The finances of NIH grants

I’ve been terribly behind on a billion things lately, most importantly spending time with my family and calling PharmSis and PharmMom.
However, DrugMonkey’s post on Mentoring 101: Let’s Talk About the Money drew from me a comment I feel I should post here despite coming after 60+ other comments there.
The bulk of the discussion was on 1) what do you do to educate your lab on the actual budget of running the show, 2) do NIH research grants really support graduate and postgraduate education? and 3) does recovery of indirect costs (ICRs) represent a boondoggle for university administration, an abuse of faculty, or a reasonable charge for the costs of doing research that are, well, indirectly related to the actual conduct of the research itself.
I know my Mom could give two rat’s asses (or is it “rats’ asses?”) about the following so please feel free to read another post. For those interested, here are my comments:

To respond to DM’s original point, I think it is important for the entire lab staff to know the general finances so they can begin to comprehend just how expensive it is to run a decent-sized group. I had no idea about fringe rates, for example, as a postdoc. I believe that I even used to give undergrads a general 5 min primer on lab grants since they’d see in the school paper that Dr Pharmboy got a $900,000 grant (over 4 yrs) but ask why he was still driving a 10 year-old car. It is an eye-opener for many to see how relatively challenging it is to run a lab on $200-250K direct costs per year.
Second, NIH deeply underwrites graduate and postgraduate training extensively. On R01 grants, the university gains far more ICR. On individual K or F awards, or institutional T awards, the ICR is only 8%. Nevertheless, most but not all places allow a certain number of sub-negotiated ICR grants to be awarded. Every place I’ve been has required pre- and post-docs to write an individual NRSA (Ruth Kirschstein) grant and then fall back on an institutional training grant or PI’s R award otherwise.
Which leads me to ICRs. I’ve been at places from 39% to 52.5% to over 100% for various reasons. Like any such controversy, the truth is likely to be in the middle. Remember that the ICRs are negotiated with DHHS at regular intervals. I had one auditor in my lab once look at the amperage of all my equipment and ask how many hours per day each thing operated. Depending where you are, these costs cover the amazingly talented people who keep your facilities running, from physical plant specialists (have you ever seen the stuff above and below your research building??) to compliance officers to accounting and purchasing to custodial staff to the pain-in-the-ass upper administrators. Some of these people are useless while some are absolutely invaluable, more so often than many researchers and trainees. Just as an auto garage charges a “shop fee” for incidentals that cannot be directly associated with a given repair, research universities are justified to charge NIH a reasonable ICR.
What is reasonable is the gray area. Some U’s abuse this by padding the ICRs mathematically to justify all kinds of bullcrap. While some discuss the ICRs that flow back to the dept, this is technically illegal – the U’s have a fixed budget for facilities and administration costs (F&A) and depts are rewarded for covering a higher percentage of these fees with grant-derived ICRs, thereby releasing funds that are referred to as ICR returns but are not really – the return basis is the dept’s share of costs for F&A.
The bottom line is that I had no idea of the intricacies of university grants accounting until I was nearly a tenured associate professor. Some things remain a mystery to me. The earlier we educate our trainees, the better they understand the important parts while also remaining appropriately wary of being taken advantage of by administration.


6 thoughts on “The finances of NIH grants

  1. Having graduated from a small uni, my undergraduate mentor was able to give us a glimpse, albeit a small one, of the intricacies of running a lab. He actually included us when our animals and equipments were ordered. Each of us knew how much our experiments cost.

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