This article was updated June 18, 2020.
Starting with the July 31, 2020, reporting deadline, institutions of higher education are required to follow the new requirements for foreign gift reporting under Section 117 of the Higher Education Act. The Office of Management and Budget (OMB) approved most of the US Department of Education’s (ED) proposed revisions in April 2020.
Below is a review of the major changes that are effective starting with the July 31, 2020, reporting deadline.
In late 2019, ED issued a proposal for foreign gift and contract reporting requirements, which was originally effective for the January 31, 2020, reporting period.
However, ED postponed the effective date and eventually withdrew the proposal due to delays from the OMB and concerns raised by several stakeholders.
In February 2020, ED released an updated proposal concerning foreign gift reporting under Section 117, which scaled back some of the changes ED proposed in late 2019. This updated notice was open for public comment through March 11, 2020.
After receiving multiple comment letters from National Association of College and University Business Officers (NACUBO) and other higher education associations regarding concerns over the new reporting requirements, OMB approved the updated proposal with some clarifications and minor edits.
The revisions approved by OMB introduce several changes to Section 117 of the Higher Education Act. One proposed change that wasn’t approved by OMB was a requirement that the true copy of the gift or donation agreement or contract be included with the required reporting. However, the following changes were approved:
Original: An institution must report if it received a gift from, or entered into a contract with, a foreign source if the value of the gift or contract is $250,000 or more. This requirement applies when the gift or contract are considered alone or in combination with all other gifts from or contracts with that foreign source within a calendar year.
New: Each institution must report all gifts—gifts of money or property—received from, or contracts entered into with, a foreign source or an agent of a foreign source when the $250,000 threshold from a foreign source is reached in aggregate.
Original: For gifts received from, or contracts entered into with, a foreign source other than a foreign government, the aggregate dollar amount of these gifts and contracts attributable to a particular country. In addition, an entity must disclose the amount, the date, and a description of the conditions or restrictions, as applicable. For gifts received from, or contracts entered into with, a foreign government, the aggregate amount of these gifts and contracts received from each foreign government as well as the amount, the date, a description of the conditions or restrictions, and name of the foreign government, as applicable.
New: Reporting of each gift and contract from a foreign source must include:
- Name of foreign source, including name of the foreign government, if applicable
- Foreign-source address, including country of origin
The name of the foreign government, legal entity, individual, or person must also be provided if the gift or contract is from:
- A person, subsidiary, or affiliate of a foreign legal entity who acts as an agent of a foreign government
- A legal entity created solely under the laws of a foreign state or states
- An individual who isn’t a citizen or national of the United States or a US trust territory
Gift terms that must be reported include:
- Date received
- Detailed description of all conditions or restrictions, as applicable
- Recipient, including any and all intermediaries
Reporting of contract must also disclose:
- The name of the domestic party
- Contract terms, including amount, contract start date, and contract end date
- A narrative description of all conditions or restrictions, as applicable
All institutions need to evaluate their foreign gifts and contracts and file the necessary Foreign Gift and Contract Disclosure Form by July 31, 2020. Institutions will need to file this form annually with the ED Secretary on January 31 or July 31, whichever is earlier, for the preceding six-month period.
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If you have questions about the expanded foreign gift reporting disclosure requirements as approved by OMB, contact your Moss Adams professional.