Universities must make greater efforts to avoid being exploited by individuals seeking to launder their reputation, says a new report.
Accepting foreign donations without scrutiny leaves higher education providers open to the risk of being exploited by kleptocrats and autocrats and their “ill-gotten gains”, according to Paying for a world class affiliation: Reputation Laundering in the University Sector of Open Societies – written by Alexander Cooley from Columbia University, Tena Prelec from the University of Oxford, and John Heathershaw and Tom Mayne from the University of Exeter, and produced by the US agency National Endowment for Democracy.
The report highlights how higher education and think tanks are prime targets for reputation-laundering and draws on primary research as well as publicly available secondary data and a survey of gift acceptance policies at Russell Group and top US universities.
It points out that UK and Irish universities have, within the past decade, seen a near-tripling of philanthropic donations and, while individual providers agree that the majority of gifts still come from UK and US donors, fundraising is increasingly internationalised. For example, Oxford University saw a hundred-fold increase in donations from the Middle East between 2001 and 2014, with Saudi Arabia, the United Arab Emirates (UAE), and Qatar accounting for the majority of these amounts. It is estimated that more than one-third of overseas funding to UK universities now comes from China.
Reputational management is not just a one-time vetting process, but a recurring concern – Tena Prelec, University of Oxford
As well as making donations, individuals can also launder their reputations – that is, obtain positive publicity, legal standing, support and influence in their chosen country/university – by accepting invitations to speak and sidestepping conventional admissions processes.
The report’s authors cite several cases in UK universities as evidence of “reputation laundering’s wider ecosystem”. These include, in 2012, Cambridge’s Churchill College being forced to abandon plans for a ‘Nazarbayev Fellowship’ funded by the Kazakhstan branch of the financial services company PricewaterhouseCoopers after it was accused of reputation laundering. A spokesperson for the college argued that the fellowship title was named after the university in Kazakhstan to which the president had given his name, and that it was “not the college’s intention to celebrate President Nazarbayev.”
The report shows universities are increasingly aware of risks to their reputation of accepting questionable gifts, and have adopted ethical guidelines in response.
“Our study shows reputation laundering can involve private citizens endowing university programs and institutes to garner legal standing and manage their image,” Professor Heathershaw said.
“They do so by making donations, serving as guest speakers at high-profile events, and gaining preferential admission to academic institutions for themselves, their family, and associates”.
“Many of today’s funders are not merely individual, politically exposed persons, but companies and the states with which they are associated, blurring the distinction between reputation laundering, authoritarian influencing, and commercial interests.”
The report recommends:
- Universities should conduct due diligence on prospects before beginning negotiations about the terms of a particular gifts. University representatives should ascertain the donor’s identity, their citizenship/residency, whether they are on sanctions or other law enforcement watchlists or a politically exposed person requiring enhanced due diligence. They should also find out the source of funds used to make the proposed donation, the involvement of the donor in current legal proceedings, or any criminal history or allegations linked to the donor.
- Higher education institutions should consider making gift acceptance policies publicly available, and encourage institution-wide ethics training, regular accountability reviews, and the participation of the student body in major endowment decisions.
- Universities should provide a comprehensive and searchable public list of all donations (foreign and domestic) over a modest threshold (£10,000/$15,000), including the identity of donor, the amount, and major stipulations.
- Universities should adopt a formal policy of refusing to consider donations from a donor, foreign or domestic, whose family member or associate is currently in the admissions process.
Dr Prelec said: “Universities have serious concerns about reputational risk, but there is little agreement as to what this is, and how to mitigate it or recognise red flags.
“However, there is now a broad consensus that the status of named rights, honorary degrees, and university affiliations is subject to current events and may be susceptible to rapid change or revocation. This means reputational management is not just a one-time vetting process, but a recurring concern.
“To show their willingness to deal with this problem, universities must commit to full transparency in publishing information about gifts and partnerships: it has to become not the exception, but the norm”.
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