One of the primary reasons the Trump administration has provided for its surprising proposal to significantly reduce the overhead costs that the National Institutes of Health (NIH) covers in research grants is that many private organizations impose similar restrictions on the funding for what is known as indirect costs. According to the agency's guidance for the proposed changes, "Most private foundations that fund research provide substantially lower indirect costs than the federal government, and universities readily accept grants from these foundations."
While this statement holds true to some extent, experts in scientific funding have told STAT that the comparison is not entirely fair. Plaintiffs challenging the policy change in federal court have echoed this sentiment. Although the 15% cap on indirect costs proposed by the NIH aligns with the rates most foundations offer, it's important to note that universities often accept significantly less than their actual overhead costs from private sources because they receive a much larger portion of their research funding from the federal government.
Private foundation funding is often seen as a beneficial supplement to governmental research funding. Although these foundations typically provide lower indirect cost rates, universities agree to these terms due to the substantial funding they receive from federal sources, which helps balance their financial needs. This arrangement highlights the pivotal role of federal funding in supporting university research infrastructure.
