A US National Institutes of Health notice announcing a drastic cut in federal science funding appears to draw heavily on a 2022 report by the Heritage Foundation, the conservative think tank behind Project 2025. The report argues that the so-called indirect research costs targeted by the cuts contribute to the “massive growth in DEI staff at US universities.”
The NIH policy change, announced on February 7, dramatically reduces the amount of funding that accompanies NIH grants to cover indirect costs—money that universities put toward building maintenance, administration, support staff wages, regulatory compliance, and safety requirements associated with funded research.
The cuts, which standardize indirect costs at 15 percent of the grant size, will be potentially devastating for research universities that are heavily dependent on federal grants. Many universities directly negotiate these rates, which historically average 27 to 28 percent, with some universities receiving over 60 percent. Stanford University alone is facing a reduction of $160 million, with many other research universities facing reductions in the tens or hundreds of millions of dollars. The wider economies of university cities will also be hit, as indirect research costs are used to pay laborers, administrators, janitors, technicians, and other support staff. All of this comes on top of the deep cuts Elon Musk’s Department of Government Efficiency have inflicted across government departments.
In the notice announcing the change, the NIH argued that private foundations provide much lower rates of indirect costs than the federal government. To make that argument, the NIH notice draws heavily on what appears to be an analysis from a 2022 report from the Heritage Foundation called “Indirect Costs: How Taxpayers Subsidize University Nonsense.” The authors of that report, Jay Greene and John Schoof, claim that indirect costs have been used to “subsidize the agenda of the political left” and fund DEI staff on university campuses. Reducing indirect costs, the authors allege, would “dramatically reduce the amount of money available to spend on political activism” as well as “universities’ ability to install more DEI staff.”
The report claims that a 1 percentage point increase in the federal indirect cost rate is associated with 2.1 additional DEI employees, while a $100 million increase in the total amount of indirect costs received by a university is associated with 15.5 additional DEI employees.
“Currently, taxpayers are forced to subsidize the agenda of the political left through funding its research agendas and DEI staff on university campuses,” the authors of the 2022 report wrote. “The Left has used the indirect cost reimbursement system to capture an important professional institution.”
The NIH notice does not mention DEI, and the Heritage Foundation report does not recommend a 15 percent cap specifically. But the federal agency justifies its slashed rate in part by citing a “recent analysis” that found that 67 out of 72 universities were willing to accept research grants with no indirect cost coverage. While the notice does not provide a source for that analysis, it appears to have originated in the Heritage Foundation report.
The 2022 report includes an analysis of 82 universities, the indirect cost rate they receive from federal grants, and the indirect cost rate they receive from private funders such as the Sloan Foundation, Gates Foundation, and the Chan Zuckerberg Initiative. Ten of the schools in the Heritage Foundation analysis did not confirm their indirect cost rates for private funders, leaving 72 full entries in the report’s analysis.
Of those 72 universities, the report claimed that 67 accepted private research grants with zero percent indirect research cost coverage—exactly the same analysis and finding as in the NIH notice.
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The Heritage Foundation report concluded that just three schools in the sample refuse to accept indirect cost rates from private foundations at lower rates than those they negotiated with the federal government. Those schools are the University of Alabama at Birmingham, Massachusetts Institute for Technology, and the University of Michigan.
The NIH notice refers to the same three schools without identifying the Heritage Foundation as the source of the analysis. It mentions that Harvard required a minimum 15 percent indirect cost coverage from private funders and that California Institute of Technology required a 20 percent indirect cost coverage. These examples also appear in the Heritage Foundation report.
One of the report’s authors, Heritage Foundation senior research fellow Jay Greene, says he was not involved in drafting the NIH notice but did acknowledge that one paragraph of the NIH notice “does appear to be a reference to our 2022 report.” The NIH did not respond to WIRED’s request for comments.
A plan to cut indirect cost rates in federal grants also appears in Project 2025, the nearly thousand-page Heritage Foundation policy blueprint for a second Trump presidency. “This market-based reform would help reduce federal taxpayer subsidization of leftist agendas,” the report reads. During his presidential campaign, Trump consistently disavowed any links to the Heritage Foundation and Project 2025.
On Monday, a coalition of 22 states filed a lawsuit challenging the legality of the NIH’s attempt to cut indirect costs.
Universities say the cap will hamper their ability to do vital research. “The discovery of new treatments would slow, opportunities to train the next generation of scientific leaders would shrink, and our nation’s science and engineering prowess would be severely compromised,” wrote Harvard president Alan Garber in a post on the university’s website.
Some universities stand to lose more than $100 million in federal funding if the new grant cap is maintained. According to STAT, Weill Cornell Medicine brought in $107 million in indirect costs during 2022—a figure that would drop to $23 million if the rate had been 15 percent.