Foreign Funding Under Fire: A US Crackdown with Global Lessons for Accountants
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Foreign funding received by higher education institutions in the United States is under tightening scruitiny. Universities are facing growing regulatory scrutiny over foreign gifts, contracts and partnerships. While this is unfolding in the US, the governance lessons apply just as strongly in South Africa and other developing markets where foreign capital plays a critical role in funding growth.
The Core Issue
US regulators are increasingly concerned that foreign entities, including state-aligned actors, may use donations or partnerships to gain influence, access research, or shape institutional decisions. Existing laws already require disclosure of certain foreign gifts. Proposed legislation, such as the DETERRENT Act, would expand reporting obligations and enforcement powers even further.
The important shift? Scrutiny is no longer limited to formal research funding. Philanthropic donations, endowments and non-research partnerships are now firmly in scope.
Why This Matters in South Africa
This may be a US-driven development, but the principle is universal: foreign money brings opportunity, and it also brings risk. South African universities, NGOs, public entities and even private businesses increasingly rely on foreign grants, investment and donor funding. That funding can accelerate growth, but weak due diligence can expose institutions to:
Regulatory breaches
Reputational damage
Governance failures
Executive and board liability.
Regulators often apply standards with hindsight. “Reasonable due diligence” today may look inadequate tomorrow.
The Governance Gap
One key concern raised in the article is the gap between structured research compliance and less formalised fundraising oversight.
Research teams typically follow strict compliance protocols. Fundraising or advancement teams often operate with fewer documented checks, even though the financial and reputational stakes are just as high. This creates risk.
Institutions are now being pushed toward proactive risk assessment models that include:
Identifying ultimate beneficial owners
Screening for sanctions and political exposure
Reviewing reputational red flags
Documenting due diligence processes
Verifying the true source and intent of funds
In simple terms: follow the money, properly.
The CIBA Perspective
Strong governance is not about blocking investment. It is about protecting economic growth through accountability and transparency.
As outlined in the CIBA Intellectual & Policy Framework , governance must deliver real outcomes, reduce risk and strengthen institutions — without imposing unnecessary compliance burdens that stifle growth.
The balance is critical. Foreign funding can drive innovation, infrastructure and development. But governance failures undermine sovereignty, credibility and long-term economic stability.
Practical Takeaways for Accountants
Whether you are in practice or in commerce:
Map all foreign funding streams — not just formal contracts.
Identify the true beneficial source of funds.
Align finance, compliance and leadership under one risk framework.
Keep a documented audit trail that can withstand regulatory review.
The Bottom Line
The US crackdown is not an isolated event. As global scrutiny increases, accountants who understand foreign funding risk, and help their clients or organisations manage it properly, will protect reputations, reduce liability and position themselves as trusted strategic advisers. In today’s environment, due diligence is no longer optional. It is part of professional survival.
Article source: Accounting Today
