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As a young researcher, I find it disheartening to find how much of a cut of total grant awards are taken by a university. Sure, there are overhead costs, but 40 - 60%? Come on. This seems like a terrible deal. Especially in some fields, such as software research, where faculty do all the work, rely very little on physical infrastructure, power, depreciation costs of facilities and equipment, administrative costs, etc, it makes such little sense to me. Why on earth would a modern researcher obtain grants and give up half to an aging academic institution rather than working within the realm of industry-led research?

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    What makes you think there are not indirect costs in industry-led research? – Dawn Sep 26 '17 at 18:18
  • Related: academia.stackexchange.com/questions/29384/… – Dawn Sep 26 '17 at 18:24
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    Vote to close as "opinion-based". This reads more like a rant than an actual question. – iayork Sep 26 '17 at 18:27
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    Bear in mind that indirect costs are calculated as a percentage of requested funding, not as a slice of requested funding. If my overhead rate is 52% and I ask for $100,000, then the total grant request is $152,000 and the percentage of money that goes to overhead is roughly 33%, not 52%. In exchange the university provides me a compliance office, a legal office, a press office, etc. on top of office space, lab space, HR staff, administrative assistants, maintenance staff, janitorial staff, and so forth. You'd be hard pressed to provide all those services for 33% of your net on your own. – David Sep 26 '17 at 20:13
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1) All organizations--including private companies--have indirect costs which need to be added to grant budgets. Like universities, private companies negotiate indirect cost rates with the government which apply to any contracts or grants awarded. The rates can be comparable to university rates, and at some types of institutions (nonprofits) they can be significantly higher! (This Nature blog post dedicated to indirect costs has a nifty graphic of the range of rates across institution types.)

2) If you are working in a private company, you might think you would be relieved of the burden of grantwriting altogether. However, then you need to convince the people above you in the company that the research/development project you want to pursue is the one that is in the best interest of the company. This might be more difficult than you are anticipating.

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    Even for internally financed development projects, there is an overhead that has to be added to the direct costs. One way I have seen it done is to use a "fully burdened cost" of a developer, which is much higher than the developer's salary. – Patricia Shanahan Sep 26 '17 at 18:41
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A "bad deal" for who?

I find it disheartening to find how much of a cut of total grant awards are taken by a university.

Note that for many grant mechanisms, and indeed probably the largest single grant agency (the NIH), overhead is not "a cut of the total grant award" but is added on to the total cost of the grant. If the overhead rate was lower, the amount you'd get for your lab would not be larger.

Sure, there are overhead costs, but 40 - 60%? Come on. This seems like a terrible deal. Especially in some fields, such as software research, where faculty do all the work, rely very little on physical infrastructure, power, depreciation costs of facilities and equipment, administrative costs, etc, it makes such little sense to me.

Our institution has an overhead rate in the middle-high end of that range, and having looked at it, that rate doesn't actually cover the cost of administering research. I'm also skeptical of your claim that you use little in the way of overhead - I'm in a very similar field, and I derive a great deal of value from the overhead rates I pay. Additionally, overhead goes to things like startup packages, which are consumed in large chunks at a single time, but largely invisible to you.

Further, overhead rates tend to be institution wide, which means that it has to cover the average cost of research - for every cheap software researcher, there's also someone who has to maintain a cattle herd for their research, and a single overhead rate needs to cover both of those.

Why on earth would a modern researcher obtain grants and give up half to an aging academic institution rather than working within the realm of industry-led research?

Why would you think this is true? Industry has an overhead rate as well - they're just allowed to roll it into the total costs of their research contracts, rather than being forced to keep it as a separate entry. Or are you under the impression that industrial research doesn't have to pay for electricity and internet and offices and administrative support?

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