In a move to curb wasteful spending, the National Institutes of Health (NIH) has announced significant cuts to indirect costs associated with federally funded research grants. These grants, totaling approximately $35 billion in fiscal year 2023, are distributed among roughly 50,000 research institutions like universities and hospitals.
Previously, around 27-28% of each grant was allocated to cover indirect costs such as building depreciation, equipment maintenance, and capital improvements. The new directive, however, imposes a 15% cap on these costs, potentially saving billions of dollars annually. This change aligns with practices of many private foundations and large research funders like the Bill and Melinda Gates Foundation, which often provide lower or no indirect cost reimbursement.
The decision has been met with mixed reactions. While the Trump administration and Elon Musk, leading the Department of Government Efficiency, praised the move as a way to redirect funds towards actual research, some universities have expressed concerns. Institutions like the University of Wisconsin-Madison argue the cuts will disrupt essential research activities and limit student research opportunities. The University of Michigan, with a negotiated indirect cost rate of 56%, is currently assessing the policy's impact on its existing grants. Some academics have also criticized the decision as abrupt and potentially harmful.
The White House maintains that the reallocation of funds will ultimately benefit scientific research. The NIH has declined to comment on the matter.
