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“Congress should cap the indirect cost rate paid to universities so that it does not exceed the lowest rate a university accepts from a private organization to fund research efforts. “This market-based reform would help reduce federal taxpayer subsidization of leftist agendas” (Project 2025, p. 388)
The Trump Administration, in line with ideas laid out in the Project 2025 plan, has taken dramatic steps to undermine higher education and constrain the pursuit of knowledge on university campuses. These include the censoring of specific language in grants, website, and programming, specifically those that refer to gender, race, ethnicity, equity, and disparities, as well as delaying or eliminating entire grant programs. But one area of attack that will impact our discipline but till now has been relatively overlooked by anthropologists is the so-far court-thwarted executive order capping indirect cost rates on federal grants at 15%.
Implications of Capping Indirect Costs for Anthropologists
Amid the flurry of the Administration’s executive orders, and multiple moves that may be unconstitutional, on February 7, the National Institutes of Health published a note entitled: “Supplemental Guidance to the 2024 NIH Grants Policy Statement: Indirect Cost Rates Notice Number: Not-Od-25-068” capping grants’ indirect cost rate at 15%. Indirect costs (IDCs) are those administrative expenses a university or other research organization incurs in providing the infrastructure to support a project. They cover laboratories, building infrastructure, research animals, additional personnel, administrative costs and more. NIH adds those administrative costs to the total amount of the grant. They are renegotiated with NIH and other institutions regularly. Most Research 1 universities have IDCs of 50% of the direct costs of a grant. Research nonprofits like the Urban Institute, Pacific Institute for Research and Evaluation (PIRE), and the Institute for Community Research (ICR) may have similar or higher negotiated indirect cost rates.
“Anthropologist Erin Kane figured out what the new NIH policy would mean for states by looking at institutions that received more than $10 million in grants in 2024 and figuring out what percentage of their indirect costs would not be eligible for grant money under the new formula. Six schools in New York won $2.4 billion, including $953 million for indirect costs. The new indirect rate would allow only $220 million for overhead, a loss of $723 million.” (Heather Cox Richardson Newsletter, Substack, February 8, 2025)
Can this dramatic reduction in IDC rates affect anthropologists, their departments, and their institutions? Absolutely. And negatively. First, an increasing number of anthropologists have obtained, or are co-investigators and researchers on, NIH and other federal grants with IDCs. The value of these grants to the institution decreases when the indirect costs cannot be covered by the granting institution.
Second, IDCs support the overall research enterprise in universities, research institutes, and NGOs, and can be shared with departments and PIs to provide bridge grants, develop research partnerships and infrastructure including community engagement, and create opportunities for new students, post-docs and researchers. Thus, IDC builds overall research capacity including for anthropologists and anthropology students.
Third, IDCs support other schools and departments in which anthropologists have faculty positions, including gerontology, allied health, education, public health, nursing, and communications and engineering schools. The ability of these departments and schools to engage anthropologists to improve the education of students in their programs depends in part on the pool of funds available for the growth of the academy. It also depends on their ability to generate grants with institutionally negotiated IDC rates.
Fourth, the dramatic decline in IDC revenues, coupled with 20 years of flat NIH budgets, and increased competition for grants, means that universities will have to seek alternative sources of revenue to continue groundbreaking work in all science disciplines. Considerable revenue now comes from businesses corporations (e.g., drug companies) and individual private interests rather than for basic investigative research leading to new approaches in science and medicine. In 2000, 57% of science research funding was derived from federal sources, and 20% from business. By 2022, federal funding had dropped by one third, to 40%, while business spending on research had increased to 40%, an increase of 25%, according to the National Center for Science and Engineering Statistics (Pece & Anderson, 2024).
Although nonprofits constitute a small proportion of federal NIH and other grantees, they nonetheless are important producers of health and public health research. The 15% cap on IDC creates significant problems for these smaller NGOs and research centers that are run by or employ anthropologists. These NGOs depend on IDCs from NIH and other federal funds to support critical organizational infrastructure. Many will be forced to close or change their missions. The AAA interest group on NGOs and Nonprofits has already taken note of these strains, with its town meeting to discuss issues facing these organizations scheduled for March 14.
In relation to federal funding, foundations cover only a small percentage of funds for laboratory, clinical and earth/space sciences, but are substantial funders of research carried out by social scientists, including anthropologists, sociologists and geographers. It is already apparent that, in light of reductions in federal funding for social services, and university funding for the health sciences, foundations are being called upon to fill the gap. To meet these new demands, they are stretching funds by delaying start dates of promised funding, demanding matches, requiring demonstrated guarantees of projected income, or reducing the size and scope of awarded projects or ending initiatives altogether. The large number of anthropologists working in nonprofit organizations, already challenged by funding constraints, will find their efforts compromised by the increased difficulty of obtaining foundation grants. The is especially challenging for those anthropologists working to investigate, and support inclusion and equity.
Language restrictions, grant terminations and the cap on IDCs represent a direct attack on science including OUR science, on scholarship, rigorous health research for public health benefit, and the nonprofit science/social science advocacy world. At a time when science and social science are most needed to address intractable challenges posted by climate change, global diseases, and environmental degradation, it behooves us to pay attention to how and why science/social science is defunded, and to act accordingly.
References
Diamond, D., C.Y. Johnson, and L.H. Sun. 2025. “NIH Cuts Billions of Dollars in Biomedical Funding, Effective immediately.” Washington Post, Feb. 8.
Gans, Paul, and S. Groves. 2023. Mandate for Leadership: The Conservative Promise. Presidential Transition Process. The Heritage Foundation.
Graddy-Reed, A., M. Feldman, J. Bercovitz, and Scott Langfo. 2021. “The Distribution of Indirect Cost Recovery in Academic Research.” Science and Public Policy 48 (3): 364-386.
Ledford, Heidi. 2014. “Keeping the Lights On ” Nature 515, November.
Marshall, J. 2025. “White House Declares War on Academic Medical Centers.” Talking Points Memo, Feb 7.
Nietzel, Michael. 2025. “NIH Cuts Back Its Indirect Costs for University Research.” Forbes February 8.
Pece, Christopher V., and Gary W. Anderson. 2024. National Patterns of R&D Resources (NationalPatterns). National Center for Science and Engineering Statistics.
Wadman, Meredith. 2025. “HHMI Kills Program Aimed at Boosting Inclusivity in Stem Education.” Science Insider, January 6.
