Penn got $258 million in foreign money, and there may be more it hadn’t disclosed

Chinese banks and real estate firms. Pharmaceutical companies in nearly a dozen countries. Saudi Arabia’s Ministry of Defense.

These are among the hundreds of foreign organizations that have made financial gifts or contracted with the University of Pennsylvania between 2013 and the middle of last year, federal records show. The amount of foreign money flowing to Penn during that period comes to $257.9 million, with China giving the most of any country.

But that total could be even higher, according to Department of Education officials cracking down on how schools report funds they receive from foreign sources. Since July 1, the department said this month, 10 schools have disclosed $3.6 billion in “previously unreported” foreign money, including two Pennsylvania colleges: Penn and Carnegie Mellon University in Pittsburgh.

The announcement came as the Education Department issued two investigative requests to Harvard and Yale, asking for more information about their foreign funding. Last year, the department sent similar notices to six other schools, including Rutgers University and MIT.

The requests have focused on gifts coming from countries such as China, Qatar, Saudi Arabia, and Russia.

“If colleges and universities are accepting foreign money and gifts, their students, donors, and taxpayers deserve to know how much and from whom," Secretary of Education Betsy DeVos said in a Feb. 12 statement. “Moreover, it’s what the law requires. Unfortunately, the more we dig, the more we find that too many are under-reporting or not reporting at all.”

Under the Higher Education Act, schools must disclose gifts and contracts of $250,000 or more in a calendar year. Colleges file the reports by Jan. 31 or July 31, whichever date is soonest after the transaction, and data covering the previous 6½ years are posted online.

An Education Department spokesperson told The Inquirer that Penn “recently submitted a number of ‘previously unreported’ transactions” that don’t appear in the data that’s currently online. Most of the transactions “appear to have been submitted last month,” the official said. That new information likely will be released in March or April.

Overall, Penn raised $626 million last year, placing it among the top 10 colleges that received the most donations, according to a survey of 913 schools by the Council for Advancement and Support of Education.

Penn did not respond to several requests for comment on the foreign funding data.

“Carnegie Mellon has always taken seriously our obligation to report contracts with and donations from foreign persons and entities, and we believe we have accurately disclosed these contracts and donations in compliance with Section 117 of the Higher Education Act,” school spokesperson Julie Mattera said in a statement. “We have not changed the way we report.”

The American Council on Education says the DOE hasn’t given colleges enough guidance on how to comply with the reporting requirements. “Instead, what they’ve done is play a game of ‘gotcha’ with some high-profile schools,” said Steven Bloom, the group’s director of government relations.

In January 2019, the council, which lobbies for colleges and universities, asked the department for clarification on reporting thresholds and correcting previous reports.

The following month, a bipartisan U.S. Senate report examined Confucius Institutes, which offer language classes and promote cultural events on U.S. campuses with funding from the Chinese government. The report, from a subcommittee overseen by chairman Rob Portman (R., Ohio) and Delaware Democrat Tom Carper, said this Chinese funding “comes with strings that can compromise academic freedom.” It also found that colleges were failing to report foreign gifts and that the Department of Education was not conducting regular oversight.

The available data show that organizations in China gave $67.6 million in gifts and contracts to Penn between Jan. 1, 2013, and June 30, 2019. Penn received the third-highest amount of funding from groups in mainland China, behind Harvard and the University of Southern California, a Bloomberg analysis found this month.

Financial institutions, collectively, were among China’s leading gift-givers to Penn. Six banks in China gave donations or contracts to Penn that were collectively worth $13.6 million. Another big donor — E-House (China) Holdings Limited, a real estate services company — gave $6.3 million in gifts.

Forty percent of the mainland China gifts, worth $27.1 million, came from anonymous donors.

After China, money from sources in England ($60.9 million), Hong Kong ($24.9 million), Singapore ($14.6 million), and India ($11 million) rounded out the top five countries giving gifts and contracts to Penn.

About $35 million worth of contracts and donations to Penn came from pharmaceutical, biotechnology, and medical-device firms abroad — such as GlaxoSmithKline ($10.2 million in contracts) and AstraZeneca ($5.3 million in contracts) in England, BioNTech in Germany (a $4.4 million contract), and CRISPR Therapeutics in Switzerland ($1.95 million in contracts).

Eric Campbell, a professor of medicine and bioethics expert at the University of Colorado, said it’s not surprising that global drug companies would be involved with a major research university such as Penn.

“When it comes to research grants, they are generally viewed as acceptable and there are very elaborate infrastructures for managing them at universities,” Campbell said.

About $35 million worth of contracts and donations to Penn came from pharmaceutical, biotechnology, and medical-device firms abroad — such as GlaxoSmithKline ($10.2 million in contracts) and AstraZeneca ($5.3 million in contracts) in E, BioNTech in Germany (a $4.4 million contract), and CRISPR Therapeutics in Switzerland ($1.95 million in contracts).

Out of all Penn’s foreign gifts and contracts, the $2.7 million originating in Saudi Arabia was tiny, making up about 1%.

The school disclosed two monetary gifts from the Saudi Ministry of Defense: one in March 2017 for $767,000, and one in April 2018 for $557,000.

A third entry for the Saudi Defense Ministry was labeled as a contract for $684,400 in April 2019.

Penn political science professor Robert Vitalis recalled giving a lecture to Saudi military officers attending an executive education seminar at Wharton in March 2017. “I was paid a couple thousand dollars for the 45-minute lecture,” Vitalis said. But he didn’t know whether the seminar was connected to the foreign funds reflected in the Department of Education data.

A Wharton spokesperson referred all questions to Penn’s media relations, which did not respond to messages.

Colleges’ financial ties to Saudi Arabia became a subject of controversy after the October 2018 murder of journalist Jamal Khashoggi, a vocal critic of the kingdom who wrote for the Washington Post. The CIA concluded that the order to kill Khashoggi would have to have come from Saudi Crown Prince Mohammed bin Salman.

A number of schools — most notably, perhaps, MIT — said they would review their financial relationships with Saudi Arabia in the wake of Khashoggi’s death.

“The money from Saudi Arabia has embarrassed institutions, given that the money is coming from a government that is pretty repressive and just assassinated a U.S. reporter,” said Vitalis, a previous director of Penn’s Middle East Center who writes about the U.S.-Saudi relationship and oil in a forthcoming book called Oilcraft.

Another Philadelphia college, Temple University, has reported $8.7 million in contracts with the Saudi Cultural Mission, a government agency, in 2018 and 2019. The payments “represent tuition for students taught,” according to a school spokesperson.

“We continue to have students from Saudi Arabia attend Temple, and therefore continue to accept funding from that country to support their education,” spokesperson Ray Betzner said.

Temple’s largest source of foreign contracts, according to the Education Department data, is with Kuwait’s embassy — which paid a combined $15.1 million for student tuition in 2018 and 2019, Betzner said.

Likewise, he said, $2.7 million from the Beijing National Accounting Institute in 2017 and 2018 covered student tuition. Temple partnered with the institute to offer master’s programs through the Fox School of Business.

Carnegie Mellon University disclosed $1.48 billion in gifts and contracts through last June. About half of that — $750 million in 2016 — stemmed from a legal settlement for patent enforcement, according to Mattera, the school spokesperson. The case centered on patents by two inventors at CMU, who came up with new technology to help computer users recover data. The settlement was paid by Marvell Technology Group Ltd., a Bermuda entity.

The school received $373.9 million in contracts from the Qatar Foundation for Education, and a $26.95 million contract from the Rwandan government. Those funds “are used principally to run our campuses and educate students in those respective countries,” Mattera said.