On February 7, 2025, the National Institutes of Health (NIH) announced a sudden policy change to cap indirect cost reimbursements at 15% for all existing and new research grants.
The decision sent shockwaves through the research community and prompted extensive and heated online discussions on the potential implications. Universities and research institutions nationwide have expressed deep concern that this reduction could severely disrupt ongoing and future research projects, as indirect costs—covering essential expenses like facility maintenance, utilities, and administrative support—often exceed this cap, sometimes reaching over 50% of grant funding.
In response to a lawsuit filed by 22 states, a federal judge temporarily blocked the policy’s implementation and held a hearing on the issue on February 21. The block will stay in place until the judge issues a ruling.
The Decision
According to Notice NOT-OD-25-068, “Supplemental Guidance to the 2024 NIH Grants Policy Statement: Indirect Cost Rates,” the NIH has historically used negotiated indirect cost rates, which average 27%–28%.
However, many private foundations that fund research offer much lower reimbursement of indirect costs. For example, according to the notice, the Gates Foundation has a 10% maximum indirect cost rate, several cap indirect cost reimbursement at 12% or 15%, and some offer no reimbursement at all for indirect costs.
Citing concerns over accountability and alignment with private foundations, the administration claimed that the new 15% indirect cost rate is designed to “allow grant recipients a reasonable and realistic recovery of indirect costs while helping NIH ensure that grant funds are, to the maximum extent possible, spent on furthering its mission.”
What Are “Indirect Costs?”
While the administration argues that the new rate ensures that federal funds go toward “direct scientific research costs rather than administrative overhead,” many universities, labs, and research institutions argue that the new rate will be devastating to their ability to run a research facility.
Indirect costs are defined as expenses that are essential to support research but can’t be directly tied to a specific project. This includes:
- Building and equipment: Construction, maintenance, depreciation of buildings and equipment, mortgages, interest, hardware and software
- Utilities: Electricity, heat, air conditioning, water
- Safety and security: Environmental monitoring, hazardous waste disposal, security
- Administration: General administration, departmental administration, and project administration
- Insurance: Health, liability, other insurance
- Regulatory compliance: Ethical review, biohazard or radiation safety, environmental assessments
The Reaction
The decision elicited a flood of reactions in academia and the scientific community. Proponents of the policy argue that standardizing indirect cost rates could lead to more efficient use of federal funds, reasoning that if universities can accept private funding with a lower indirect cost rate, they should be able to make do with federal funding offering a comparable rate.
However, many who support the cut in theory object to its abrupt implementation, as the sudden reduction in these funds leaves institutions scrambling to reassess budgets and project plans and threatens the operational viability of labs, potentially leading to staff layoffs, halted projects, and a slowdown in scientific progress.
Some opponents of the policy argue that while large, well-endowed universities will be able to absorb the cut with minimal impact, smaller universities, colleges, and research institutes will be disproportionately affected. They contend that these institutions, which often rely more heavily on external funding, may struggle to sustain research programs, support faculty, and provide opportunities for students, potentially widening the gap between well-funded and under-resourced institutions.
The general feeling in the research community, one echoed by Kent Scientific, is that the new policy could significantly hinder scientific progress and innovation in the U.S.—both foundational to U.S. leadership in research and development.
Moving Forward
As the research community awaits the judge’s decision, Kent Scientific offers guidance and resources to help its valued research partners navigate the evolving landscape and uphold the integrity and global leadership of U.S. science.
Kent encourages researchers facing funding uncertainties to:
- Prioritize Core Components: Focus on project elements that directly support primary research goals. Identify the most critical research activities and allocate resources accordingly. Reduce or delay nonessential experiments and administrative expenses.
- Diversify Funding Sources: Explore alternative revenue streams such as technology licensing, consulting, and educational programs. Establish partnerships for contract research. Offer specialized training programs or workshops to generate revenue. Consider developing patentable technologies for licensing opportunities.
- Seek Nontraditional Funding: Apply for foundation grants that align with your research area. Engage with corporate sponsors for targeted funding. Launch a crowdfunding campaign highlighting the societal impact of your research.
- Get Creative with Proposal Development: Conduct grant-writing workshops for your team. Utilize professional grant consultants to improve funding success rates. Develop modular proposals adaptable to different funding sources.
- Collaborate for Efficiency: Partner with other institutions to share costly equipment and facilities. Establish joint research initiatives to increase competitiveness for larger grants. Negotiate bulk purchasing agreements with suppliers to cut costs.
For additional assistance, Kent Scientific offers a wealth of free resources, including:
- Training Programs: Gain hands-on experience with our expert-led training programs, designed to enhance your skills in research techniques, equipment usage, and best practices.
- Funding and Sponsorship Opportunities: Discover potential funding sources through our curated list of grants, sponsorships, and alternative funding avenues to help sustain your research.
- How-to and Educational Laboratory Videos: Our video library features a wealth of content on products, procedures, best practices, and other helpful information.
- Webinars: Stay informed with our live and recorded webinars, featuring industry experts and Kent personnel discussing procedures, providing demonstrations, and discussing innovative research approaches.
- Research and Surgical Learning Centers: We’ve collaborated with market leaders to develop and deliver in-person specialized courses and workshops designed to keep you updated on the latest tools and techniques in the industry.
Do you need additional support for your lab in light of these cuts? Contact us to discuss how we may be able to help you today.
