NSF Foreign Financial Disclosure Reports due September 3 for higher education institutions

In August 2022, President Biden signed into law the CHIPS and Science Act (“CHIPS Act”), a landmark legislation intended to strengthen the U.S. position in semiconductor research, development, and manufacturing. Section 10339B of the CHIPS Act (codified at 42 U.S.C. § 19040) requires a “recipient institution of higher education” to submit to NSF an annual “Foreign Financial Disclosure Report” (FFDR) of “the current financial support, the value of which is $50,000 or more, including gifts and contracts, received directly or indirectly from a foreign source…associated with a foreign country of concern.”          

NSF’s FFDR requirement applies to IHEs that are direct recipients of NSF funding on or after May 20, 2024. The FFDR requirement differs in certain aspects from ED’s Section 117 reporting requirement, which we’ve previously summarized here. Examples of notable distinctions include:

• Who must report. Both the NSF and ED requirements apply to IHEs as defined by 20 U.S.C. § 1001(a). While IHEs submit one Section 117 report for the entire institution, including intermediaries that operate substantially for the benefit or under the auspices of the institution, an IHE may submit one or more FFDRs to NSF. According to NSF’s FFDR FAQs:

Is an FFDR required for each campus of a multicampus IHE?

Every entity of an IHE, whether a branch campus of a multicampus IHE, or a school of the IHE (e.g., a medical school affiliated with an IHE), that is a direct recipient of NSF funding and has its own Unique Entity ID (UEI) should prepare its own FFDR submission.

One exception is if all NSF funding during the reporting period is directed to the main campus of a multicampus IHE and the main campus then allocates the funding to the branch campus (the branch campus does not receive any direct funding from NSF during the reporting period). The main campus is considered the direct recipient of NSF funding and the FFDR requirement applies to the main campus. The branch campus, even if it has a UEI, does not have to prepare its own FFDR submission since it is not a direct recipient of NSF funding.

• Reporting period. Section 117 requires biannual reporting on a calendar year basis. FFDRs are to be submitted annually for the period July 1 to June 30. IHEs’ first FFDR submissions relate to financial support for the period July 1, 2023 to June 30, 2024. For this year only, IHEs must file by September 3. For subsequent years, reports are due by July 31.

• Reporting threshold. The Section 117 reporting threshold is gifts and contracts valued at $250,000 or more at the time the gift was received or the contract was entered into. Comparatively, the FFDR reporting threshold is $50,000 and is based on the amount received by the IHE in the relevant one-year period. NSF issued the following updated guidance to clarify how it expects IHEs to treat multiyear contracts:

Based on additional questions from the community and upon further review, NSF wishes to provide updated guidance. The requirement to disclose is based on the receipt of gift or contract payments during the current reporting period. Therefore:

• If a multiyear gift or a contract spanning more than one year from a foreign source in a foreign country of concern is initiated during the reporting period (July 1, 2023, to June 30, 2024), and $50,000 or more is received during the reporting period (July 1, 2023, to June 30, 2024), only the amount received during this reporting period must be reported in the “Gift Amount” or “Contract Amount” field in the FFDR portal.

• If a multiyear gift or a contract spanning more than one year from a foreign source in a foreign country of concern was initiated prior to the reporting period (July 1, 2023, to June 30, 2024) but $50,000 or more is received during the reporting period (July 1, 2023, to June 30, 2024), the amount received during the reporting period must still be reported in the “Gift Amount” or “Contract Amount” field in the FFDR portal.

• Amounts received in future years must be reported in future years, not in this reporting period (July 1, 2023, to June 30, 2024).

• Countries of concern. While Section 117 reports capture gifts and contracts attributable to any foreign country, the scope of the FFDR reports is narrower. FFDR reports relate to financial support received from a foreign source associated with a “foreign country of concern.” The FFDR FAQs confirm that such “countries of concern” include China (excluding Macau, Hong Kong, and Taiwan), North Korea, Russia, Iran, and “any other country deemed to be a country of concern as determined by the [U.S.] Secretary of State.” The Secretary of State most recently issued a “Countries of Particular Concern” list in December 2023. In addition to the aforementioned countries, the list includes Burma, Cuba, Eritrea, Nicaragua, Pakistan, Saudi Arabia, Tajikistan, and Turkmenistan.

• Tuition payments. ED has interpreted Section 117 to capture tuition payments, including when an individual makes a tuition payment for themselves or another individual. Comparatively, NSF has interpreted the FFDR requirements to include certain types of tuition payments. As explained in the FFDR FAQs:

Are IHEs required to report tuition payments?

Tuition payments for a specific student(s) are excluded from the reporting requirement (e.g., parent payment for child/children or other relatives). However, if tuition payment is received from a foreign source in the form of a grant, scholarship, or other form of financial aid, the payment is reportable when the cumulative threshold of $50,000 from a foreign source is met.

• Negative reports. For Section 117, ED does not require an IHE to make a report if it was not involved in any reportable transactions for the relevant period. NSF, however, requires negative FFDRs. As explained in the FFDR FAQs: “Any IHE that receives an award or funding amendment on an existing award on or after May 20, 2024, must submit an FFDR regardless of whether financial support in the value of $50,000 or more in gifts and contracts from a foreign country of concern was received.”

Next steps

FFDRs for the period July 1, 2023 – June 30, 2024 are due Tuesday, September 3. However, IHEs who are not yet ready to submit can request an extension beginning September 4, and extensions may be granted in 30-day increments. See NSF’s guidance for more details.

If you have any questions about FFDR requirements or Section 117 requirements, please feel free to reach out to the authors of this alert or the Hogan Lovells attorney with whom you regularly work.

Authored by Stephanie Gold and Megan Wilson