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The Black Hole

Misallocated incentives in an already cash-strapped grants system

BY JONATHAN THON | JAN 28 2013

Research proposals are by necessity narrow in focus, and once awarded require that funds be allocated as described in the proposal on penalty of having these funds withdrawn. When funding rates are low it becomes increasingly important for investigators to demonstrate that their research proposals are unlikely to fail and therefore constitute a good investment. This requires evidence of the successful application of their research plan in the form of preliminary data.

As a result, nearly one-third of any research plan will propose experiments that have already been performed, and a research proposal will not be funded without preliminary data (despite what the grant might say). To generate these data investigators must unofficially devote a significant portion of their current research funds and allotted time over the first two years of a five-year operating grant, to put in place the backbones of their second and third research proposals. This amounts to a gross misallocation of funds, creates an unnecessary administrative burden on the investigator, and significantly limits progress on the original (funded) research plan.

Instead of funding long-term ambitious projects that redraw our current worldview and spark scientific and technical innovation, taxpayers end up funding a series of incremental short-term projects that colour in the spaces. While arguments can be made for the importance of both, access to infrastructure, equipment and expertise, resulting from earlier investments in the basic sciences has afforded us the unique opportunity in the United States and Canada to be trailblazers and innovators, creating the technologies and new industries that will guarantee our future economic prosperity. Growth, in this regard, is currently being stifled not only by insufficient investment in the sciences (as is often discussed), but by a ballooning and self-perpetuating administrative process that ends up costing more than the research itself.

At research-intensive institutions such as Brigham and Women’s Hospital, Children’s Hospital, Beth Israel Deaconess, Dana Farber and Harvard Medical School (all located within five city blocks of each other, in the Longwood Medical and Academic Area in Boston, MA), indirect costs constitute approximately 76% of any total award and pay for facilities and administrative costs of the research institution. At this Research Crossroads site, you can input your favorite research institute and search their respective indirect cost agreements for yourself. This means that for every $100 of federal research spending, another $76 dollars is collected as overhead. While a certain amount of indirect costs are needed to support the research infrastructure, 76% is exorbitant (and, incidentally, reduces the total number of awards federal agencies can provide).

At major Canadian universities the current reimbursement rate of indirect costs is roughly 22%.* While it is true that ensuring regulatory and safety compliance, managing intellectual property, renovation and maintenance of research spaces, training of staff in animal care and ethics… etc. are unavoidable university expenses, it is also morally problematic when a significant portion of taxpayer money originally allocated to promoting scientific advancement for a specific research program is becoming absorbed into administrative fees at the recipient university. Indeed, the now common title of “principal investigator” instead of “professor” reflects the shifting role of researchers at biomedical institutions as administrative heads rather than academic leaders. Indirect costs need to be capped at 40%, and research equipment and administrative facilities centralized within each department, as will be discussed in my following post. In the interim, I would love to hear what you consider fair and why.

*This is a change from the original post, see comments below.

ABOUT JONATHAN THON
Jonathan Thon
Dr. Thon is the founder and chief scientific officer of Platelet BioGenesis.
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  1. Steven Siciliano / January 28, 2013 at 22:31

    Jonathan,

    I’m not sure where you are getting your numbers from but in all of my Canadian tricouncil grants, I’ve never put in an overhead figure (except for partnership programs which University require overhead).

    The 40% number you may be referring to may only apply to research contracts. These contracts, typically insist on the IP residing with the industry and are not normally subsidized by the Tricouncils. Similarly, overhead will apply to government research contracts but these too are not eligible for Tricouncil. So for example, if you were to look up McGill in Research Crossroads you will see that their rate is 63% but this does not apply to Tricouncils, only governments.

    I’d be very interested to know what Canadian University is asking for a 40% overhead for cash contribution to a NSERC CRD.

    By the way, you don’t have to post this, just perhaps put a reference in for your Canadian overhead rate for Tricouncils. I think you may be off base here. As the dilemna you describe occurring in the CIHR world has to do with the philosophy of that particular granting agency. Not the overhead rate.

    • Tracey Leacock / January 30, 2013 at 16:10

      Hi Steven,

      The Canadian Tricouncil agencies generally don’t allow researchers to include requests for indirect costs (which are different from matching funds) in specific proposals. Instead, funding for indirect costs is distributed to eligible institutions through the Federal Indirect Costs Program.

      In brief, the calculation is based on the total Tricouncil funding awarded to a university over the previous 3 years, with the percentage dropping as the total funding awarded to a given institution increases.

      Individual researchers are often not aware of this program, as there is no requirement that any of the funds be directed back to the Principal Investigators. I believe some universities allocate these funds entirely at the VP level; others let portions trickle down to the Deans, Chairs, and, occasionally, individual faculty level.

      I agree with you, though, that there is a difference between increasing indirect costs and the issue of using current grant money to do work that was not part of the current proposal yet is apparently needed prior to submitting the next proposal.

  2. Steven Maltby / January 31, 2013 at 00:19

    Couldn’t agree more with your post Jonathan, particularly regarding your point on “new” funding applications being prepared to cover research that has already been completed.

    In my current position in Australia, I have been surprised at the 3-year federal granting cycle. Based on low funding levels, each grant requires a large amount of “preliminary” data, to the point that the project is basically completed before the grant is submitted. The 1st year of funding for a successful grant is then spent completing the study and submitting for publication (to prove successful track record). With safety and ethics requirements, starting actual new experiments/studies would require most of the year to even have appropriate approvals. The 2nd year is then used for follow-on experiments to generate new “preliminary” data and the 3rd year is again devoted to new grant submission (as grants are due in Feb/Mar for the following January).

    There seems to be very little time in the grant cycle to actually work on the proposed experiments within the actual grant.

  3. bob / January 31, 2013 at 09:13

    On the issue of funding incremental advances, I basically agree. But on the issue of indirect costs, you need to keep in mind where alternative funding might come from. If there is no alternative source to fund the cost of buildings, etc. simply cutting indirect costs would lead to layoffs (this may or may not be a good thing, but it needs to be part of the discussion).

  4. Léo Charbonneau, Deputy Editor, University Affairs / January 31, 2013 at 11:02

    Hello Jonathan,

    The Research and Policy Analysis Division of AUCC (Association of Universities and Colleges of Canada, publisher of University Affairs), asked that I post the following comment for the sake of clarification and furthering the discussion. In that spirit, here goes:

    Dr. Thon raises important questions about the funding of the indirect costs of research. However, the numbers he uses for Canada are not accurate. Dr. Thon sates that the indirect costs reimbursement rate for Canadian universities is 40%. For research supported by the granting councils, this would mean that for every dollar of federal research, universities would get an additional 40 cents to cover the indirect costs of the research. This is far from being true. The current rate of reimbursement of indirect costs, through the Indirect Costs Program, is only 21.5% and for Canada’s most research-intensive universities, this rate is even lower.

    It must also be emphasized that indirect costs, although not always easy to grasp, are real costs that must be covered. Indirect costs that can’t be avoided include such things as ensuring regulatory and safety compliance, managing intellectual property, renovation and maintenance of research spaces, training of staff in animal care and ethics, etc.

    Low levels of support for indirect costs means that money to pay for these costs has to be taken from universities’ general operating and endowment funds. In the end, money spent on unfunded indirect costs is not available for other purposes, such as teaching. Getting an appropriate level of support for indirect costs from the federal government is thus essential. Arbitrarily capping indirect costs reimbursement does not appear to be a sustainable solution for Canada’s universities.

  5. Jonathan Thon / January 31, 2013 at 12:30

    Thank you for your comment. I have corrected my article accordingly.