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Murphy Releases Discussion Draft of Protecting Endowments from Our Adversaries Act

May 16, 2022

Washington, D.C. – Today, Rep. Greg Murphy, M.D. (NC-03) released a discussion draft of his upcoming bill, the Protecting Endowments from Our Adversaries Act (PEOAA). The proposal discourages billion-dollar, tax-advantaged university endowments from investing in entities that have been deemed an unacceptable national security risk.

"Because of university endowments' educational mission and tax advantage status, they have a moral obligation not to invest in companies that are detrimental to the national security of the United States," said Murphy. "We know that U.S. endowment dollars have funded Chinese companies in the past, and this draft seeks to address the pervasiveness of the problem. Colleges and universities have been warned about the national security implications of funding our adversaries. It's time that Congress have an open and honest conversation about the risks these investments carry and take action to address it."

The Protecting Endowments from Our Adversaries Act applies to private colleges and universities endowments over $1 billion. The draft is designed to encourage divestment from listed entities with no additional penalty.

PEOAA:

  • Applies to private college and university endowments over $1,000,000,000
  • Disincentivizes endowments from investing (directly or indirectly) in adversarial entities that are on any of the following US Government Lists (USG):
    • Entity List, Military End User (MEU) List, Unverified List, FCC Covered List
    • These lists are maintained by the USG and restrict the export of certain sensitive technologies and components to organizations who are involved in activities that threaten the national security of the United States. The USG could not verify their legitimacy and reliability in an end-use check, or are deemed to pose an unacceptable risk to national security.
    • Treasury will maintain a master list that updates as companies are added or taken off each list.
  • Imposes a 50% excise tax on the principal investment at the time of acquisition if an endowment invests in a company that is listed.
  • One year after an entity is listed, imposes a 100% excise tax on the realized gains derived from listed investments.
  • Once signed into law, the bill will not take effect until the following December.

Read the PEOAA discussion draft HERE. Access a one-pager of the proposal HERE.

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Issues:Education