Indirects, what are they good for?

You may have heard that this week the Trump NIH has decided to immediately cap the indirect rate for all federal research grants at 15%.

But this isn't our first time down this path!

They tried and failed to lower it to 10% in 2017.

Their reasoning this time is that private foundations provide lower indirects and that reducing the indirect rate will "curb leftist agendas."

I hate to break it to my conservative friends, but science is not a leftist agenda.

That's not to downplay the important conversation we need to have about indirect rates which help to cover things like facilities, electricity, water, administrators, and funding the purchase of all of the equipment that end up in core facilities at universities.

Maybe you think there's administrative bloat, or that institutes spend too much money.

You might also be upset that some institutions get 30% indirects while other schools get close to 80%. (The average is 27%)

Why is there such a discrepancy?

Well, title II part 200 of the code of federal regulations (we'll get back to why this is important) says that indirects are calculated by taking the cost of doing science at the university (facilities, administrators, etc) and dividing that by how much money they spend directly doing research (the direct costs).

But universities don't just get this money, they have to submit documentation to support their calculations and then negotiate the rate with the federal government.

So, research institutions set their budgets based on what they've negotiated with the federal government which is determined by the laws of our country.

And they use those budgets to plan things like building facilities, or buying equipment that amortize/depreciate over decades.

Just capping the indirect rate at 15% without warning is a seriously damaging change that imperils not only the budgets of our top research institutions, but also all of the ongoing and future scientific work that they are doing.

Can a president and his associates just say that the laws of the US don't apply anymore?

Probably not, and I'm certain that this will go to the courts and be blocked like many of the other illegal actions that have been undertaken in the last few weeks.

But I want to try to instill in all of you the importance of federal research grants that are provided to our public and private universities.

The most innovative things we are doing right now are happening at these research universities.

It is the discoveries that these institutions make that turn into the products that we all use today.

And it is our research universities that do the important, high risk research that serve as the backbone for all of the advances that we have seen in healthcare, pharma, aerospace, energy and every other high technology industry in existence.

Investment in biomedical research alone has over a 2x ROI and generates billions of dollars in economic activity.

The US is unquestionably the most scientifically advanced nation on this planet and it's because we invest so heavily in these discovery efforts at research universities.

But irrational and hasty caps to indirects put all of that in jeopardy and my heart breaks thinking about the chilling effect this is going to have on scientific innovation if this policy stands.

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If you feel the same way, please contact your representatives in congress and explain to them why they must reverse this irresponsible new policy.

This policy was promptly blocked by federal judges on 2/10/2025 but whether the Trump administration will comply is another story.