In lieu of recent executive orders seeking to restructure government spending, the National Institute of Health (NIH) announced a policy that limits the funding of “indirect costs” to a mere 15%. This is a harsh blow to public health research institutions that currently rely on indirect rates of up to 60%. Disguised by large numbers meaningless to most Americans, this policy will have severe, local consequences to the economy, employment and healthcare if upheld.
In 2024, NIH funded $3.46 billion in public health research in Massachusetts, including $277.6 million for institutions in Western Massachusetts. The proposed restructuring seeks to cut the national amount of NIH indirect funding in half, significantly impacting economic activity in the region. Contrary to the administration’s rhetoric, this is not an issue limited to ivory tower institutions: indirect costs support expenses that local employees and patients rely on.
Historically, NIH grants consist of direct and indirect costs. Direct costs cover research staff salaries, travel and some equipment (NIH. Indirect costs—also called “facilities and administrative costs”—cover some administrative expenses, but mostly essentials like office space, electricity and some medical supplies used in clinical trials.
The Trump Administration argues institutions should fund their own indirect costs through endowments. Elon Musk recently posted on X: “Can you believe universities with tens of billions in endowments were siphoning off 60% of research award money for ‘overhead’? What a ripoff!”
As a range of institutions have released statements on how this will negatively impact their work, it is clear that funding indirect costs may not be as simple as Musk believes. Harvard President, Alan Garber, described in a recent letter that because of this policy, “[t]he 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.” According to the Worcester Regional Chamber of Commerce, UMass Chan Medical School, an R2 institution located in Worcester, MA, would lose almost $90 million in funding.
While a portion of these grants cover administrative costs benefiting institutions, such dramatic reductions to indirect costs would cause mass unemployment of lab technicians, facilities staff and other essential employees who keep research institutions running.
State data shows the top employers in the state of Massachusetts are healthcare institutions receiving considerable support from these federal research grants. In Western Massachusetts, UMass Amherst is an R1 institution and one of the top employers in the area (Western Mass Economic Development Council). With drastic impacts to the funding for medical supplies in clinical trials, many patients could lose access to potentially life-saving treatments.
With $277.6 million in funding supporting the Western Massachusetts economy, further transparency on possible impacts is necessary from these large employers and healthcare providers. Locals should be concerned about how these threats might impact their jobs or healthcare, as researchers warn that conditions could become so severe that countless clinical trials will be forced to shut down when they cannot even pay their electrical bills.