Later this week, a federal judge in Massachusetts will hear arguments in a lawsuit that aims to block a controversial policy change, announced on 7 February by the National Institutes of Health, that would pay grantee institutions billions of dollars less each year to support the NIH-funded research done on their campuses. A coalition of states and research institutions is asking the judge to extend an order, issued on 10 February, that bars NIH from implementing the change, which research advocates argue would force institutions to close labs and lay off researchers.
The 21 February legal showdown will put an obscure but important funding mechanism in the spotlight. Few academic scientists understand how—or why—the U.S. government adds these payments, known as indirect costs, to the so-called direct costs they receive from NIH to carry out their research.
Critics of indirect costs say they are a waste of tax dollars and a slush fund for universities, and over the years some institutions have been penalized for cooking the books when negotiating with the government on how much they are entitled to receive. But higher education officials say the payments are essential for the country to maintain global leadership in science.
Here are some important things to know about indirect costs, including the rationale for paying them, how the rates are calculated, and how institutions manage the money they receive.
