Enhanced scrutiny of foreign donations a ‘vote winner’ for Trump

The US government’s enhanced scrutiny of foreign donations to universities is “at odds” with its rolling back of anti-corruption guidelines in other sectors but will likely prove a vote winner, according to academics.

The Department of Education is launching a new “state-of-the-art” foreign funding reporting portal in January after what it described as “years of neglect by the Biden Administration”.

The move has been viewed as a tightening of Section 117 of the Higher Education Act, whereby institutions must disclose foreign source gifts and contracts with a value of $250,000 (£186,000) or more to the department twice a year.

The National Association of Independent Colleges and Universities said institutions have been requesting improvements to the “outdated reporting portal” for many years.

But amid a “deeply concerning” 17 per cent drop in international students, Alexander Cooley, professor of political science at Barnard College, told Times Higher Education that revenue from donations was more important than ever.

“In the current political environment, universities understandably might be concerned that these reporting requirements could be selectively enforced and might even be used as leverage in future negotiations.”

Donald Trump is likely to use the information on the volume of foreign donations as a justification to increase endowment taxes, he added.

But Cooley said the enforcement of this statute seems “at odds” with how the administration has rolled back transparency laws and anti-corruption guidelines.

It paused enforcement of parts of the Corporate Transparency Act and the Foreign Corrupt Practices Act, narrowed the scope of the criminal enforcement of the Foreign Agents Registration Act and disbanded the Foreign Influence Task Force.

Cooley also said that a loophole in Section 117 means foreign donors can “relatively easily use an opaque shell company to conceal the national origin of their donation”.

The Trump administration has already initiated four Section 117 investigations into Harvard University and the universities of Pennsylvania, Michigan, and California, Berkeley.

Larry Donnelly, a law lecturer at the University of Galway, said action around foreign donations was “long overdue” in an economy where “cash is king”, “nefarious regimes” want to expand their realms of influence and universities pay “virtually no tax”.

Trump is also tackling this issue because it is politically advantageous for him to do so and is tapping into a “deep vein of frustration” around the high cost of US higher education,  he added.

“It is certainly a political winner for him. And it speaks to sad realities about the Democratic Party’s donor base, many of whom are in academia, and pivot to the cultural left that they haven’t been banging this drum for some time.”

The government has turned to fast-growing data technology company Palantir to help develop the new portal, according to reports.

Secretary of education Linda McMahon said universities have “both a moral and legal obligation” to be transparent about their foreign financial relationships and that the portal will protect them from “potentially harmful foreign influence”.