Why don’t we know what foreign money is entering our universities?

In August 2022, thanks to an investigation by the Daily Beast, a University of Maryland, College Park professor was revealed to have received a six-figure grant from Alibaba, the Chinese e-commerce company, to build surveillance software. This would be concerning enough, but to make matters worse, the professor was at the same time receiving a grant from the U.S. Department of Defense to conduct similar research. While it isn’t illegal for U.S. postsecondary institutions to receive contributions from foreign entities, the incident raises troubling questions about the money entering our education system. It’s especially concerning when these institutions are doing similar work for different governments, directly or indirectly: the Chinese government uses Alibaba to track Uighurs, for example. 

Recognizing the need for greater transparency on this issue, the Trump administration published a memorandum, which the Biden administration endorsed, to ensure that researchers “with significant influence on the United States R&D enterprise fully disclose information that can reveal potential conflicts of interest.” This was a step in the right direction, but preventing similar national security concerns in the future will require involvement from Congress. The most important area for reform is Section 117 of the Higher Education Act of 1965. The law requires postsecondary institutions to report to the Department of Education the contributions they receive from individuals and institutions from foreign countries. 
As currently written, Section 117 would not have tracked this contribution from Alibaba.The reporting threshold for contributions is $250,000 individually or in aggregate, meaning that Alibaba’s $125,000 donation could legally have gone unreported, and the University of Maryland could have decided not to report the contribution to the Department of Education at all. We only know about this conflict of interests because of the Daily Beast’s reporting. What else could we be missing, even from universities following the law? 

Of the $2.7 billion that postsecondary institutions have received from China, we do not know when $800 million arrived. Even worse, according to the Department of Education’s own data, they lack information on who specifically gave money to a given institution, making it difficult to determine if nefarious entities are entering into partnerships with American universities.

The Department of Education is not helping in transparency. In a presentation back in July on how to comply with reporting payments, they suggested a method to minimize reporting of payments.  

Congress has recently been stirred to action to track these payments. The recently passed CHIPS and Science Act created an Office of Research Security and Policy within the National Science Foundation (NSF) with an annual budget of $6 million, tasked, in direct reference to Section 117, with monitoring foreign contributions to U.S. postsecondary institutions that receive NSF research grants. But unlike with Section 117, the Office’s reporting threshold for contributions is $50,000, rather than $250,000, meaning that reporting contributions such as Alibaba’s would be mandatory. More reported contributions will allow for greater accountability.

Transparency problems remain, however. The legislation does not make clear whether the NSF will publish the contributions publicly or even report that information to the Department of Education. If the data is kept private, the public will have only the Section 117 data published by the Department of Education to use. And because the CHIPS and Science Act did not lower the reporting threshold for Section 117 to match the NSF’s threshold, the Department of Education and NSF could have conflicting amounts of gifts tracked yearly, making it only more difficult to understand exactly what money is flowing into our colleges and universities. 

This difference in reporting thresholds could easily have been avoided, given that earlier bills that passed the House and Senate— the COMPETES Act and the United States Innovation and Competition Act—had language to update the thresholds. But the mistake can just as easily be fixed: Congress should pass legislation to standardize the reporting thresholds between the Department of Education and the NSF and promote greater data transparency. The coming 118th Congress presents a new opportunity to reform Section 117 and prevent future national security scandals. 

The American people deserve to know how foreign entities are influencing American higher education. Strengthening reporting requirements to ensure transparency deserves bipartisan support.

Lars Erik Schönander is Policy Technologist at Lincoln Network.