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I do not understand why universities are putting “pressure” on staff to obtain research grants. Well, in certain fields, research grants might be important for getting instruments or equipment, but in other fields, what we really need in order to produce research outputs is really just a good library.
This question might seem naive, but it seems no one is willing to explain this to me in a frank and clear manner.
Given that other responses are quite US-centric, here a counterpoint: in Germany (and possibly many other continental European countries), there used to be no pressure for grant money for regular-sized research, as departments endowed their professors with sufficient funds for typical research in their field. Exceptions would be large-scale projects which required significantly increased budgets or special governmental programs one could apply for.
About the '00s, this model changed and increasingly the US model was adopted. It is difficult to point to a specific reason why this happened. Notably, German universities are typically getting their money from the state and not from endowments, so essentially, this constitutes a redistribution of governmental funds in what is considered a more competitive process. It is not clear whether this is indeed the most effective use of funds, as now researchers time is invested in the process of writing proposals, reviewing them, writing reports etc., all including the high failure rate of such proposals increasing the volatility of research funding continuity and high churn.
As for the argument of overheads, again this is effectively just an accounting model. In the UK, it was explicitly changed from a "the university pays for the infrastructure, the government pays the salaries and equipment" to "everything is separately accounted for".
It is again not easy to disentangle to which extent this has really changed how money is being used or whether it is now used more appropriately; many such accounting rules are conventions, but one consequence is that it changes price tags on projects, reducing fundable project volume, while the institutions need to run their infrastructure whether or not they run a project.
There is no question that there are ambitious project ideas that require funding beyond the regular and for this, funding is essential. However, the idea that even the funds for regular research activity needs to be competitively applied for has distinctly originated in the US, due to the specific structure of the US university funding model.
It is not clear at all that the European university funding model needed such a strong veer towards the US research funding model; it was a specifically political decision.
One possible explanation was the intention to save money. If that was the intention, it is not clear whether it was successful, because with the significant friction of competitive funding processes, the output per invested money may actually have gone down instead of up (note that in, say, Germany, this is mostly government money anyway, whether in the universities, or the funding agencies).
A second possible explanation is the desire for competitiveness. The idea is that researchers with higher quality research should get more money. This may be partly working, but it also favours proposal-churning models of operation and not-too-adventurous and risk-averse research, no matter what the calls say. Very outlandish projects are not likely to be funded.
A third possible explanation is gatekeeping. Funding distribution models permit more influential researchers (and political agents) to direct research agendas. Instead of curiosity-driven research, this enables agenda-driven research. To be fair, if one bewails the loss of curiosity-driven research, one should remember that over most periods, research was mostly agenda-driven, whether alchemists hiding gold dust in their oven, or Galilei giving out telescopes to his patrons. The concept of a curiosity-driven scholar thrived in particular pockets of time and space and was never a universal feature of university. Nonetheless, one will notice that some of the most lasting and celebrated achievements of science emerged from permissive niches of curiosity.
These are several reasons I am aware of, maybe I will extend this list with additional ones.
Whatever the reasons, with the adoption of the US-type perspective on research funds, university gain not only money, but prestige from being able to acquire grant money. As such, grants are considered a way to measure the research prowess of an institution, with large grants indicating more prowess. Funding volume follows scientific excellence with significant delay and averaged over time - rarely does the volume of a project directly correlate with its scientific value (with some exceptions, again, such as large-scale instruments and experiments).
TL;DR:
While ostensibly universities need grant money to fund personnel and overheads, in its basic form, this is a US-centric perspective. For Europe, this is not ultimately an explanation, as there used to be different funding models for universities. The move towards a competitive grant-based funding model has many potential reasons, ranging, for instance, from the desire to increase competitiveness, save money, or be able to set the agenda of scientific research.
As such giving importance to external funding is a political decision, and as consequence, European universities have begun to vye for grant money not only for reasons of finance, but also of prestige, power and influence.
I’m in pure math, so my perspective is that of someone who really only needs “a good library” (and these days, not even that a lot of the time) to produce good research. Indeed, in my area funding is a lot less crucial than in the experimental sciences that rely on large amounts of both infrastructure and human labor. In that sense, there is a kernel of truth to what you’re saying.
Despite that, your question still contains a false premise. Even “a good library” employs a fair number of people and costs money to build and run. Likewise for all the other buildings and offices where all those smart brains that “only need a good library” work their magic. More importantly, those brains belong to people, who need to be paid for their efforts. Many of them are graduate students, who need to be trained to do research by much more experienced (and expensive to employ) faculty before they can begin to produce anything approaching good work. So, the research component of a university, even in purely theoretical areas, ends up being a rather costly enterprise to run, with high expenditures on both physical and human infrastructure. And of course, unlike a for-profit corporation, there is no obvious source of incoming funds to fund those activities based on their immediate economic value to society, which is close to zero.
Anyway, the pressure that you mention is not equally strong in all areas. But it is a fact that the research mission of a university needs money to operate, and grant funding is one of the main mechanisms for obtaining that money. Applying for grants is less fun than most other components of a researcher’s job, so universities come up with various ways to, er, motivate their researchers to be be successful in that aspect of their job. It is not inconceivable that such incentives are designed in a way that makes them perceived as “pressure” by at least some people.
Quoting Ian Sudbery's answer to another question:
Funding is all. If you don’t get funding, you can’t do research. If you don’t get funding, you definitely won’t get promoted. In my university, if you don’t get funding you won’t pass your probationary period to get a lectureship, and at many places if you don’t keep getting funding, you are in danger of losing your job. Not all funding is equal, because not all funding comes with overheads: that is, if I apply for a grant to buy a $ 100,000 piece of equipment and the funder gives me $ 100,000, then the university gets nothing. There are different ways of seeing this. You could see it as the university wanted to profit from the grant. Or you could see it as the university needing to find the funds to pay my salary, heat, light and clean my office etc. Making the university a lot of money is primarily what gets you promoted.
Funding lets you hire students/postdocs, buy equipment, buy computers, etc. The overhead on the grant also helps pay the electricity bill, pay the cleaners, pay for the library, etc.
Money makes the world (and universities) go round.
Overheads from grants are a substantial net source of income: if your grant is X, the university (in the US) will directly claw back a non-negligible percentage from X to keep the lights on (the researcher gets X-overhead). In Canada, overheads on Tri-Council grants are usually paid on top of the grant, directly to the institution, on a sliding scale (less than most US places I know).
It is true there is cost incurred (electricity, heating, maintenance, admin etc) in doing research but if you run a Uni you have these costs anyways so the marginal cost to the university of having researchers is much smaller than the overhead amounts they receive. Research income is increasingly crucial in times of diminishing (state) government funding of higher education.
There are multiple indirect benefits. Because grants are competitive, research income is often taken as a proxy for the quality of the faculty. If you have research-active faculty, they will need graduate students who usually bring in tuition. Research is also a recruitment tool: research opportunities for students are often a major factor in selecting a university. It is also a fundraising tool: Phil Knight, the founder of Nike, has endowed multiple research chairs at the University of Oregon and at Stanford (in addition to multiple hundreds of millions of dollars in donation to the universities.)
Sometimes, faculty members will start a spin-off company based on research results they obtained, and universities will get a slice of those revenues. Gatorade is a product developed at the University of Florida, where the sports teams are named “Florida Gators” (hence the name); the university got of piece of those revenues (Gatorade was sold to PepsiCo so I don’t know how things sorted themselves out after.)
Now… one should really take this in context because in some areas (philosophy, music, English literature etc), there are very few grants, and it doesn’t mean faculty in these departments aren’t doing research or don’t have good ideas.
This is not a naive question, but as you can see from the many good existing answers, how universities are funded isn't straight-forward (and grants are a substantial part of it).
I will try to explain based on my own university (Chalmers University of Technology). Some of the specifics will be, well, specific to our university, but in broad strokes I have seen similar dynamics at play at every university I worked at.
We are a well-known, privately owned research university in South-West Sweden. Despite being "private", we are tightly integrated into (and a substantial player in) the Swedish educational system, meaning our positioning in practice is somewhere between a traditional European public university and a "real" private university.
A research university with large undergraduate programs, such as Chalmers, really has two jobs:
This two "jobs" bleed into each other (one of the key ways how innovative ideas are "transferred" into industry is by teaching undergraduates, and PhD education and research are so closely related that the border is basically impossible to draw), but those are essentially the two big things the government and society at large expects from us.
Unsurprisingly, both of these "jobs" cost money. Education needs teachers, research needs researchers, and both need administrative support staff. Buildings and other infrastructure need to be maintained, and many other small and large costs accrue. Sadly, neither of these "jobs" actually generates substantial money directly - in Sweden education is free (students pay no tuition, even at our private university), and with the exception of the rare patent- or spinoff-generating research, even world-class publications do not pay salaries or utility bills. At Chalmers, just like at most universities (at least in Europe), all our core functions are substantial loss leaders.
Hence, Chalmers needs income streams. The government pays us for graduating students, which is sufficient (more or less) to cover the "education job" at least on bachelor and master level.
However, who pays for research and PhD education? As a private university, we do not directly get money from the government to hire research staff. We do have an endowment, but it's not the size of typical US endowments. Hence, the only way to actually do research is by getting some external organization to pay for most or all of it. This is exactly what a grant is. Importantly, this typically includes all costs associated with doing research, not just equipment: salary for PhD students, some prorated amount of salary for administrative personnel, offices and other infrastructure costs, travel expenses, and laptops. Importantly, at Chalmers, even the researcher themselves will often "cover" some fraction of their own salary from their grants, to "buy out" themselves from other university duties.
In conclusion, even a researcher who needs zero equipment outside of a library still needs grants to actually conduct research. Otherwise they will have very limited or no money to fund students, limited money to travel or publish, and potentially no time to actually work on the research since they can't "buy themselves out" from other university duties. The key idea to understand here is that grants are really how universities pay for the "research job" they are asked to do, since doing research, by itself, does not generate money.
@CaptainEmacs' answer does a good job of explaining why it doesn't have to be this way, if the world were to choose a different system of university funding, but it doesn't really explain why universities behave the way they do given the current system.
Other answers deal with the question of overheads, and there is some discussion over what the marginal costs of research in terms of overhead, and how much of this would be costs the university would have irrespective.
But there is one big item that the university definately has to pay, irrespective, and that is the salary of the academic.
My contract says I spend 40% of my time teaching, 20% on admin and 40% on research. Lets just say, for the sake of argument, that student fees cover the 40% teaching time, and half the admin time. That still leaves 50% of my salary to find from somewhere.
UK universities (where I am) don't have endowments - what capital they do have (generally in the $10m's rather than the fractions of $1b) is generally kept as cash reserves, rather than income generating investments. Their is some government block grant for research, known as the quality-related research grant, but this does not cover every one's salary.
If I charge 10%-20% of my time to a grant (which is average), that is 10%-20% the university doesn't have to find from somewhere.
But what of the costs of applying for the grants? Is that greater than the 10% I get? Well, no, because generally if my funding is running out, I write new applications on top of all the things I was doing anyway, in the evenings and weekends, not instead of - thus while there is a cost involved in applying for grants, often, the individual, rather than the university foots that cost.
To turn briefly to CaptainEmacs' point about why things have changed: Firstly, they haven't changed that much in my field, in the UK - research funding was still important 40 years ago, but perhaps not quite as much as now. So what has changed?
Well, one thing that has changed is that we have gone from 10% of young people going to university, to 50%. That means a large increase in the number of academics to teach them (not quite 5x, but still quite a large increase). If all those academics were traditional research & teaching positions, it would have meant a similar increase in research. But the increase in government research funds is way, way less than that.
One solution would be that everyone spends less than 40% of their time of research (i.e. a change in the classic 40:40:20 model). But instead what happened was that some people funded their research through grants, and stay 40:40:20, while others didn't and became almost fully teaching focused, leading to research intensive institutions, and teaching focused institutions, where as previously all universities had been "research intensive".
[I]n certain fields, research grants might be important for getting instruments or equipment, but in other fields, what we really need in order to produce research outputs is really just a good library.
At least in Germany and Austria, but probably also in other EU countries, grant money funds a large chunk of positions (salary etc.). Many postdocs apply for grants to fund their own (precarious fixed-term) position these days.
I would say it all boils down to a fundamental lack of leadership. At a governmental level and at the university's level. Governments motives when it comes to education are typically not in the best interest of students or universities, but still they have to be unhappy bedfellows and somehow coexist.
I personally know that the great decline of my local university coincided with the day when an accountant was made chancellor. I personally know of music students who were accepted to a music program with so little theory training that I knew they had virtually no chance of passing their first year of harmony studies. The standard of acceptance gets lowered to anyone who can pay, but what is required to pass your first year still remains the same. The university accepts students who they know for certain have no chance of passing but because they can pay, the come, they pay, they fail and then they leave. None of this being a problem for an entity driven by profit.
When I think about the sad state of these affairs I think about what I once read on the Oxford university's website. They mention that the whole of the music department on average admits 70 - 80 new students every year. The department also has around 30 full-time members of staff.
I cannot help but think to myself that there is probably no way that such a low student-to-teacher ratio could be managed without it costing the university more money than what it makes. That could probably be said about many departments at Oxford.
Do you think the Rector at Oxford would ever consider closing the music department over something as vulgar as money? A discipline that has been a part of Oxford since the middle ages? Money is not the metric of its success.
There are for sure some liberal arts colleges in the US which I would love to be a part of. Sarah Lawrence is a whole university dedicated to the character traits that I admire most in women. Does that university make lots of money probably not. Does it produce women whom I would consider lucky to know, for sure?
It just seems unfortunate to me that money is how we consider the success of higher learning, it is a rather one dimensional outlook on what it's influence can be on society.
Universities do not apply for grants to get grant money. Grant money is spent on expenditures the university would not have made if it did not have the grant. Receiving a grant usually causes the university to lose money. The university must spend money on compliance, administration, space, utilities and grant applications (70-80% of which fail). The university may receive "overhead" money from the grant agency, but this is less than the costs.
Universities do apply for grants to gain prestige. Grants are the ultimate competition in academia. If you win grants, you are the best. The research resulting from the grants also contributes prestige, but that is secondary.
