Frequently Asked Questions

Section 117 applies to any public or private institution of higher education to which Federal financial assistance is extended (directly or indirectly through another entity or person), including an institution receiving support from the extension of Federal financial assistance to any of the institution’s subunits, provided that the institution meets all of the following conditions:

Section 117 requires institutions to file a disclosure report with the Department whenever any of the following conditions occur within a calendar year:

20 U.S.C. § 1011f contains two statutory reporting deadlines: July 31 and January 31.

The applicable deadline will depend on the date on which a transaction becomes reportable. For reportable transactions occurring between January 1 and June 30, an institution should submit disclosure reports to the Department by the July 31 deadline. For reportable transactions occurring between July 1 and December 31, an institution should submit the required disclosures by the January 31 deadline.

In certain instances, an institution may not need to report a transaction that occurred between January 1 and June 30 in their July 31 disclosure report but will need to report that transaction in a disclosure report filed no later than the following January 31. The $250,000 reporting threshold is based on a calendar year and an institution may receive multiple transactions involving a foreign source in the same year that only meet the reporting threshold in the aggregate. For example, if an institution received a gift valued at $150,000 from a foreign source on April 1, they would not need to report it by July 31 since it did not meet or exceed $250,000. However, if that same institution received another gift valued at $200,000 from the same foreign source on August 1, the institution would have received—in the aggregate—$350,000 from that foreign source within the calendar year. The institution would therefore need to report each gift by January 31 of the following year.

The date at which an institution’s reporting obligation is triggered will vary depending on whether the transaction relates to a gift, a contract, or foreign ownership or control.

For gifts and contracts, institutions must file a disclosure report no later than January 31 or July 31, whichever is sooner, once the reporting obligation has been triggered. Foreign source owned or controlled institutions must file two disclosure reports per year.

Yes, an institution that receives Federal financial assistance must also consider whether it has reportable gifts or contracts pertaining to its campuses located outside of the United States. For a multicampus institution, the statute defines a covered institution to include “any single campus of such institution.” 20 U.S.C. § 1011f(h)(4).

The statutory text, alongside its context, purpose, and history, requires an institution receiving the benefit of a gift from or a contract with a foreign source, even if through an intermediary, to disclose the gift or contract. Permitting foreign sources and institutions to circumvent the reporting requirement by using intermediaries to transfer money, property, or other benefits would be contrary to the statute’s broad disclosure mandate and the statutory purpose of transparency with regard to gifts from and contracts with foreign sources. This interpretation accords with congressional intent, as expressed in legislative history, for the scope of an institution’s disclosure obligations, which does not require a direct relationship.²

In this context, an intermediary may be a legal entity other than an institution that receives a gift originating from or enters into a contract with a foreign source, and then passes to an institution part or all of the benefit of the gift from or contract with the foreign source. These entities may not meet the statutory definition of an “institution” or fall under the direct control of an institution. Nonetheless, an intermediary may operate under the auspices of, or on behalf of, an institution, which is when an entity acts as a representative or agent of the institution and, therefore, in furtherance of the institution’s interests. Where such legal entities operate for the benefit or under the auspices of an institution, there is a rebuttable presumption that when that legal entity receives money from or enters into a contract with a foreign source, it is for the benefit of the institution, and, thus, must be disclosed.

The Department is aware that there are legal entities that exist for the purpose of serving as an intermediary for certain gifts or contracts, including gifts from or contracts with foreign sources. For example, a charitable foundation may be established under Section 501(c)(3) of Title 26 of the United States Code for the stated purpose of supporting an institution’s library functions. If a foreign source were to gift the charitable foundation $250,000 to advance that purpose, then the institution would be required to report the associated gift from the charitable foundation because the charitable foundation is functioning as an intermediary and the institution benefited from the gift.

Another example is an institution that establishes, manages, and operates a laboratory, off campus grounds, to conduct scientific research. In some instances, laboratory employees may even be treated as employees of the institution. If a foreign source were to contract with the laboratory, for purposes of conducting scientific research and the contract were valued at $250,000 or more, then the institution would be required to report the contract.

Institutions should conduct reasonable due diligence in ascertaining the source of the funds that they receive from any entity, including legal entities that operate for the benefit of or under the auspices of the institution. The Department recognizes that institutions may not exercise control over legal entities that operate for their benefit. However, institutions often have control over money received from those legal entities. If, in exercising reasonable due diligence, an institution determines that certain gifts or contracts benefiting the institution that were received from an intermediary organization originated from a foreign source, then it must submit the appropriate disclosure report.

The Department’s information collection describes when an institution might be required to report a gift or contract involving an intermediary. While intermediaries are not required to report transactions to the Department, an institution might seek information from intermediary entities as part of its due diligence for ensuring compliance with Section 117. This reporting is also consistent with, but not necessarily identical to, the requirements for institutions to provide information about related parties in their annual audited financial statement submissions required under 34 CFR § 668.23(d). Moreover, this does not expand the scope of which entities must submit disclosure reports or require institutions to disclose all entities that operate substantially for the benefit or under the auspices of an institution. For legal entities other than statutorily defined institutions, the Department is not imposing any additional reporting requirement. For example, the local chapter of an alumni association typically would not meet the statutory definition of an institution and thus would not need to consider whether to file disclosure reports at the biannual reporting deadlines. The intermediary would be reported as the “recipient” (if the transaction involves a gift) or “domestic party” (if the transaction involves a contract).

¹   https://www.reginfo.gov/public/do/DownloadDocument?objectID=127593001

²   See Conference Report on H.R. 4137, College Opportunity and Affordability Act of 2008, 154 Cong. Rec. H7353-01, H7503 (“The conferees intend for the Department of Education to ensure the integrity of the reporting requirements under this Title and Section 117. In particular, the conferees are concerned that donations are reported and categorized correctly. It is the intent of Congress that the Department of Education guidance prohibit avoidance of the disclosure of foreign gifts through the utilization of domestic conduits or through the reimbursement of domestic entity contributions.”) (emphasis added).

In some instances, an institution might be required to report gifts or contracts involving these types of organizations. The Department recognizes that entities that function as intermediaries may also be involved in transactions with a foreign source that are not intended to benefit an institution directly or indirectly, but rather are intended to benefit the intermediary entity itself. Additionally, some legal entities that operate for the benefit of or under the auspices of an institution may serve purposes other than as a pass-through entity, and they may also have separate governing boards. As articulated above in INS-Q2, there is a rebuttable presumption that gifts to or contracts with such intermediaries are for the benefit of the institution and thus reportable. The presumption can be rebutted for individual transactions where the gift to or contract with the intermediary is not for the direct benefit of the institution or the benefit is not passed on to the institution. In such scenarios, an institution would not be required to report gifts or contracts involving an intermediary entity where the institution might receive merely incidental benefits from the actions of associated or affiliated organizations.

In other words, to be potentially reportable, the gift or contract must directly benefit the institution. For example, alumni established an alumni association that is completely controlled by the alumni and is separate from the institution. A foreign source donates $800,000 to the alumni association to go towards a new research facility on campus, and the alumni association included that donation as part of a larger contribution to the institution. In that scenario, the institution would be expected to conduct reasonable due diligence into the alumni association’s contribution and, upon learning of the donation of the foreign source, disclose the $800,000 portion of the contribution as a gift from a foreign source.

An institution is not required to report a gift to or contract between a foreign source and an intermediary if the institution did not receive a direct benefit from the gift or contract. For example, if a foreign source donates $300,000 to the alumni association to host a local alumni event raising money for cancer awareness, the institution would not have to report this gift because the institution is not directly benefiting from the donation, although it may be considered an incidental benefit due to possible affiliation with its alumni.

To best ensure compliance with Section 117, institutions should conduct reasonable due diligence into the source of the funds that they receive from any entity, including legal entities that operate substantially for the benefit or under the auspices of an institution. Reasonable due diligence will vary depending on the facts specific to each transaction, including the nature, source, and size of the transaction. For example, institutions might exercise increased due diligence the first time an institution or intermediary enters into a large transaction to determine whether the gift or contract is from or with a foreign source. Repeat or routine transactions of smaller amounts, however, generally require less diligence to determine whether a gift or contract is from or with a foreign source. If, in exercising this due diligence, an institution determines that certain gifts or contracts are in fact from a foreign source, provided benefit to the institution, and involve the threshold monetary amount, then the institution must submit the appropriate disclosure report. No matter the level of due diligence conducted, institutions have the ultimate responsibility to ensure their compliance with Section 117.

Section 117 defines foreign source to include four “types” of transaction counterparties:

An institution does not need to report a transaction if the source of the gift or counterparty to the contract fails to meet any of the statutory definitions of a “foreign source.” See 20 U.S.C. § 1011f(h)(2)(A)-(D). Conversely, every reported transaction should involve a party that satisfies at least one of the four definitions of foreign sources.

These types of foreign sources are not mutually exclusive. Institutions should indicate all of the applicable foreign source types on its disclosure report. Examples of foreign sources that may fall under more than one type include:

Section 117 states that the country to which a gift or a contract is attributable “is the country of citizenship, or if unknown, the principal residence for a foreign source who is a natural person, and the country of incorporation, or if unknown, the principal place of business, for a foreign source which is a legal entity.” See 20 U.S.C. § 1011f(b)(1).

For example, Institution A receives a $3 million gift from an individual donor who is a citizen of Country A and whose principal residence is Country B. The gift is subject to the condition that the funds be used to support the institution’s Country A Studies department and to establish an endowed position for faculty specializing in Country A’s language, politics, and history. Institution A is aware that the donor is a citizen of Country A while living in Country B. Institution A would be required to report this gift with Country A as the appropriate country of attribution.

When a gift is received from, or a contract entered into with, an agent acting on behalf of a principal foreign source, the country of attribution is that of the principal foreign source.

For example, Institution B receives a $1 million gift from a charitable trust incorporated in Country C. According to public records, the charitable trust has a single trustee, an individual who is a citizen of Country D, and that trustee exercises complete management and control over the operations of the trust. While the direct source of the gift is a Country C trust, Institution B would be required to report the Country C trust as a foreign source, the individual trustee as the principal foreign source, and Country D as the country of attribution based on the country of citizenship for the principal foreign source.

Multinational companies operating in the United States and abroad, as well as U.S. entities with a foreign parent company may constitute foreign sources by virtue of their satisfying the definition of an agent acting on behalf of a foreign source. The statute expressly indicates that a subsidiary or affiliate of a foreign legal entity may be an agent of a foreign source.

The fundamental characteristic of agency is control. Accordingly, for both multinational companies and U.S. entities with foreign parent companies, institutions must evaluate the degree to which the foreign parent or foreign affiliates exercise control. Although the formal relationship between the parent and subsidiary is important in this analysis, so are the practical realities of how the parent and subsidiary actually interact. For example, an institution may consider whether a counterparty is acting under the direction, supervision, or management of a foreign parent company or affiliate, both generally and in the context of the specific gift or contract. In some instances, the formal, general relationship between a parent and subsidiary or between affiliated entities can be ascertained from public records, such as filings with government agencies and annual reports, or from the terms of a contract, such as an indemnification clause. In other instances, it may be appropriate for an institution to ask whether a specific gift is being provided or specific contract is being entered into on behalf of a third-party foreign entity.

For example, Institution A enters into a contract with a Foundation A, a nonprofit organization whose mission is supporting international education partnerships between Qatar and institutions of higher education worldwide. The contract is valued at $1.5 million based primarily on financial support and other resources being provided to Institution A as part of the partnership. Foundation A is a legal entity incorporated in Delaware and exists as a U.S. legal entity solely for the purpose of entering into contracts with U.S. institutions of higher education. Foundation A does not have independent U.S. operations and acts under the direction and control of an affiliated umbrella entity, a non-governmental organization (NGO) based in Qatar. In fact, Institution A dealt directly with individuals working for the affiliated NGO in negotiating the terms of the agreement. While the counterparty to the contract is a U.S. entity, Institution A would be required to report the affiliated umbrella NGO as the principal foreign source, Foundation A as an agent of a foreign source, and Qatar as the country of attribution.

When evaluating whether a subsidiary or affiliate is an agent of a foreign source with respect to the transaction at issue, institutions may not simply assume that all transactions with U.S.-based counterparties fall outside the scope of Section 117. Institutions are expected to exercise reasonable due diligence and to make good faith efforts to ascertain whether the counterparty in a transaction is acting as an agent of a foreign source.

Foreign subsidiaries of U.S.-based corporations may constitute foreign sources by virtue of their satisfying the definition of a foreign legal entity (20 U.S.C. § 1011f(h)(2)(B)). Foreign subsidiaries that are separate and independent entities may not always be operating as an agent of a domestic parent company. Consistent with the discussion of U.S.-based subsidiaries of foreign parent companies in FS-Q3, an institution must evaluate the degree to which the U.S. parent company exercises control over the foreign subsidiary. Where there is no evidence of control either generally or in the context of the gift or contract in question, then the mere fact of the formal corporate structure would not require the institution to report the transaction as involving a foreign subsidiary acting as an agent of a foreign source. Instead, the institution would be required to report the transaction as a gift or contract with a foreign source.

To ensure compliance with Section 117, the institution should exercise due diligence and make a good faith effort to understand the source of the gift or the identity of the contracting party. In exercising due diligence and making this good faith effort, an institution may directly ask the gifting individual or entity or the contract counterparty to confirm whether they meet any of the statutory definitions of a foreign source. However, although obtaining certifications from donors and counterparties may certainly be part of an institution’s efforts to determine whether a transaction is reportable, relying solely on a certification would cede the determination of whether a transaction is reportable entirely to the potential foreign agent, which runs counter to the purposes of the statute. Institutions have the ultimate responsibility to ensure their compliance with Section 117. The Department therefore would caution against overreliance on certifications or other third-party statements as a sufficient exercise of reasonable due diligence by the institution. Therefore, in some instances institutions should verify independently whether an individual or entity meets the definition of a foreign source. For example, an institution could conduct a search of publicly available information and records associated with the individual or entity from whom it is receiving a gift or with whom it is contracting.

As noted in the response to INS-Q3, reasonable due diligence will vary depending on the circumstances. Institutions should often exercise increased diligence the first time an institution or intermediary enter into a large transaction to determine whether the gift or contract is from or with a foreign source. Repeat or routine transactions of smaller amounts, however, may require less diligence to determine whether a gift or contract is from or with a foreign source. Ultimately, what is required for an institution to exercise “reasonable due diligence” will depend on the facts specific to each transaction.

For example, Institution A receives a $300,000 donation from a local chapter of its alumni association. The alumni association had received the $300,000 through a gift agreement with a foreign source directing the donation be made through the alumni association. Institution A sees that the gift is from the alumni association and determines that the transaction is not reportable solely because the alumni association itself is not a foreign source. The alumni association, however, is an intermediary, meaning that, in receiving the $300,000 gift from the alumni association, Institution A is receiving a benefit from a foreign source that meets or exceeds Section 117’s threshold amount. As a result, Institution A should have reported the gift. In this scenario, Institution A failed to exercise reasonable due diligence to determine whether or not it received the benefit of a gift from a foreign source.

Yes, an institution is required to report the names and addresses of each foreign source to the extent that the institution has or could reasonably obtain the foreign source’s identity.

Where an institution receives a direct gift from a donor who wishes to remain anonymous from the public, the institution would have knowledge of the foreign source’s identity and would be required to disclose the gift provided it meets the other requirements of Section 117.

Where an institution receives a gift from a third-party entity who indicates the gift is on behalf of someone who wishes to remain anonymous, an institution must make a reasonable effort to obtain a donor’s identity or other information necessary to ascertain whether it is a gift from a foreign source as noted in response to FS-Q5.

The Department appreciates that it may not always be possible to track a particular gift back to a foreign source. For example, an individual or group of individuals might contribute funds to a charitable trust or other legal entities where they have relinquished control over how the funds are spent. In such a scenario, the charitable trust or other legal entity itself is the legal entity with control over the funding and the relevant inquiry would focus on whether that entity is a “foreign source.” For a trust, for example, whether the trust is a foreign source could depend on whether the trustees meet one of the definitions of a “foreign source.” In that case, it may not be necessary or reasonably possible for the institution to identify the original source of the funds or ascertain whether they are a foreign source for purposes of Section 117.

An institution is not currently required to submit any information to the Department if it was not involved in covered transactions with a value of $250,000 or more, considered alone or in combination with all other gifts from or contracts with that foreign source within a calendar year.

However, in some instances, an institution may be required to report gifts or contracts that individually are valued at less than $250,000. The reporting threshold is determined on a foreign source level, not an individual transaction level. Covered transactions involving a particular foreign source must be considered in the aggregate based on all gifts from or contracts with the same foreign source within a calendar year.

For example, Institution A receives a monthly $25,000 donation from Foreign Source A. In a given calendar year, those donations total $300,000. While each individual donation is less than $250,000, Institution A nonetheless would be required to report these gifts because, when considered in combination with all gifts from that foreign source, they exceed the reporting threshold. Institution A must submit twelve disclosure reports, one corresponding to each donation received.

As another example, Institution B enters into a contract with Foreign Source B on April 1, 2023, and that contract has a fixed value of $200,000. Institution B separately receives a $100,000 donation from Foreign Source B on December 25, 2023. While each transaction considered alone is less than $250,000, these two transactions are considered in combination because they involve the same foreign source. Accordingly, Institution B would be required to report separately these two transactions.

Note, however, that if a foreign source obtains ownership or control of the institution, the institution has to report certain information even if it does not have gifts or contracts with foreign sources equal to or exceeding $250,000.

Section 117 requires institutions to determine the total value of contracts—including contracts other than fixed-price contracts—whenever the institution “enters into [the] contract with [the] foreign source, the value of which is $250,000 or more.” (see 20 U.S.C. § 1011f(a)) (emphasis added). This language is why institutions—when confronted with contracts that are not fixed-price—must use a reasonable valuation methodology to determine the total value of the contract.

Whether such a contract must be reported would turn on whether the total value—as determined by the reasonable valuation methodology—combined with the value of all other calendar year transactions involving that foreign source meets or exceeds $250,000. Given the valuation challenges presented by certain contracts (e.g., indefinite delivery/indefinite quantity contracts), institutions may wish to consider simply reporting contracts whose values could meet or exceed the statutory threshold to avoid potential non-compliance.

The Department does not require a specific valuation method. The Department would consider it reasonable and appropriate for an institution to value in-kind exchanges based on the fair market value of the property. Fair market value is the price that the property would sell for on the market. In determining the fair market value of property, institutions could consider the cost of selling the property, sale of comparable properties, replacement costs, and opinions of experts. Institutions must compute a reasonable valuation of property as it compares to similar property being sold.

For example, Institution A owns the intellectual property rights for a delivery system used for medical treatments. Institution A enters into a licensing agreement with Foreign Source A, a pharmaceutical company, permitting Foreign Source A to use the delivery system for certain products. In exchange, Foreign Source A agrees to provide Institution A with a reasonable royalty fee for each unit sold of that product. The parties entered into the licensing agreement in January 2023, but Foreign Source A would not begin making royalty payments until January 2024. Prior to entering into the agreement, Institution A conducted due diligence and estimated that the licensing agreement would result in $2 million in royalty payments over the duration of the contract. Based on this valuation, Institution A would be required to report the contract once which, based on the date the contract was entered into (January 2023), would require the institution to file a disclosure report no later than July 31, 2023, reflecting a value of $2 million, even though it had not yet received any royalty payments.

A gift that is pledged to—but not actually received by—an institution is not reportable under Section 117. The statute indicates that a disclosure report must be filed “[w]henever any institution . . . receives a gift from . . . a foreign source.” The Department does not believe that pledged gifts satisfy this element of the statute unless and until the institution receives payment. If an institution receives all or a portion of a pledge or bequest that meets or exceeds the $250,000 threshold (including in the aggregate) within a calendar year, that portion of a pledge or bequest must be disclosed.

Whether such a gift must be reported would turn on whether the value of the gift received in any given year—combined with the value of all other gifts from and contracts with that foreign source during the same year—meets or exceeds $250,000. Section 117 imposes a reporting threshold based on the total value of gifts received from a particular foreign source within a calendar year. As such, an institution does not need to aggregate the value of gifts received in different calendar years to determine whether those gifts would be reportable pursuant to Section 117.

The Department encourages schools to examine closely multi-year gifts if it appears that such gifts are structured with the intent to evade statutory, regulatory, financial, or other disclosure requirements. While an institution may not need to file a disclosure report for purposes of Section 117, the institution should consider whether additional due diligence into a foreign source and its relationship with the institution is necessary, especially if the gift comes with unusual conditions or restrictions as to how the institution can use the funds.

In contrast, with respect to contracts, the statute indicates that a disclosure report must be filed “[w]henever any institution . . . enters into a contract with a foreign source.” The reporting requirement is therefore triggered by entering into a contract, not the completion or performance of a contract. When a contract is to be performed over multiple years, an institution must consider the value of the contract over the lifetime of the contract and not solely the value of the contract within a given calendar year and must report that value once, no later than the first reporting deadline following the date the contract is entered into and not as contract payments are made over multiple years.

Section 117 does not distinguish between reportable and non-reportable contracts based on subject matter. The statute defines the term “contract” broadly to mean “any agreement for the acquisition by purchase, lease, or barter of property or services by the foreign source, for the direct benefit or use of either of the parties.” 20 U.S.C. § 1011f(h)(1). Accordingly, clinical trial contracts between institutions and pharmaceutical companies are not exempt from the Section 117 reporting requirement. Similarly, licensing agreements relating to intellectual property would also generally meet the statutory definition of a “contract.”

Section 117 generally does not cover contracts involving the transfer of funds from an institution to a foreign source, or “money-out” contracts. This position is consistent with the statutory definition of a “contract” and congressional intent reflected in the legislative history. The language of the statute defines “contract” as “any agreement for the acquisition by purchase, lease, or barter of property or services by the foreign source, for the direct benefit or use of either of the parties.” 20 U.S.C. § 1011f(h)(1). The legislative history provides an example of a type of contract that would not have to be reported: an arms-length transaction in which an institution purchased equipment from a foreign source or leased property from a foreign source. H.R. Rep. No. 99-383, at 88 (1985). A money-out contract could however be considered a “gift” for purpose of Section 117 where the contract is not an arms-length commercial transaction but rather a below-value contract used to transfer property to an institution.

For example, Institution A purchases 200 widgets with a value of $3,000 each from Foreign Source A for $600,000. Such a contract would be a transfer of funds from an institution to a foreign source. Assuming the amount reflects a fair market price, it would not be considered a reportable contract for purposes of Section 117.

However, if Institution B purchased 200 identical widgets from Foreign Source A for $20,000, the contract could result in a reportable transaction. In this example, Institution B paid well below the value for the widgets. Since there is no indication that Institution B offered some other type of consideration to obtain that price, it is possible that the purchase is not an arms-length transaction. In that case, the widgets could be considered a gift, which is defined broadly by statute to include “any gift of money or property.” The institution would potentially be required to report the difference between the price paid for the widgets and the value of the widgets ($580,000).

An institution may be required to disclose international partnership or collaborative agreements. As a general matter, contracts with a foreign source must satisfy at least three conditions in order to be reportable. First, the contract must involve an agreement for the acquisition of property or services by the source. Second, the property or services must be for the direct benefit or use of either the institution or the foreign source. And third, the value of the contract must be $250,000 or more. These conditions are likely not met where the partnership or collaborative agreement does not include legally binding obligations to engage in specific activities. Therefore, such an agreement is unlikely to constitute a contract for purposes of Section 117.

For example, Institution A signs a Memorandum of Understanding (MOU) with Foreign University A outlining a general commitment to establish a partnership and explore opportunities for collaboration in academic research and other endeavors. The MOU is non-binding and reflects the aspirations of both institutions and does not commit either institution to provide funding or resources. Accordingly, the MOU does not involve an agreement for the acquisition or exchange of property or services. In this scenario, Institution A would not be required to submit a disclosure report for this MOU. However, Institution A might be required to report subsequent agreements or amendments to the MOU to the extent they establish binding obligations for specific research activities that meet or exceed the $250,000 threshold.

As another example, Institution B signs a collaboration agreement with Foreign University B outlining terms and conditions for a student exchange and visiting faculty program. Pursuant to the agreement, Foreign University B commits to provide funding to Institution B for a certain number of the participating students and faculty members over a three-year period. In exchange, Institution B commits to provide housing and specialized programming to participants from Foreign University B. Because this agreement includes legally binding obligations to acquire or exchange specific activities, Institution B may be required to file a disclosure report if the value of the contract is $250,000 or more.

No. The reporting requirement is triggered by entering into a contract, not the completion or performance of a contract. The statute indicates that a disclosure report must be filed “[w]henever any institution . . . enters into a contract with a foreign source.” In this respect, the appropriate time to disclose a contract differs from when an institution must report a gift. While an institution may wait until it actually receives a gift before submitting a disclosure report, it should file a disclosure report for contracts no later than the first reporting deadline following the date the contract was “enter[ed] into”, without reference to whether the institution has received anything of value under the contract.

An institution must consider the value of a covered contract with a foreign source over the duration of the contract and not solely the value of the contract within a given calendar year. Whether a particular contract must be reported by an institution depends upon whether the value of the contract when it is signed, combined with the value of all other gifts and contracts with that foreign source in that calendar year, meets or exceeds the statutory threshold.

For example, Institution A enters into a five-year contract with Foreign Source A for the provision of research and consulting services to the foreign source. The terms of the contract provide for an annual flat fee of $50,000 for the services to be paid by the Foreign Source on January 1 of each year. The lifetime value of the contract would therefore be $250,000. Institution A would therefore be required to disclose the contract at the time it is entered into and report a value of $250,000.

The Department generally views instances where a foreign source pays tuition for a student or students to meet the definition of a “contract” under Section 117(h)(1). Student sponsorship agreements generally would be considered restricted or conditional contracts as they concern the payment of tuition and fees on behalf of a student from a particular country. See 20 U.S.C. § 1011f(h)(5)(D).

Generally, each covered transaction should be reported individually, provided the transactions meet or exceed the $250,000 threshold. The Department acknowledges, however, that institutions may have many student sponsorship agreements with the same foreign source and that reporting by individual transaction may be challenging. In such circumstances, if the terms and conditions of the sponsorship agreements with a particular foreign source are substantially the same, an institution may aggregate the transactions and report them collectively.

For example, Institution A enters into an agreement with Foreign Embassy A concerning international students who are citizens of Foreign Country A and admitted to study at Institution A. Under the terms of the agreement, the embassy agrees to pay for the tuition and fees for up to 25 international students each semester. Before the start of each semester, Institution A must confirm each student that is enrolled for the upcoming semester. The embassy then provides a financial guarantee for each student covering that semester. For the Fall 2022 semester (Sept. 1 – Dec. 31), Institution A received a financial guarantee from Foreign Embassy A to cover tuition and fees for 20 international students, $15,000 for each student individually and $300,000 in total. In this scenario, Institution A could file a single disclosure report for all 20 students as a restricted and conditional contract involving Foreign Embassy A with start and end dates corresponding to the semester. Institution A may choose to file a separate disclosure report for each student, but it is not required to do so provided that the terms for each financial guarantee are substantially the same for the 20 students.

As another example, Institution B receives tuition payments from Foreign Source B, a parent of two enrolled students, for the 2023-2024 academic year. While the tuition payments would constitute a contract, Institution B would only need to report this type of contract if the $250,000 threshold is met for gifts from or contracts with Foreign Source B for the calendar year individually or in combination with other gifts or contracts. Typically, the Department would not expect for tuition payments alone to reach the reporting threshold except where a foreign source is paying tuition for multiple students.

For purposes of Section 117, the term “restricted or conditional gift or contract” carries a specific meaning given at 20 U.S.C. § 1011f(h)(5). As such, a gift or contract is only considered “restricted or conditional” if it includes provisions regarding –

The statute requires any institution receiving a restricted or conditional gift from or entering into a restricted or conditional contract with a foreign source to disclose, among other things, “a description of such conditions or restrictions.” 20 U.S.C. § 1011f(c). In line with this statutory requirement, the Department’s information collection requires institutions to provide a “detailed description” of all conditions or restrictions for gifts and contracts. Such information is part of the public disclosure report required by Section 117.

The Department believes it is important to clarify the scope of this requirement in three respects. First, an institution does not need to provide a description of “all” conditions or restrictions associated with a gift or contract. The Department recognizes that most transactions, by their nature, contain a range of conditions or restrictions on either or both parties. Section 117, however, is only concerned with specific types of restrictions or conditions. Thus, an institution may comply with its statutory disclosure obligation by providing a detailed description concerning only the conditions or restrictions that make the individual transaction meet the definition at 20 U.S.C. § 1011f(h)(5).

Second, an institution may not simply identify which of the four enumerated restrictions or conditions are applicable to a transaction. Rather, institutions must describe the conditions or restrictions associated with the specific transaction. For this reason, the Department has previously stated, “an institution’s employee who is familiar with the substance of the contract should develop the detailed description as opposed to an administrative staff person.” (see Response to Public Comments (30-day notice), available at https://downloads.regulations.gov/ED-2019-ICCD-0114-0065/attachment_2.pdf).

For example, an institution may receive a gift to establish or fund a research program. It would not be sufficient for an institution’s disclosure report to state that the gift was for “research.” The institution would need to provide a description of the type of research based on the terms of the reported gift. The Department recognizes that certain restrictions or conditions may constitute confidential, sensitive, or proprietary information. The Department does not interpret Section 117 to require an institution to divulge proprietary information about its research endeavors in its public disclosure report. However, the Department believes that the statute would require, at minimum, a general description of the subject matter for the research being funded by a foreign source.

Third, an institution may not withhold entirely a description from the public disclosure report. The Department is aware of some instances in which institutions have reported a restricted or conditional gift or contract but did not provide the required description or sought to make the information available separately to the Department. The Department reiterates that a description of the relevant restrictions or conditions is a required component of the disclosure report to be made public by the Department. As such, in order to comply with the statutory disclosure obligations, institutions must provide this information when submitting a disclosure report for a restricted or conditional gift or contract.

The statute does not define “owned or controlled by a foreign source.” However, in its regulations and guidance, the Department has considered the definitions of “control” and “ownership” for purposes of Title IV eligibility. An institution should view those definitions as informative in determining whether it is owned or controlled by a foreign source for purposes of the Section 117 reporting requirement.

As of June 22, 2020, institutions must report Section 117 information using the reporting system available at https://partners.ed.gov/ForeignGifts.

Disclosure reports may only be submitted by users authorized by an institution’s primary destination point administrator (PDPA) to submit information on behalf of that institution. In order to gain access to the reporting system, users must complete a Partners Enterprise Business Collaboration (PEBC) user access document. The PEBC user access document must be completed—including OPE identification number (OPEID) and Destination Point Administrator (DPA) signature—for each institution that chooses to delegate authority to file Section 117 disclosure reports to the user named on the PEBC user access document. Before submitting a disclosure report on behalf of an institution, a completed PEBC user access document signed by that institution’s DPA must be submitted to, and approved by, the Department.

Please contact the Foreign Gifts Access Team for additional information (ForeignGiftsAccess@ed.gov).

The Department’s systems do not currently allow users to edit final submissions. If an institution determines it needs to edit a previously submitted disclosure report, it must flag that submission for withdrawal and re-submit a corrected disclosure report in full. At that point, the Department will mark the disclosure report as withdrawn.

To flag a submission for withdrawal, institutions must send an email to the Foreign Gifts Access Team (ForeignGiftsAccess@ed.gov) that includes the OPEID of the institution, the approximate date of the incorrect submission (if known), and the Application ID number for the incorrect submission (which can be found on the home page of the reporting portal under “My Submitted Entries,” in the first column next to the incorrect submission). The Foreign Gifts Access Team will flag the submission as incorrect and send a confirmation response to the institution, at which time the institution must submit a corrected report.

Section 117 is a transparency statute requiring institutions to disclose to the public certain information about gifts from and contracts with foreign sources and their agents. It specifies in 20 U.S.C. § 1011f(e) that “all disclosure reports required by this section shall be public records open to inspection and copying during business hours.” Subsections 1011f(a)-(d) provide the items to include in the disclosure report as well as related information.

Consistent with this transparency goal, the Department maintains a public database with the statutorily required disclosures. This database can be found at the following website dedicated to Section 117: https://sites.ed.gov/foreigngifts/.

The Department’s public database includes the following information for each transaction –

The Department requires the name and address of foreign sources to assess an institution’s compliance with Section 117. However, the Department does not consider the name and address of a foreign source to be part of the disclosure report that must be made public. The Department has taken this position with respect to disclosure reports filed by institutions since June 22, 2020. The statute itself lists the specific content that the Department is required to post publicly, including the amount, date, and country of attribution for each reported transaction. Under current law, the name and address of the foreign source is not required to be publicly disclosed except in the case of restricted or conditional gifts and contracts with a foreign government. In accordance with the statute, the Department publishes the names of foreign government sources for restricted or conditional transactions.

In response to public comments received on the proposed information collection, the Department assured submitting institutions that it would withhold the name and address of a foreign source from the public disclosure report and protect the confidentiality of this information to the extent permitted by law. The Department provided this assurance in response to several concerns raised by members of the higher education community, including concerns that disclosure of a foreign source’s identity in certain instances could put the foreign source in danger of being harmed by violence or subject the foreign source to political pressure and persecution by their home countries. Consistent with that assurance of confidentiality, the Department does not include the foreign source name and address (excepting country) in the public disclosure reports other than with respect to restricted or conditional transactions with a foreign government.

The Department is committed to public transparency surrounding foreign gifts and contracts involving U.S. institutions of higher education. The Department may, however withhold confidential commercial or financial information requested under the Freedom of Information Act pursuant to 5 U.S.C. § 552(b)(4) and 34 CFR§ 5.11Whether information is “confidential” and exempt from disclosure depends on whether the information is both customarily kept as private or closely held and actually treated in that manner by the submitting institution.

The Department understands that the names of foreign sources reported pursuant to Section 117 of the Higher Education Act is information not customarily disclosed to the public by institutions of higher education. However, the Department is also aware that there are occasions in which the relationship between a foreign source and an institution of higher education is public knowledge. In such circumstances, the identity of a particular foreign source may not constitute confidential business information and FOIA Exemption 4 would therefore not apply.

Examples of treatment of gift- or contract-related information that could undercut a claim of confidentiality include:

In the reporting portal, an institution has the option to indicate whether it considers the name and address of a foreign source to be confidential and exempt from public disclosure pursuant to FOIA. The Department incorporated this option into its information collection to ensure it is promoting the statutory interest in public transparency while complying with its obligations to protect confidential business information. An institution’s designation of information as exempt is not binding on the Department. See 34 CFR § 5.11(c). However, if the Department determines that information must be released over an institution’s objections, the Department will follow the procedures outlined in its regulations for notifying the submitting institution. See 34 CFR § 5.11.

The approved information collection generally requires institutions to report each individual transaction involving a foreign source. This general approach applies even where an individual transaction is reportable only when considered in combination with other gifts from or contracts with the same foreign source in a calendar year. Under the current information collection, an institution may not report summary-level data about the relationship between the institution and the foreign source, such as the total money from all gifts and contracts, in a single disclosure report. Moreover, the Department needs this disaggregated information to verify Section 117 compliance.

However, the Department acknowledges that this transaction-based approach could impose a substantial burden in the context of tuition payments received from a foreign source. The Department recognizes that institutions may have many individual restricted or conditional contracts with the same foreign source, each of which includes provisions regarding payment—including, for example, in the form of a financial guarantee—by the foreign source of tuition (and related fees) for students from a specified country. As a result, where an institution has many individual restricted or conditional contracts with the same foreign source for tuition payments, each of which contains substantially the same terms and conditions other than the identity of the individual student, an institution may treat such contracts collectively for reporting purposes.

In most cases, an institution that utilizes a reasonable valuation methodology to determine the total value of a contract and reports that information to the Department will not need to report the same contract in subsequent years. However, if an institution becomes aware of facts that make the previously reported information materially incorrect or inaccurate, an institution must withdraw its prior disclosure reports and submit corrected disclosure reports as explained in REP-Q2.

An institution assessing the materiality of an inaccuracy should consider both quantitative and qualitative factors. Quantitatively, an institution should consider the numerical discrepancy between the reported value and the actual or estimated value based on a reasonable valuation methodology or revenues received. The Department does not believe that all numerical deviations result in a “material” inaccuracy. While the Department is not establishing a bright-line rule and it is incumbent on institutions to employ reason and good faith in assessing whether there is a “material” inaccuracy, a discrepancy of 10 percent or less for contract values would generally not result in a materially inaccurate disclosure report in light of the purposes of Section 117. As explained further below, there may be qualitative factors that could cause a relatively small discrepancy, either in terms of percent or absolute amounts, to be material.

Qualitatively, an institution should consider whether the inaccurate reporting had the effect of concealing the relationship between the institution and a foreign source. In particular, a valuation will result in a “material” inaccuracy where the institution determined initially that the transaction was valued below the reporting threshold and thus did not file a disclosure report. Additionally, a previously filed disclosure report would be materially inaccurate if an institution learns that it misreported fields other than the contract amount, such as the country of attribution or the restricted transaction description. Inaccurate reporting of these fields in particular would necessarily have the effect of concealing the nature of the relationship between the institution and the foreign source, necessitating filing of a revised or amended disclosure report.

For example, Institution A entered into a MOU with Foreign Source A in 2021. Institution A reported the MOU as a contract in 2022 with a value of $750,000. Institution A and Foreign Source A subsequently amended that MOU in 2023 to include provisions related to hiring of faculty. Because this new provision concerns “the employment, assignment, or termination of faculty,” 20 U.S.C. § 1011f(h)(1), it transforms the MOU in question from a contract to a restricted or conditional contract. Therefore, Institution A would need to either amend the previously filed disclosure report or file a new disclosure report to reflect that it has entered into a restricted or conditional contract and include a description of the restrictions or conditions.

As another example, Institution B entered into a three-year contract with Foreign Source B in 2022. At that time, Institution B estimated that the value of the contract was $1 million and therefore submitted a disclosure report to the Department. By 2023, however, the contract had already generated more than $2 million and Institution B’s internal analysis estimated that the contract would likely generate $5 million in total over the lifetime of the contract. Based on this additional information, Institution B should update its Section 117 disclosures to reflect the revised valuation.

As a third example, Institution C entered into a five-year contract with Foreign Source C. Institution C timely filed a disclosure report for the contract with a value of $450,000. At the conclusion of the five-year contract period, Institution C had earned $500,000 from the reported contract. The initial reported valuation was therefore 10 percent less than the amount of the actual contract value. While there is a discrepancy between the actual and reported value of the contract, the Department would likely not require Institution C to amend its prior disclosure report provided that it was otherwise materially accurate.

No. Institutions are not required to submit to the Department supporting documentation, such as a copy of contracts, as part of their disclosure reports required by statute.

However, institutions should retain all relevant records in order for the Department to be able to verify its compliance with all reporting requirements. As part of its compliance reviews and audits, the Department may require that an institution provide copies of documentation related to gifts and contracts involving foreign sources when assessing the sufficiency of an institution’s Section 117 reporting. See Notice of Interpretation, “The Department’s Enforcement Authority for Failure to Adequately Report Under Section 117 of the Higher Education Act of 1965, as Amended,” 85 Fed. Reg. 72567, 72568 (Nov. 13, 2020) and 20 U.S.C. § 1011f(f).