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2021-04-04 14:14:28 | onclick: | An empirical study on indirect cost compensation of scientific research in American Universities

The distribution of indirect cost recovery in academic research (distribution of indirect cost recovery in academic research) was published on March 29, 2021 in science and public policy. See the original text

https://academic.oup.com/spp/advance-article/doi/10.1093/scipol/scab004/6199575 . This paper has a good reference significance on how to solve the problem of indirect cost compensation of scientific research and how to optimize the government's research funding policy.

This paper obtains the internal data of external science and technology project funding and indirect cost compensation (IDC) from four famous research universities in the United States from 2003 to 2012. The sample institutions include both public and private institutions, all of which include medical schools. The author believes that the sample is representative of the top 30 science and Engineering Colleges in the United States, but not necessarily all of them. A total of 42007 project observations were obtained. Over the past ten years, the four universities have received an average of 3854 projects per year, and each university has received an average of 963 projects per year.

It is found that the level of indirect cost compensation varies with the types of funding, project areas and project characteristics. The proportion of IDC allowed for projects funded by non-profit organizations is much lower than that funded by the federal government. The shortage of IDC in biological science is more serious than that in most fields. The proportion of effective indirect cost compensation (eidc) of projects undertaken by research centers of universities is higher, because the research centers undertake more industrial projects, and the industry sponsors are willing to bear a higher proportion of indirect cost compensation.

Finally, three problems are discussed.

First, efficiency or equality?

If IDC only negotiates the proportion of the actual cost of the project, it will be considered as indirect compensation. However, in fact, the lack of indirect cost compensation exists for all kinds of funders, and varies with the project area and project characteristics, so the real situation of indirect cost cannot be reflected.

In recent years, the level of research funding of the federal government has declined relatively, so universities have to rely more on the project funding of non-profit institutions and enterprises. The proportion of eidc stipulated by non-profit organizations is 10% (according to the sample of four universities), and the average proportion of eidc funded by federal government departments is 41%. If we assume that the vast majority of the total project funding of 100 million US dollars of a university comes from non-profit organizations rather than the Federal government, it means that the university will lose about 20 million US dollars in IDC compensation.

Secondly, establish another IDC system.

Maybe we can build a more efficient IDC system. The first option is fixed cost and mobile indirect cost coverage above baseline. Some countries do not engage in indirect cost compensation, but the level of their research universities is still high. For example, the UK, Ireland, Finland and Sweden all adopt the full cost method.

The second option is an equal and efficient tax law. Instead of negotiating an appropriate IDC ratio, the two sides stipulate a single ratio. This is the practice in Japan. The cost compensation ratio of all projects is 30%.

Third, the real cost of university research.

Firstly, the difference of acceptable IDC ratio may undermine the financial legitimacy of universities and weaken the status of universities in negotiation with various types of funders.

Secondly, the difference in the proportion of eidc may lead to cross subsidization among different research fields and project leaders.

Finally, the potential cross subsidization of indirect cost compensation will make people feel that IDC accounting method is replaceable.

To understand the real cost of university research, we need to make further analysis of University expenditure, including the supervision burden imposed on university administrators by the federal government. This kind of administrative data will provide more accurate information about the real indirect cost of scientific research, so that the proportion of University IDC is based on sound accounting principles, and can balance the conflicting demands of funders, university departments and university managers.

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