In July, the U.S. Department of Education Notices of Investigation to four U.S. universities seeking information on the “Confucius Institutes” operating on their campuses. The investigations center on provisions of the Higher Education Act requiring reporting of certain foreign gifts. But the investigations are part of a larger U.S. national security initiative to address foreign influence on U.S. campuses.

In light of these initiatives, the need is greater than ever to balance the sometimes-competing values of protecting U.S. national security and defending academic freedom. Because of the intense U.S. national security focus being trained on these organizations, U.S. colleges and universities are well advised to pay close attention to developments in this area.

Background

The Confucius Institutes are non-profit public educational organizations operating at colleges and universities around the world. They are funded jointly by the Chinese Government and the host university. The institutes are operated by the Chinese Language Council International, an agency of the Chinese Ministry of Education. About 110 colleges and universities host Confucius Institutes in the United States, the most of any country in the world, according to a 2019 U.S. Senate report. There are Confucius Institutes in 44 U.S. states. The stated aims of the program are to promote Chinese language and culture and to facilitate cultural exchanges.

Why Does It Matter?

The U.S. government is concerned that the influx of Chinese funding to U.S. colleges and universities, in part through the Confucius Institute program, results in undue foreign control and influence over the U.S. higher education system. In February 2018 testimony to the Senate Intelligence Committee, FBI Director Christopher Wray stated that the FBI is investigating the Confucius Institutes as possible threats to U.S. national security. Increasingly over the past decade or so, the United States has been treating U.S. technological superiority as a strategic national security asset. This has forced U.S. colleges and universities into a sometimes unwelcome role as a battleground over foreign influence.

When a Confucius Institute is established, the Chinese government conditions its financial contributions on its right to approve all teachers, events, and speakers affiliated with the Institute. Teachers at the institutes are required to sign contracts with the Chinese government pledging not to take any actions that would damage China’s national interests.

A leader of the Chinese Politburo reportedly stated that the Confucius Institute is “an appealing brand for expanding our culture abroad,” and arguing that the program has made important contributions to the expansion of China’s “soft power” around the world. According to the speech, “the ‘Confucius’ brand has a natural attractiveness. Using the excuse of teaching Chinese language, everything looks reasonable and logical.”

The possibility of undue foreign influence on U.S. campuses has long troubled the FBI. In a recent speech before the Council on Foreign Relations, FBI Director Wray placed the Confucius institutes in the context of a broader Chinese threat, saying that “China has pioneered a societal approach to stealing innovation in any way it can,” targeting private industry and university technologies, using the Chinese intelligence services, state-owned enterprises, private companies, graduate students, and researchers. He stated that the FBI conducts “economic espionage investigations that almost invariably lead back to China in nearly all of our fifty-six field offices, and they span just about every industry or sector.” As we have reported here, U.S. international trade issues on University campuses often cross over among economic espionage, export controls, sponsored research, sanctions, and national security issues.

And the Bureau’s response has often been unduly heavy-handed. Some of our university clients have had regular visits from their local FBI field offices, who appear at times to be explicitly encouraging faculty and administration to engage in profiling to spot the Chinese threats on campus. The FBI

The New U.S. Enforcement Angle

The immediate problem for U.S. campuses is that the receipt of Confucius Institutes funding may trigger a reporting requirement under the Higher Education Act of 1965. Specifically, institutions are required to report foreign gifts totaling $250,000 or more, considered alone or in combination with all other gifts received from the same foreign source within a calendar year, to the Secretary of Education. Failure to meet this obligation may result in fines. The U.S. Attorney General may also bring a civil action against the institution at the request of the Secretary of Education. Compliance investigations by the Department of Education can be initiated through notices like those issued in July to two prominent U.S. universities.

The July notices followed May 13, 2019 letter from the Deputy Secretary of Education (found here) reminding U.S. colleges and universities of their reporting obligations under the Higher Education Act. In recent weeks, Department of Education officials have opened investigations into Georgetown University, Texas A&M University, Cornell University, and Rutgers. All of these institutions must now disclose years of financial records and details about funding they may have received from Qatar, Saudi Arabia, Huawei and more.

Reporting Checklist

In order to determine whether your institution may be subject to reporting requirements under the Higher Education Act, we recommend answering three basic questions:

1. Did your institution receive gifts or enter into contracts with a foreign source (other than a foreign government) worth more than $250,000?
2. Did your institution receive gifts or enter into contracts with a foreign government worth more than $250,000?
3. Is your institution owned or controlled by a foreign source? If so, were changes made to the institution’s programs or structure?

The Takeaway

Given the increased scrutiny surrounding foreign funding and involvement in U.S. post-secondary institutions, more schools will likely face questioning from the Department of Education in the coming months. It is thus more important than ever that U.S. colleges and universities are aware of their foreign funding reporting obligations. More broadly, the challenge of balancing academic freedom and national security compliance must continue to be addressed at an organizational level.

If you answered ‘yes’ to any of the questions above, you may wish to consult counsel regarding your obligation to submit reports under Section 117 of the Higher Education Act.

The authors gratefully acknowledge the contributions of our former associate Amber Thomson, who helped draft this article.