Officials said they have “concerns” about newly proposed federal guidelines for reporting foreign gifts to the U.S. Department of Education.
Thirty higher education organizations wrote a letter to the department objecting to the proposal, which would provide formal guidance to comply with a section of the Higher Education Act that requires universities to report foreign gifts exceeding $250,000. University spokeswoman Crystal Nosal said GW shares “several concerns” described in the letter, which argues that the new guidance burdens universities with a “significant increase” in cost.
“After reviewing the notice, it is clear that these new requirements will have a significant impact on universities,” Nosal said in an email.
Organizations signing onto the letter believe the proposed guidelines exceed the department’s legal authority under Section 117 of the Higher Education Act to collect the information and confer no “discernible benefits,” according to the letter.
Nosal said that if the proposed rules are finalized as is, GW will need to hire additional staff to collect the data the University is required to report under the “greatly expanded” rule, and “several” departments will have to begin additional tracking and internal reporting to record the necessary data. The Division of Development and Alumni Relations, which oversees philanthropy and fundraising, currently has at least 13 open positions.
Nosal added that GW has consistently reported foreign income as required by the law, but the Education Department has previously issued “little guidance” on how to comply with the act.
“The notice was proposed with little input from the higher education community,” Nosal said. “Hopefully, the Department of Education will listen to some of the concerns raised and work with the higher education community to identify an appropriate scope and process for reporting.”
Nosal declined to say the amount GW has received in foreign gifts, but disclosures with the Department of Education reveal that the University accepted about $135.3 million in foreign gifts or contracts exceeding $250,000 between June 2013 and June 2019.
The letter – written by the American Council on Education, which includes GW as a member, and undersigned by 29 other organizations – states that the proposal could lead to “differing reasonable interpretations” of foreign gift reporting requirements, some of which exceed the scope of the requirements enumerated in the Higher Education Act.
An American Council on Education spokesperson declined to comment, deferring to the letter.
“Aspects of the proposed information collection would go far beyond the plain language of Sec. 117, clearly directing institutions to make disclosures – with no statutory basis – of a vastly expanded amount of information and documents,” the letter states.
The letter states that the proposed rule possibly implies that all foreign gifts and contracts must be reported, even though the law requires that administrators report only amounts that exceed $250,000.
The groups argued in the letter that the guidelines – which would require disclosure of foreign gifts for organizations that “operate substantially for the benefit” of a university – potentially “unlawfully” expand the definition of a higher education institution to include related organizations like alumni associations and athletic boosters.
“The department’s information collection request requires such a large amount of information that it will actually undermine, as opposed to increase, the transparency of the relationships colleges and universities have with foreign individuals and entities,” the letter states.
The signers also claimed the proposal would require universities to divulge intellectual property and proprietary information by requiring “true” copies of foreign contracts without guaranteeing confidentiality.
The letter also states that the department “vastly” underestimates the burden and cost of the proposed reporting requirements. The department estimates the burden at 10 hours per response, according to documents detailing the Education Department’s proposed rule.
“This will be an enormously burdensome, costly and difficult task, particularly for larger institutions, where there could be hundreds or more of such documents during each six-month reporting time frame,” the groups wrote.
About 40 other organizations, universities and individuals wrote to the Department of Education during the 60-day comment period, which ended Nov. 6.
A Department of Education spokesperson said the department “requested comments on modernization of the information collection as required by law” and is “currently reviewing those comments.”
The spokesperson added that the department cannot comment on specific public comments but will address all relevant comments in “a Federal Register publication sometime in the near future.”
Sarah Mangelsdorf, the president of the University of Rochester, said her university is “deeply concerned” about the proposal because it would require her institution to hire additional staff and divulge information beyond the scope of the law.
She said the proposal “suggests” that institutions will need to report individual tuition payments from foreign students and “possibly” payments from foreign patients for medical care.
“This reporting would not only be incredibly time consuming to make, but it would likely violate the Family Education Rights and Privacy Act and the Health Insurance Portability and Accountability Act,” Mangelsdorf said in a letter.
Henry Stoever, the president and chief executive officer of the Association of Governing Boards of Universities and Colleges – an organization that counsels higher education institutions on governance issues – said the proposal “exceeds” the Education Department’s authority and imposes “unreasonable” and “unjustified” requirements that institutions do not have the information to answer.
“AGB’s member boards and the institutions they oversee are willing to work with the Department to comply with Sec. 117 to provide statutorily required disclosure,” Stoever wrote in a letter. “However, the effects of complying with this information collection could result in significant challenges for boards and diminish the focus on successfully serving their students.”
Stoever said the guidelines would require universities to disclose identifying information regarding foreign donors, which is at “odds” with longstanding guarantees for anonymity at “many” institutions, according to the letter.
“Practically speaking, this would preclude any anonymous gifts from foreign individuals, even very modest gifts, which is likely to have a chilling effect on the willingness of such donors to make charitable contributions at a time when affordability is a key issue on campuses and among policymakers,” Stoever wrote.
