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Price of Business

How indirect costs — money that pays for things like heat and administrative support — are calculated and then given out by funding agencies can be opaque. Nature this week has looked into how these amounts are determined.

The US National Institutes of Health, it says, gave out more than $5.7 billion in 2013 to cover indirect costs. Research institutes typically negotiate with NIH — the US National Science Foundation, Japan, and the European Union's Horizon 2020 program give a flat rate — on what their rate will be, but they don't typically receive that full negotiated amount.

There are, Nature notes, restrictions on what indirect cost money can be used for, borne out of a controversy 20 years ago involving the use of funds to maintain a yacht and buy decorations for a university president's house.

For instance, Stanford University has a negotiated rate of 57 percent, but Nature calculates that it has received 43 percent. Similarly, Brigham and Women's Hospital has a negotiated rate of 76 percent, but has received 39 percent.

Tony DeCrappeo, president of the Council on Governmental Relations, tells Nature that even if institutes received the full amount they negotiated, it wouldn't cover the actual cost of supporting research.

Arizona State University's Barry Bozeman further argues that the research bureaucracy has swelled and needs to be trimmed to bring costs down.

"Nowadays, the actual content of the proposal — what people are going to do and why it's important — is always a small fraction of what they submit," he says. The rest, he adds, is mostly administrative requirements.

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