Editor’s Note: The following is an excerpt from the soon-to-be-published National Association of Scholars report, Rescuing Science. It has been edited to align with Minding the Campus’s style guidelines and is cross-posted here with permission.
Since the Trump administration proposed a 15 percent cap on them in February, indirect costs on research grants are the object of a roiling controversy.
If you have no idea what that sentence means, you are not alone. Indirect costs are one of the more arcane features of how scientific research is funded in American universities. As it was with the Albigensian heresy, great passions are exercised on fine points barely understood by normal people. How do we know this? Ask a critical question about indirect costs, as the Trump administration did with its proposal to cut them, and out will come the sectarian mobs to denounce you.
The indirect costs heresy obscures the fundamental question about indirect costs: is science helped or harmed by them? The message from universities and astroturfed mobs is clear: science will be devastated if they are reduced in any way. I argue here the opposite: under our current regime of science funding, science has become less free, less innovative, more craven, and more dishonest, and indirect costs have been the instruments of its degradation.
Figure 1. Proportion of funds for university research by source of funds. Source: NSF Higher Education Research and Development Survey 2023.
Some history. Federal support of university science is a recent phenomenon, launched in 1950 as an experiment, kicked off with the establishment of the National Science Foundation (NSF). Since then, the NSF model of university science funding has spread to some two dozen federal agencies, which have distributed roughly a trillion dollars over the past 75 years. Nationwide, federal support accounts for 60-80 percent of all university research (Figure 1). At some universities, nearly their entire research portfolio is supported by federal funds.[1]
As a spending program, the experiment launched in 1950 has been a smashing success. Starting from a modest beginning, government funding for academic research has increased exponentially, doubling roughly every seven years (Figure 2). In FY2023, total spending for academic research totaled about $109 billion. Under the current regime of grant funding, about $28 billion of that goes to indirect costs. This is a significant revenue stream, roughly equivalent to annual spending on Pell grants.
Figure 2. Research revenues—all sources—since 1953 to 2023. Source: NSF Higher Education Research and Development Survey 2023. IDC revenues are calculated on the basis of prevailing IDC rates at the time, with rates from 1966 calculated at the national average of 53 percent.
[RELATED: $15 Billion Saved from Indirect Costs Boosts Research]
Behind the dollars and cents lies the troubling extent to which universities have become utterly dependent upon government funding, to the point that they cannot long survive without it. This dependence, akin to an addiction really, has reduced universities, public and private, to being vassals of government. In light of this, claims that universities are islands for free inquiry and intellectual independence are hollow virtue-signaling. Like it or not, it’s the fiddler who calls the tune, and in the case of universities, the major funder, the government, calls the shots.
Indirect costs have driven this problem because universities have come to look at science more as a revenue generator than an instrument of discovery. As Warren Buffett once described it, “[General Motors] is a health and benefits company with an auto company attached.” Universities, similarly, now operate as spending programs to which science is attached. Indirect costs revenues are assessed as a percent surcharge of a research grant’s direct costs, that is, the funds that support the actual research. Nationwide, the surcharge is 53 percent of direct costs. Science, if it is to be done at all, is valuable to a university for the indirect costs revenues it can pull in, which pressures scientists to maximize grant revenues. Scientists’ careers now rise or fall depending upon how much grant revenue, and hence how much indirect cost revenue, a scientist generates. Discovery, the original purpose of the experiment, is now secondary.
A host of perverse incentives now govern the careers of university scientists, none of which are geared toward the very thing research funds are intended to support: discovery. Where once a candidate for employment, promotion, and tenure would make his case by pointing to discoveries he had made, to intellectual achievements he took pride in, to conventional wisdom challenged, to intellectual risks taken, now his case turns on numbers. How many papers have you published? What are the h-indices of journals where you have published? What are your citation numbers? How many graduate students have you churned through to graduation? It is promotion by spreadsheet, not for any of the virtues that science presumes, nor for virtues that universities claim to be promoting.
It is an extraordinarily cynical way to run a national research program. Yet, that is the very system our entire research enterprise is organized around, and it has corrupted the entire edifice of the academic sciences. Research is now guided, not by a scientist’s idiosyncratic curiosity, but by the funders’ priorities—government being the dominant player here—and the institutional demands for more, ever more, revenues. Results are expected on specified timelines, not by the usual meandering path to discovery, which cannot be rushed or predicted. The nearly half a million scientific papers published annually are littered with untrustworthy and fraudulent research, which, though worthless scientifically, still can be traded in for career rewards. Scientific associations, like the American Association for the Advancement of Science or the American Association of University Professors, that once had protected the interests of scientific discovery and intellectual independence, are now lobbying groups for special interests whose primary goal is opening the spigots wider for the toxic revenue streams that pervade modern science.
At the root of the problem is a failure to recognize and defend the very different interests of scientists and the universities and institutions that support them. University scientists’ interests are in intellectual independence and autonomy. Universities’ interests are in control of their institutions. The two sets of interests are fundamentally in conflict, but it is institutions, not scientists, who hold the cards. Now, the meandering path to discovery, the pursuit of curiosity, the idiosyncrasy of the individual mind, are increasingly seen as frivolous indulgences, to be tolerated only insofar as it does not harm the indirect costs revenue stream.
The drafters of the founding document of modern science, Science: The Endless Frontier, recognized the disparity and took pains in their recommendations to protect the interests of academic scientists from the prevailing interests of universities, governments, and powerful corporate interests.[2] Their recommendation was to support academic science through long-term block grants to universities, which would then allocate the funds similarly to how it had used institutional funds to support the work of their scientists. Many universities had research committees, staffed by academics and administrators, who could consider proposals from colleagues and distribute funds accordingly. Scientists could appeal directly to their university administrations to raise funds. This was how most particle physics work pre-war was funded, for example, including the development of the instrument that laid the foundation for particle physics, the cyclotron.[3] And it was admirably suited to the unique demands of the basic sciences: curiosity-driven, responsive to inspiration, built around ad hoc risk-taking, and responsive to intimate person-to-person appeals.
In 1948, that approach was rejected by the Truman administration as deficient in public accountability. What was substituted was our current system of short-term research contracts with its attendant regime of indirect costs. Rather than immediate appeals to close colleagues, scientists’ research proposals are now evaluated through a cumbersome funding bureaucracy, which imposes its own demands on how scientists must think and what problems they are allowed to think about. Institutional demands for revenue chain university scientists to a ravenous, time-consuming, and intellectually draining grants treadmill that diverts them from the real work of basic science, and leaves little room for the creativity and inspiration that drives discovery. Being employees whose careers depend upon working the grants treadmill, scientists have had no choice but to buckle to the demands of their institutions. Several generations of scientists have come and gone, working under these perverse incentives that they are now considered normal. The academic sciences have thereby become almost entirely co-opted.
Not totally co-opted, however. A spirit of discovery still exists in the academic sciences, although its flame is flickering. Restoring the flame will mean removing the well-entrenched landscape of perverse incentives that currently prevail. Indirect costs reform is one aspect of the restoration, along with restructuring the models for funding science that have allowed that perverse landscape to flourish. We have some suggestions for how to do that in a subsequent article.
Follow Scott Turner on X and visit our Minding the Science column for in-depth analysis on topics ranging from wokeism in STEM, scientific ethics, and research funding to climate science, scientific organizations, and much more.
[1] XU paper
[2] Bush, V. (1945). Science. The Endless Frontier. A Report to the President by Vannevar Bush, Director of the Office of Scientific Research and Development, July 1945 Washington, D.C.
[3] Hiltzik, M. (2016). Big Science: Ernest Lawrence and the Invention that Launched the Military-Industrial Complex, Simon & Schuster.
Cover by Jared Gould using Grok.
A lot of nostalgia for natural philosophy. Is Scott Turner kind of bitter? I can’t tell. He has done decently well. Lots of people have somewhat aligned ideas. I’ve heard some good young biophysicists talk about similar things. Job candidates. I hope they will not be forced to leave for Europe and China.
If one wants to sit around and think deep thoughts, it is still possible. Just be willing to forego the big rewards — unless you do something really big.
As for the American system — I look at the American born or recruited Nobel winners from the last 5 years. They seem pretty impressive. I will hate to see that destroyed.
Hmm, it’s hard to see how you derive bitterness from this article.