the enforcement of these rules, suggesting an awareness of potential bureaucratic hurdles.