On February 7, the National Institutes of Health, the government’s largest and most important funder of biomedical and related research, announced a change in its procedures that would slash about $4 billion from the approximately $35 billion it makes each year in grants to universities, medical centers and other research institutions. The announcement sparked confusion and apprehension throughout the research community, with scientists and research administrators saying the cuts would substantially slow the progress of science and medicine.
At the center of the cuts is funding for what’s known as the “indirect costs” of research — money that the NIH gives to institutions to maintain and administer the facilities where research studies can be conducted. “Direct” costs awarded in a grant, meanwhile, would pay for things like the drugs, reagents, test tubes or other equipment used in a specific study. Indirect costs in NIH grants have traditionally equaled about 60% of every dollar spent on direct costs — last year, the NIH said it paid out about $9 billion for indirect costs. The newly announced NIH policy caps indirect costs at 15% per grant. The hit to big research institutions would be substantial: According to estimates, some institutions could lose $100 million or more per year at the new lower level.
“These indirect costs are terribly important — they’re essential for running the university,” said Nick Spitzer, a professor of neurobiology at University of California San Diego and president-elect of the Society for Neuroscience, a global organization of scientists in the field. “They go to keeping the lights on, the temperature controlled — all the facilities you need to have running so teams can do the science that people pay us to do.”
Since the NIH announcement, many scientific organizations and universities have harshly criticized the cuts, saying they’ll have an immediate and long-term chilling effect on basic scientific research — and the eventual lifesaving drugs and other benefits that accrue from that research. “The discovery of new treatments would slow, opportunities to train the next generation of scientific leaders would shrink, and our nation’s science and engineering prowess would be severely compromised,” wrote Harvard University President Alan M. Garber.
Research institutions in red states reacted just as negatively. “A reduction in the [facilities and administrative] rate to 15% would require the university to absorb more than $27 million to sustain its current research and facilities,” wrote Jeffrey P. Gold, president of the University of Nebraska System. “This change isn’t a cost savings; it’s a cost transfer that either intentionally reduces the scale and scope of our research programs and/or shifts responsibility for F&A from NIH to Nebraska taxpayers.”
In the short term, the NIH cuts would weaken or invalidate ongoing studies, wasting months or years of work, researchers told me. In the longer term, as Garber wrote, the dangers are far more dire. It is worth remembering that after World War II, the U.S. emerged as the world’s leading force in scientific and medical research, and we have federal dollars and political will to thank for this country’s current primacy in science. Back in the 1940s, Vannevar Bush, who directed American scientific and military research during the war, argued persuasively for expanded federal research funding in the postwar era. Bush’s vision and advocacy helped guide the energetic growth of U.S. government funding for science. Major funding cuts now will only weaken America’s research leadership — as well as the real-world advances and economic activity it enables.
“There were 10 blockbuster drugs in the last year and 100% of them were developed as a result of NIH-funded research,” one veteran scientist told me. “The U.S. is far and away the most important country when it comes to basic research, so this would hit the worldwide pharmaceutical industry.” China has been working hard to catch up to the U.S., and billions of dollars in cuts to research will only make that easier to do.
A statement from the American Association of Medical Colleges on healthcare is quite clear on what the medical community thinks about the impact of the NIH cuts: “Every American has benefited from NIH-supported medical research conducted at medical schools, academic health systems and teaching hospitals nationwide,” wrote AAMC President and CEO David J. Skorton and Chief Scientific Officer Elena Fuentes-Afflick. “Every American will be harmed by the undermining of this longstanding partnership between academic institutions and the federal government.”
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What do the NIH cuts mean for philanthropy?
The downsides of the cuts are clear, but a harder-to-answer question is what these changes could mean for private philanthropy, which funds research at the same universities and research centers that the NIH supports. I reached out to several of the larger grantmakers that focus on science and biomedical research, including Gates, Kavli and CZI, to ask how the NIH cuts might impact philanthropic giving, or how philanthropy might respond; all either declined to discuss the issue or didn’t respond to my request.
It certainly seems clear that philanthropy won’t pick up the slack from a major cut to NIH funding in the near future. Inside Philanthropy frequently writes about the invaluable role of foundations and individual givers in research, but in the working science world, that funding doesn’t begin to approach the amount of money that comes from the NIH and other government sources, such as the National Science Foundation. Senior scientists I spoke with — principal investigators who run labs — estimated that between 85% and 95% of their research funding comes from places like the NIH and NSF. Philanthropy plays an important role in biomedical and scientific research, but it is typically of a sort that complements, rather than replaces, NIH funding.
“Philanthropic support that I and my colleagues have enjoyed is a small portion of the total funding we’ve received in our careers, but it can’t make up for the loss of NIH funding,” Spitzer said. He added, however, that philanthropic funding produces a disproportionate impact “that’s much greater than the actual dollar amount. Because philanthropy can fund new and sometimes riskier ideas, and has a shorter application process than the NIH, it enables us to jump on new opportunities faster.”
While we don’t expect private funders to make up for that annual $4 billion deficit anytime soon, in a brave new world of billionaire-dominated giving, that total isn’t so far out of reach. Some of the richest donors we cover — those with centibillionaire fortunes — could bridge the gap singlehandedly, although the logistical complexities of tackling research grantmaking would still be daunting. Generally speaking, it would take a willingness to fund in a less-restricted way for organizational capacity-building, which is something of an analogue to these indirect costs. Some big donors may be skeptical about such an approach, but compared to more established private foundations, many new billionaire giving outfits (see Yield Giving) have actually been more open to less-restricted funding.
What is almost amusing is that the NIH justified the funding cuts for indirect costs by pointing out that 15% is in line with the levels that philanthropic research grants provide. But it’s not philanthropy’s job to set funding benchmarks for the government, and it most definitely is the government’s job to enable the best possible science and research that this country can produce.
Potential billionaire donors should note that it doesn’t even make sense economically to cut NIH funding: Government-funded research as a whole pays enormous dividends in economic activity and benefits. According to the NIH itself, every $100 million of NIH-supported research led to an estimated $598 million in further research and development.
The situation will likely change more than a few times over the coming weeks. It’s not even clear if the reduction in funding indirect costs will go into force — it is likely unlawful. Grant agreements between the NIH and the research institutions are legally binding contracts in which the indirect costs and other details are spelled out. The NIH said the new limit on indirect costs would apply immediately — that is, not just covering new grants, but already-negotiated grant contracts.
In response to a lawsuit filed by attorneys general in 22 states, a federal judge this week ordered a hold on the new policy. Nevertheless, that the NIH will continue to take more steps damaging to science in the U.S. is all but guaranteed by the recent confirmation of anti-science and anti-vaccine activist Robert F. Kennedy Jr. as secretary of the Department of Health and Human Services, which controls the NIH.
