Here’s a Bloomberg piece that matches what I have been hearing from the scientific community working on stuff like autism, cancer, nuclear fission, and more. (Or this from the New Yorker.)
Out of office
Recent story: A Harvard lab doing work on cancer won a grant in Q4. Expected the funds in February. Started firing up the experiments and hiring. Now it’s March. No checks. They called their grant administrator – out of office. Turns out they no longer work at the agency. Tried calling the boss. No response. So what happens next? They shut it down…
This is just one lab and the situation at every lab is likely identical. The Bloomberg piece, and other comments from contracts suggest the same – so many cases like this.
In recent years, the National Institutes of Health (NIH) has issued approximately 58,000 grants annually. The National Science Foundation (NSF) awards about 11,000 new grants each year. Regarding Small Business Innovation Research (SBIR) grants, across all federal agencies, approximately 4,000 awards are made annually. Therefore, combining these figures, there are roughly 73,000 individual recipient projects funded each year by these programs.
One of those grants is probably for a rare disease one of your relatives has, sadly now kiboshed.
Indeed, you can browse awardees and research topics in these databases, all out in the open:
1. NIH RePORTER (reporter.nih.gov) – Search NIH-funded projects by year, institution, investigator, keywords, and funding mechanism.
2. NSF Award Search (nsf.gov/awardsearch) – Browse all NSF grants, including abstracts and funding details.
3. SBIR.gov Awards Database (sbir.gov/sbirsearch/award/all) – Search SBIR/STTR awards across all participating federal agencies.
But what about administrative overhead fraud?
Part of how this topic has been positioned in the political debate is that it’s actually about elite institutions, taking an unfair share of the grand amount for administrative overhead. The comments above are actually not about that. It’s about a total freeze on funds going out. Indiscriminate.
But let’s have a look at the administrative costs. Why would there be any administrative costs?
Shouldn’t you be able to do some biology research just by yourself with a couple hundred dollars worth of ingredients if you’re at a place like Stanford? Or is it a big deal that you need lab space, in particular lab space in a facility that surrounded by a bunch of other researchers who know what you’re working on, and in particular with other equipment that you might only use for five minutes, but that’s hugely expensive to get access to…?
(ChatGPT and me below.)
Some context on “indirect costs”
Indirect costs, also known as Facilities and Administrative (F&A) costs, cover expenses like utilities, maintenance, and administrative support essential for conducting research but not directly attributable to specific projects. Traditionally, institutions negotiated these rates individually with federal agencies, leading to variations based on each institution’s infrastructure and administrative needs.
The Small Business Innovation Research (SBIR) program, aimed at fostering innovation among small businesses, has historically capped indirect cost rates at 15% to ensure that a significant portion of funding is directed toward direct research activities. This cap reflects the program’s focus on maximizing research output while maintaining fiscal responsibility.
In February 2025, the National Institutes of Health (NIH) announced a policy to standardize the indirect cost rate at 15% across all grants, affecting both new and existing awards. This move aimed to streamline funding allocations and align NIH practices with those of private foundations, which often limit indirect costs. However, this decision faced criticism from research institutions, as it significantly reduced funding for essential operational expenses previously covered by higher negotiated rates.
Institutions like Harvard University have historically negotiated higher indirect cost rates, sometimes exceeding 60%, to cover substantial investments in research infrastructure, compliance requirements, and administrative support. These negotiated rates reflect the actual costs incurred by large research institutions to maintain state-of-the-art facilities and support services necessary for cutting-edge research.
Regarding the concentration of grant funding, data indicates that a significant portion of NIH funding is awarded to a relatively small number of institutions. For instance, in 2024, Johns Hopkins University led the rankings, with other top institutions also receiving substantial NIH funding. This concentration underscores the pivotal role major research universities play in advancing scientific and medical research in the United States.
Would it help small institutions, who have fewer overhead costs?
Standardizing indirect cost rates at 15% could have mixed effects on smaller research institutions:
Potential Benefits:
• More Competitive Grants: Since large institutions like Harvard typically receive 50-60% indirect costs, reducing all institutions to 15% levels the playing field. Smaller universities might have a better chance of winning grants.
• More Funds for Direct Research: A lower cap means a larger portion of the grant must go toward actual research, which could benefit researchers at institutions with lower overhead costs.
Potential Downsides:
• Financial Strain on Small Institutions: Large universities often cross-subsidize research with other revenue sources. Smaller institutions, lacking these resources, may struggle to maintain compliance, infrastructure, and administrative support.
• Less Capacity to Scale Research: Without sufficient indirect cost recovery, smaller institutions may find it harder to expand lab facilities, hire support staff, or maintain cutting-edge equipment.
Why are the big ones expensive?
The high overhead (indirect) costs at major research universities come from a mix of necessary infrastructure, compliance burdens, and administrative expenses. Some are genuinely expensive and essential, while others may reflect inefficiencies.
Legitimate High-Cost Infrastructure
1. Cutting-Edge Research Facilities – Advanced labs for biomedical, physics, or AI research (e.g., clean rooms, supercomputing clusters, high-field MRI scanners).
2. Core Scientific Services – Genomics, mass spectrometry, high-performance computing, and other centralized resources available to researchers.
3. Regulatory Compliance – Staff and systems to manage IRB (human subjects research), IACUC (animal research), biosafety, export control, and federal grant reporting.
4. Library & Data Resources – Subscriptions to costly scientific journals, databases, and research tools.
5. Facility Maintenance & Utilities – Climate-controlled labs, 24/7 security for sensitive research, and high electricity costs for computing.
6. IT & Cybersecurity – Large institutions handle sensitive data, requiring secure infrastructure to meet NIH, NSF, and HIPAA compliance.
Potential Bureaucratic Bloat
1. Administrative Overhead – Universities have expanded non-teaching administrative roles significantly over the past few decades. Some of this is necessary, but studies suggest a high growth rate in non-research staff.
2. Overcompensated Leadership – Presidents, provosts, and senior administrators at elite universities often earn salaries in the millions.
3. Inefficient Decision-Making – Bureaucratic complexity can slow down research, with layers of approvals for simple tasks.
4. Luxury Campus Amenities – While not directly covered by grants, some universities spend heavily on non-essential perks (high-end fitness centers, fancy dining facilities), adding to operational costs.
Comparison to Smaller Institutions
Smaller institutions may lack certain rare, expensive facilities, but they also operate with leaner administrative structures. They often collaborate with larger universities or use shared national research facilities (e.g., national labs) instead of maintaining their own.
And do they produce more useful stuff?
Big universities are better at securing grants because of brand reputation, established networks, and lobbying power, but their efficiency in delivering high-impact research per dollar is debatable.
Why They Win More Grants
1. Reputation & Trust – NIH/NSF reviewers favor institutions with a strong track record.
2. Grant Writing Expertise – Large teams specialize in crafting winning proposals.
3. Faculty Prestige – Established researchers with prior funding get preference.
4. Political Influence – Elite universities have strong ties to policymakers.
5. Infrastructure Advantage – They already have the facilities, compliance systems, and personnel in place, making them “lower risk” for funding agencies.
Are They More Efficient?
Efficiency in High-End Research:
• Yes, in some cases – If a project requires multi-million-dollar facilities (e.g., particle accelerators, gene sequencing centers), large universities offer economies of scale.
• No, in other cases – Some research (especially theoretical or computational work) doesn’t require expensive infrastructure, yet still incurs high overhead at big institutions.
Inefficiencies in Bureaucracy:
• Administrative Bloat – The growth of university administrative staff outpaces research faculty, driving up costs.
• Slow Decision-Making – Large universities have complex layers of approval, making research slower and costlier.
• Salary Inflation – High executive pay and administrative costs can dilute funding impact.
Bottom Line
Big universities dominate funding because of structural advantages, not necessarily because they produce the most research per dollar. Smaller institutions might be more efficient in some areas but lack the infrastructure for certain types of research. If the goal is maximizing the impact of research dollars, a better funding model might involve targeted grants for smaller universities or requiring efficiency metrics in indirect cost negotiations.
So are the high costs just ignored?
Grant administrators do consider institutional overhead rates, but they generally do not adjust funding dollar-for-dollar based on whether a project is at a big vs. small institution.
How Indirect Costs Are Handled in Grant Funding
1. Fixed Indirect Cost Rates – Universities negotiate indirect cost rates with federal agencies, which then apply uniformly to all grants, regardless of the project’s actual administrative burden.
2. No Adjustments for Institution Size – A theoretical, low-capex project at a small school would have lower total costs because of a lower overhead rate, but big universities don’t receive less for the same project—agencies typically fund based on the approved budget, including the institution’s standard indirect costs.
3. Capped Overhead for Certain Grants – Some programs, like SBIR, cap overhead at 15%, but this applies universally and doesn’t scale by institution size.
Do High-Overhead Schools Adjust for Project Needs?
Not meaningfully. While universities justify their high indirect cost rates based on large-scale research needs, those rates still apply to all projects—even theoretical or computational work that doesn’t require expensive shared facilities.
In theory, universities could discount or waive indirect costs for projects that don’t require expensive infrastructure. In practice, they rarely do, since indirect cost recovery is a major revenue stream. Some elite universities have internal policies for reducing overhead on specific types of grants (e.g., certain private foundation grants), but federal grant overhead is generally non-negotiable at the institutional level.
Potential Reforms That Could Improve Efficiency
• Tiered Overhead Models – Adjusting indirect cost rates based on project type (e.g., theoretical vs. lab-based research).
• Performance-Based Overhead Scaling – Linking overhead rates to research productivity or efficiency metrics.
• Institution-Size Adjusted Grants – Providing additional incentives for smaller institutions with lower indirect cost burdens.
Right now, the system largely favors big universities charging high overhead, regardless of the project type
An example
Yes, your grant request from Hamilton College is likely to be smaller than an equivalent one from Yale because of differences in indirect cost rates.
Key Reasons Why
1. Lower Indirect Cost Rate at Hamilton – Smaller colleges typically have lower negotiated indirect cost rates (e.g., ~40% or less), while Yale’s could be 60%+, meaning a larger share of a Yale grant goes to overhead rather than direct research.
2. Lower Administrative Costs at Hamilton – A mathematics project at Hamilton likely requires minimal infrastructure beyond office space and computing, while Yale’s grant budget might still include institutional admin, compliance, and facility costs.
3. Same Direct Costs, Different Total Costs – If the research itself costs $100,000 in direct expenses:
• Hamilton (assuming 40% indirect): Total request = $140,000
• Yale (assuming 60% indirect): Total request = $160,000
Does This Make Hamilton More Competitive for Funding?
Not necessarily. Grant agencies typically fund the best proposals, not just the cheapest ones. If a panel prefers Yale’s reputation, established faculty, or research environment, they may fund the larger grant even if it’s more expensive. However, for smaller grants where cost-efficiency matters, Hamilton’s lower total cost might be an advantage.
Could Hamilton Voluntarily Charge Yale-Level Overhead?
No, because overhead rates are pre-negotiated with federal agencies and apply uniformly to all grants at a given institution. If Hamilton’s rate is 40%, it can’t arbitrarily raise it to Yale’s 60% level.
In summary: Yes, your grant request at Hamilton would likely be smaller, but that doesn’t necessarily make it more competitive unless the funding agency explicitly considers cost efficiency.
Why Reputation Often Beats Cost Efficiency
1. Peer Review Bias – Grant selection panels, often composed of researchers from top institutions, tend to favor proposals from well-established universities with stronger faculty track records.
2. Risk Aversion – Funders may see elite universities as a “safer bet” because they have a history of producing high-impact research and successfully managing large grants.
3. Network Effects – Researchers at top institutions often collaborate with other well-known scholars, making their proposals seem more promising.
But Don’t Administrators Have Fixed Budgets?
Yes, grant agencies work within a fixed budget, but they don’t allocate funds purely based on getting the most research per dollar spent. Instead, they prioritize:
• Scientific Merit (as judged by peer reviewers).
• Likelihood of Impact (often linked to institutional reputation).
• Track Record (past success with grants).
Does Being Cheaper Ever Help?
Sometimes, especially when agencies:
• Want to fund more projects – If they can stretch their budget by choosing lower-cost proposals, smaller schools might benefit.
• Target Underrepresented Institutions – Some NSF and NIH programs explicitly try to fund research at smaller colleges or minority-serving institutions.
Bottom Line
A smaller grant request alone won’t make you more competitive if reviewers see your institution or track record as weaker. Cost efficiency is rarely the deciding factor unless it aligns with a program’s funding strategy.