This document provides a comparative analysis of funding models and cost structures between private foundations and the federal government, specifically regarding research support for biomedical and scientific endeavors. It highlights that private foundations, while serving as essential supplemental funders to federally supported research, have fundamentally different approaches to budgeting for facilities and administrative (F&A), or indirect, costs. Unlike federal agencies such as the NIH, which operate under stringent guidelines about categorizing costs and typically reimburse indirect costs at higher rates, foundations often allow more flexibility by incorporating certain F&A-type expenses directly into their grants. Despite common perceptions based on lower stated F&A rates (e.g., the Gates Foundation's 10% versus NIH's 50%), when factoring in the different budget methodologies, the actual proportion of funding dedicated to F&A and similar costs is comparably significant in both models (approximately 22% for foundations versus 26% for NIH in the provided example).
Further, the document emphasizes that direct analogies between foundation and federal funding practices may be misleading due to differences in scale, scope, and research focus. Private foundations represent a small portion of total research funding (6% compared to the federal government’s 55%) and often target specific diseases or populations, sometimes prioritizing work in developing countries where infrastructure needs differ from U.S.-based lab research supported by NIH. The examination concludes that policy proposals aiming to align federal F&A reimbursement with foundation models, such as those put forth in the Administration’s FY 2018 budget request, may not accurately reflect the distinct methodologies and operational realities of foundation funding. Foundation representatives themselves note that such direct comparisons do not adequately represent their cost determination processes.
