I was part of a research lab on grants like that. We had close to $1m in total funding, on top of that indirect was like 50% (so $500k/year) We maybe had 4000 sq. foot of lab space in an old building that wasn't maintained well. We had one bathroom for each gender on the floor for the research arm of two whole medical departments. Two admins for the whole research department of 7-8 labs totallying maybe 60-70 staff.
I ran the numbers and the lab space would have maybe cost $100k/year tops (probably more like $80k, depending on quality) if we were rent out equivalent industrial office space. On top of that you have electrical, heating, telecom, at most $10k. Support services such as HR, cleaning, IT support (of which we didn't use a whole lot) could have been contracted out, at most around $20k. So there was about $350k which I figured was mostly just a subsidy and went to "administration". Not that I was philosophically opposed to it, except maybe the admin.
Overhead isn't applied uniformly. For example, tuition for Ph.D. students isn't charged overhead, nor is (usually) equipment. So on $1m of funding, if you've got 4 Ph.D. students, that may be something like $200k/year of tuition that isn't subject to overhead. Add in another $100k of equipment and suddenly that 50% indirect cost rate is actually more like 35%, so you end up doing $1m of "work" on $1.35m of budget.
Departments often negotiate something called "overhead return", which is a way of returning a small amount of money to the individual departments -- some of this does things like supporting Ph.D. students if their advisor runs out of funds, or helping research faculty bridge short funding gaps. These things are reasonable and help the institution remain coherent through the uncertainty of grant-driven existence.
There's waste everywhere, but it's not quite as bad as it might seem without a deeper understanding of the university research funding model.
The money you complain about goes to run an org that has connections, does advertising, provides stable employment when grants fluctuate, has hiring and HR and payroll and a zillion other services, all making those doing the research more able to do research, and provides more channels to move results into production.
So it makes sense. You just haven’t thought through or had to perform all the pieces, so to you it doesn’t make sense.
I’m sick and tired of elites telling me basic business operations of profit and loss, value for money, quantifiable results are beyond my peasant brain to understand.
Try convincing the AC guys to work for parts cost + a skilled worker wage * number of hours worked, see how well that goes over. They'll laugh you out of the room, and you'll be left sitting on your ass without air.
The entire world charges overhead for work done. Most of it way more than 25% of the sticker price.
Huh? Thats exactly what they do. Parts + labor
(Hint: Nearly half of what you pay on the bill is their overhead.)
Does the NIH not, like, compare proposals before deciding on whether to pay for them?
> To pretend NIH grants are anything remotely like normal private sector contractors
Please enlighten us to the differences that are at all pertinent to this question. Specifics, not vague scare quotes.
You are right that it is different from how the private sector operates. The private sector does not even let you think about negotiating either their overhead or profit margin.
It's significant that U. Pitt. chose to stop admitting students rather than starting to lay off administrators.
If you build a good lab which has versatile equipment to address many use-cases, the indirect costs will be high.
There were a few department-wide resources. Again, ultimately funded off someone (or a bunch of people's) grants
The "A" of F&A is capped at 26%.
That means any overhead over 26% went to some kind of facilities cost at your lab.
(Most private industry informal accounting would call that 26% "20% overhead").
Private industry is charging/billing cost + margin for profit.
University is saying X is allocated for research, Y is allocated to keep the lights running for the facility and pay for students. The students are generally funded by research, not the University. No research money, no money for students.
They also cover expenses of people, not specific projects, so the broader grant means that there's less of a need for common overhead across projects.
Academia is not "private industry."
Those overhead fees go to fund that, so universities don’t have to be even mere full of nepo baby donor legacy admissions than they already are
Two S&P 100s, one 500.
The move comes as research universities across the country battle against the National Institutes of Health over a policy to reduce the funding cap for ancillary research expenses like building construction and maintenance as well as support staff.
The policy would reduce the cap for those indirect research costs to 15%. Pitt’s current rate is 59%. A federal judge extended a temporary pause on implementation of that policy Friday. But Pitt’s decision to halt admissions was made earlier in the week.
"After the announcement that NIH indirect costs would be capped at 15%, the University’s Office of the Provost temporarily paused additional Ph.D. offers of admission until the impacts of that cap were better understood,” a Pitt spokesperson said in a statement to WESA.