Learning from Others: How CFIUS can be Applied in the Education
Sector to Control Influence from Foreign Investments
Ian Widman*
ABSTRACT
Money flowing from foreign entities into U.S. universities has rapidly grown recently, and so too have been the concerns over undue influence. The U.S. Senate, FBI, university interest groups, and now the Department of Education have shared their concerns that unchecked foreign funding in the United States’ academic sector can influence a university’s curriculum, grant improper access to sensitive research, and even stifle free speech.
The stakes are high. The Department of Education credits the strength of both the U.S. economy and national security to its unencumbered universities. The U.S. higher education system conducts a significant portion of the total research and development in the United States. Critical technologies such as nuclear power, defense equipment, and telecommunications are developed and tested at university research centers. Confucius Institutes within the United States have chilled discourse that critiques the Chinese government. Nuclear equipment has been improperly released from school research facilities to foreign countries.
Facing this modern and growing problem is a 22-year-old amendment to a 55-year-old statute. Section 117 of the Higher Education Act requires certain disclosures of foreign gifts, contracts, and donations. Institutional compliance with this statute has been poor due to lax enforcement and low penalties, resulting in large gaps in transparency of who is funding and influencing the U.S. higher education system.
This Note looks to the regulations governing the business sector to find a solution to strike a balance between innocuous foreign investment and national security—the Committee on Foreign Investment in the United States (CFIUS). CFIUS could provide a gateway mechanism that blocks any funds that could pull the U.S. education system away from the national interest and quell the growing concerns. This Note analyzes whether universities are currently exposed to CFIUS reach when accepting foreign donations and grants, and where any foreign funding is out of CFIUS’ scope, advocates for the regulatory and statutory changes necessary to adequately protect the higher education system.
* J.D., expected May 2022, The George Washington University Law School; B.S., Business Administration, May 2015, North Carolina State University. Special thanks to Walter Zalenski and David Levintow for their ideation and input during the preparation of this Note. Personal thanks to Bethan Fanning, Skylar Widman, and Kylie Widman for their intrinsic emotional support during the preparation of this Note.