Model Legislation to Track Foreign Funds to American Universities

In September 2024, the House Education and Workforce Committee and the House Select Committee on the Chinese Communist Party uncovered a troubling fact: federal agencies had inadvertently bolstered China’s military capabilities by funding researchers affiliated with American universities who partnered with Chinese universities.[1] These research partnerships were also funded by defense- and security-linked Chinese universities and Chinese corporations, such as Huawei.[2] While the partnerships were framed as academic cooperation, American researchers transferred sensitive knowledge on military technologies, including high-performance explosives and drone targeting systems—knowledge that was developed with funding from the U.S. Department of Defense. Blacklisted Chinese companies like Huawei disguised their funding by channeling money to American universities through intermediaries. The U.S. government lacked visibility into many of these collaborations because the universities involved had failed to report the funds, as required by federal law.[3]

This situation highlights the key challenge that opponents of foreign influence face: foreign influence operates in the shadows, allowing malicious actors to disguise their true intentions as genuine intellectual exchange. The implications extend beyond China. Qatar, which heavily restricts press freedoms in its own country, has funded professorships at Northwestern University in journalism, communications, and Middle East studies, among others.[4] Universities such as Harvard and Georgetown have accepted multimillion-dollar donations from Arab countries to establish Middle East studies centers, which promote curricula that align with their geopolitical agendas.[5] Transparency is essential to expose influence campaigns from adversarial foreign actors.

In recent years, the discussion of what to do about foreign influence on campus has centered on Section 117 of the Higher Education Act, which requires universities to disclose foreign funding to the Department of Education (ED).[6] Reformers have pointed out that Section 117 does not include adequate enforcement provisions and that it excludes critical information on foreign funds, such as the purpose of the funds and the donor name.[7]

Improving Section 117 is an important task, though typical partisan gridlock now characteristic of Congress has stymied reform efforts. In the meantime, states committed to monitoring potentially harmful foreign funding can implement more effective measures than the federal government by establishing their own reporting requirements. Some states already have done so, often in long-forgotten laws passed decades ago. But in the past four years, at least six states have passed new university foreign funds disclosure laws, demonstrating renewed interest in addressing malign foreign influence in higher education.

This brief provides the first comprehensive overview of the existing state-level foreign funds disclosure laws applicable to universities. State foreign disclosure laws can and do offer several key improvements over the current federal disclosure standards. However, there is significant variation: many states’ disclosure laws could be significantly improved by matching or exceeding the standards set by the most comprehensive state laws. In addition, most states do not have any such law. The key improvements that foreign disclosure laws at the state level can make, relative to federal disclosure laws include:

• Lower reporting thresholds
• Make donor names public
• Consistently report the purpose of the gift
• Define enforcement mechanisms and penalties
• Provide clear definitions of university-affiliated organizations

The model legislation presented in this brief improves laws already adopted by states by suggesting language to implement these recommendations. If states enact laws that include these provisions, the loopholes that malign foreign actors repeatedly exploit to avoid disclosure of their funding campaigns would close. While these laws will not stop foreign funds entirely, they subject universities to public accountability for the relationships that they enter with foreign actors.

Section 117 of the Higher Education Act requires universities to report all foreign contributions worth at least $250,000 per calendar year. This provision was introduced in the 1986 Higher Education Act amendments and was driven by lawmakers’ growing concerns about foreign influence, particularly from Arab governments. Libya, Oman, and the United Arab Emirates, for example, funded various academic chairs and helped establish Georgetown University’s Center for Contemporary Arab Studies in 1975.[8] Concurrently, several states enacted their own transparency laws: New York (1984), Missouri (1985), Michigan (1986), Pennsylvania (1986), and New Jersey (1987).[9]

Despite these regulations, universities often avoided reporting foreign funds because of lax enforcement at the federal level. Foreign influence proliferated into the 2000s. Confucius Institutes, which serve as propaganda tools for the Chinese government, took hold at American campuses.[10] A handful of universities entered lucrative, multimillion-dollar contracts with Qatar to establish branch campuses.[11] After lawmakers and the public’s concerns about Chinese espionage and the theft of research from American universities intensified,[12] the Trump administration investigated several universities regarding their foreign fund disclosures. In a 2020 report, the administration revealed that universities failed to report over $6.5 billion in funds from countries such as China, Qatar, and Saudi Arabia.[13]

Following these investigations and heightened concerns regarding foreign influence, particularly from China, lawmakers made foreign funds transparency a higher priority. At the federal level, the CHIPS and Science Act of 2022 (Section 10339B) requires National Science Foundation (NSF) recipients to report any foreign contributions of $50,000 or more from foreign adversaries.[14] More states also adopted transparency laws: Arkansas (2021), Florida (2021), Tennessee (2021), Indiana (2022), Louisiana (2023), and Alabama (2024).

Today, 13 states have foreign funds disclosure laws for universities (Figure 1).

While much attention is often directed toward elite universities on the coasts, other states have also attracted significant amounts of foreign funding. In the early 1990s, the Saudi Arabian government donated $21.5 million to the University of Arkansas to establish the King Fahd Center for Middle East and Islamic Studies.[15] More recently, public universities in North Carolina, South Carolina, and Texas failed to report millions received from ByteDance, the parent company of TikTok, for race-based scholarships.[16] Administrators at Idaho State University overlooked the poor performance of students funded by Kuwait and Saudi Arabia, as students from these countries paid the significantly higher out-of-state tuition costs.[17] Foreign funding is not only affecting elite institutions; it is also reshaping state colleges across the country.

By lowering the foreign funds reporting threshold, state laws provide the public with higher-quality information regarding foreign contributions. Section 117’s threshold of $250,000 overlooks significant contributions, such as a $125,000 contract between the University of Maryland and the Chinese tech company Alibaba on surveillance research.[18]

Additionally, Section 117 does not consistently disclose donor names or the intended purpose of contributions. The public must know who is funding our universities and their interests in doing so. There is a significant difference between a foreign adversary supporting an academic professorship and a foreign ally funding cancer research.

State-level laws should clarify that funds that pass through university-affiliated organizations must be reported. Universities have sometimes claimed that they are not required to report contributions routed through their foundations, citing the legal separation of these entities from educational institutions, even when the funds support university activities.[19] This lack of transparency is compounded by public records exemptions for university foundations. As a result, the federal government has not fully captured the extent of foreign funding entering American universities. Texas A&M University, which was under investigation for lax reporting during the Trump administration, concealed at least $100 million from Qatar and Russia.[20] These funds were funneled through state agencies associated with the university system but not classified as universities, thereby avoiding federal scrutiny. The majority of the funds originated from Qatar and were meant to help the country advance in a variety of areas—from oil recovery to cybersecurity.[21]

As Table 1 shows, many state laws implement stronger enforcement mechanisms than the federal government (see the Appendix for a detailed evaluation of each state’s law). Section 117 requires universities to pay enforcement costs to the government if the U.S. succeeds in its legal action for misreporting. Several states impose clearly defined penalties for reporting failures that would make universities feel the pain for failure to follow the law. Some states, like Florida, mandate annual audits to ensure compliance. Such measures place universities on heightened alert, promoting improved adherence to transparency standards.

The main weakness of certain state laws is that they introduce additional restrictions on which funds must be reported. Section 117 uses a broad definition of reportable foreign contributions, requiring universities to report funds from any foreign entity based in any foreign country, regardless of whether it is a government or some other institution.[22] Some state laws restrict reportable foreign funds to those from so-called countries of concern, a curated list of adversarial countries such as China and Iran. Missouri, unique in this respect, requires funds to be reported only if the associated contract includes a stipulation that would require the university to violate anti-discrimination laws.

States should generally adopt a broad definition of reportable foreign funds similar to Section 117, to avoid malign foreign actors and universities taking advantage of loopholes such as routing funds from one country to another to avoid reporting requirements.

The language in this model legislation improves laws already adopted by states by requiring universities to file disclosure reports in a digital spreadsheet format and to ensure that state governments make disclosure reports available online. These requirements would reduce the burden on public records offices and enhance public access to important information.

Section I. Purpose

The purpose of this act is to provide transparency into the sources of foreign funding to higher-education institutions.

Section II. Definitions

A. As used in this chapter, the term:

1. “Affiliate organization” means any entity under the direct or indirect control of, or established for the benefit of, an organization required to report under this Section, including a direct-support organization.
2. “Contract” means any agreement for the acquisition by purchase, lease, or barter of property or services by a foreign source for the direct benefit or use of any of the parties, and any purchase, lease, or barter of property or services from a foreign adversary.
3. “Foreign adversary” means any foreign government or foreign nongovernment person determined by the United States secretary of commerce or state secretary of state to have engaged in a long-term pattern or serious instances of conduct significantly adverse to the national security of the United States or security and safety of United States persons as listed in 15 CFR 7.4, Determination of Foreign Adversaries, as amended or renumbered.[36]
4. “Foreign government” means the government or an agent of any nation or group of nations, or any province or other political subdivision of any country or nation, other than the government of the United States and its states or political subdivisions.
5. “Foreign source” means any of the following:
       a. A foreign government or an agency of a foreign government
       b. A legal entity, governmental or otherwise, created solely under the laws of a foreign nation, or group of nations
       c. An individual who is not a citizen of the United States or of a territory or protectorate of the United States
       d. An agent, including a subsidiary or an affiliate of a foreign legal entity, acting on behalf of any source defined in Subparagraph (a), (b), or (c) of this Paragraph
6. “Gift” means any contract, gift, grant, endowment, award, scholarship, or donation of money or property of any kind, or any combination thereof, including a conditional or an unconditional pledge of a contract, gift, grant, endowment, award, scholarship, or donation.
   
   This includes, but is not limited to, tuition payments made on behalf of individual students by foreign sources. For purposes of this Paragraph, the term “pledge” means a promise, agreement, or an expressed intention to give a thing of value.
7. “Postsecondary education institution” or “Institution” means a college or university, a nonpublic postsecondary institution, and/or any other entity offering a program of postsecondary education that has a physical presence in the state and is required to report foreign gifts or contracts pursuant to 20 U.S.C. 1011f,37 or an affiliate or partner organization of any such college, university, institution, or school.

Section III. Reporting Requirements

A. Each Institution shall report any gift received directly or indirectly from a foreign source with a value of $50,000 or more. The report shall be submitted annually by September 1 for gifts made between August 1 and July 31 of the immediately preceding academic year. The Institution shall include in its report gifts received by all affiliate organizations of the Institution.

B. If a foreign source provides more than one gift directly or indirectly to an Institution and its affiliate organizations in a single calendar year and the total value of all gifts is $50,000 or more, then all gifts received from that foreign source shall be reported.

1. For purposes of this Paragraph, a gift received from a foreign source through an intermediary shall be considered an indirect gift to the Institution.

C. A report required under this Subsection shall be made to the following entities:

1. The Institution’s board of supervisors, trustees, or other governing board.
2. Unless already reported by the Institution’s board of supervisors, an annual summary of the gifts shall be filed with the Board of Regents for any Institution or affiliate organization of the Institution

D. Reports of gifts subject to the requirements of this Section shall include the following information, unless the information is exempt from disclosure under the provisions of this Section or otherwise prohibited or deemed confidential under federal or state law:

1. The amount of the gift
2. The date the gift was received
3. The contract start and end date, if the gift is a contract
4. The name of the foreign source and, if not a foreign government, the country of citizenship, if known, and the country of principal residence or domicile of the foreign source, except the names of payers of tuition that are not corporate entities that provide tuition assistance for individual students
5. The purpose of the gift

E. The listing of information pursuant to this Subsection shall be submitted in a digital spreadsheet with a searchable or sortable format.

Section IV. Enforcement

A. An Institution shall submit a copy of any gift agreement between the foreign source and the Institution, signed by the foreign source and the chief administrative officer of the Institution, or their respective designees, which includes a detailed description of the purpose for which the gift is to be used by the Institution, the identification of the persons whom the gift is explicitly intended to benefit, and any applicable conditions, requirements, restrictions, or terms made a part of the gift regarding the control of curricula, faculty, student admissions, student fees, or contingencies placed upon the Institution to take a specific public position or to award an honorary degree. If an agreement contains information protected from disclosure, an abstract and redacted copy of the disclosure containing information that is not protected shall be submitted in lieu of a copy of the agreement.

B. The internal auditor of the Board of Regents, or an authorized designee, shall biannually inspect or audit a random sample of at least 10% of Institutions, including Institutions that did not submit any disclosure report under this Section, to determine the Institution’s compliance with the requirements of this Section.

C. Upon request by the governor, the president of the Senate, or the speaker of the House of Representatives, the internal auditor of the Board of Regents shall inspect or audit a gift or gift agreement.

D. A disclosure report required by this Section is a public record open to inspection. The state Department of Education shall make disclosure reports available on its website in a digital spreadsheet format.

E. In the absence of enforcement by the Board of Governors or the state Board of Education, as applicable, the attorney general or the chief financial officer may bring a civil action to enforce this Section. If such action is successful, the attorney general or the chief financial officer, as applicable, is entitled to reasonable attorney fees and costs.

Section V. Penalty

A. An Institution that knowingly, willfully, or negligently fails to disclose the information required in this Section shall be subject to a civil penalty of:

1. 105% of the amount of the undisclosed gift, payable only from nonstate funds of the Institution or the affiliate organization that received the gift
2. 150% of the amount of the undisclosed gift, if the undisclosed amount originated from a foreign adversary

B. All recovered funds shall be deposited into the state general fund.

Section VI. Severability

The provisions of this act are hereby declared to be severable. If any provision of this act or the application of such provision to any person or circumstance is declared or held to be invalid for any reason, such declaration or holding shall not affect the validity of the remaining portions of this act and the application of its provisions to any other Institutions, persons, or circumstances.

I evaluated the effectiveness of state laws by assigning points based on specific criteria. States received up to five points for complying with each of the following categories: (1) disclosed donor names; (2) specified the purpose of gifts; and (3) imposed penalties for noncompliance. Next, states could earn up to three points if their reporting thresholds were below $50,000 per year; higher thresholds received fewer points. States were also rewarded up to three points if they conducted regular audits. States were awarded one point each for making reports accessible online and including private universities in disclosure requirements. States without restrictions on fund disclosure received a maximum of 10 points, while those with any restrictions lost points, as such limitations undermine the law’s effectiveness. Therefore, the maximum number of points that any state can receive is 33 points.

Please see Endnotes in the PDF.

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