By guest authors Brian Herman, University of Minnesota and Claudia Neuhauser, University of Minnesota
The United States is at a crossroads with respect to many societal issues – think about the challenges of improving human health, eradicating hunger, protecting human rights. At the same time, federal support for higher education research and development – a primary venue to generate innovative new solutions for these kinds of vexing problems – is decreasing. America’s institutions of higher education are still considered by many the best in the world, but they exist on a precipice.
Continued eroding support for American academic research will not only allow other countries to outpace the U.S. in innovation. A significant source of research capacity, both in talent and in facilities, that could be used to help address global challenges will also go untapped. International collaboration is increasingly common; because U.S. universities make up a large percentage of the world’s leading research enterprises, if their capacity diminishes, other countries’ institutions will be affected too.
The hard fact is that there’s just not enough R&D money available to support the higher ed research capabilities our country has built. As vice president and associate vice president for research at the University of Minnesota, a top 10 U.S. public research university, we see the consequences of this shortfall every day. The long-term investment in academic research made by federal, state and local governments in the United States in the second half of the 20th century is at the heart of its current success. We in American academia will continue to remind reluctant policymakers that long-term public investment in higher education R&D is needed to keep the U.S. at the forefront of innovation. The alternative is identifying other sources of funds – perhaps disrupting business as usual in the academic research enterprise by rethinking the role of industry.
The very cold hard numbers
Federal support for research and development in the U.S. has declined over the past 50 years, and languished at pre-Sputnik era levels for most of the recent past: 0.71 percent of GDP in 1953; a max of 1.86 percent of GDP in 1964; and back to 0.77 percent of GDP in 2012 (that’s US$124.6 billion). Thanks to business and industry stepping in to fill the funding gap, overall R&D expenditures are pretty close to what they had been (2.79 percent of GDP in 1964; 2.69 percent of GDP, or $435.3 billion, in 2012).
As long as the total expenditure is fairly constant for the nation as a whole, what’s the difference if it’s the federal government or industry holding more of the purse strings? The problem is that basic research takes a disproportionate hit. About half of all basic research is done within academia, which relies heavily on the federal government. Business and industry tend to focus on applied research and development. Because of the need to find solutions to today’s grand challenges, funding agencies, too, emphasize translational research that advances fundamental biomedical findings into new disease treatments and cures that can be delivered to patients faster.
However, we know that basic research provides the necessary foundation for many of the products and services that contribute to the nation’s wealth. For instance, data suggest two-thirds of the key contributions to the diagnosis, treatment and prevention of disease derive from basic research. But in a tough funding climate, there are increasing external pressures to focus on research that provides quick rewards at the expense of the search for essential, basic knowledge that has a much longer lead time before any economic impact.
Higher ed is eating its seed corn
Diversification of funding sources is widely touted as a solution to declining or flat federal investment in higher education research. Potential sources to tap include business and industry, philanthropy, foundations and other nonprofits, and an institution’s own funds.
In 2014, industry supported 5.7 percent of higher education R&D in the U.S. But, absent a change in approach or philosophy, current and longer-term trends don’t suggest business or other private sources will assume the mantle as a major funder of basic research.
Universities are increasingly using their own internal funds to finance research expenses that were once supported by external sources. Schools funded about 12 percent of research on campus in the 1950s. By 2014, almost a quarter of research dollars came not from outside funders but from university coffers. This so-called institutional funding has served as a backfill, making up the difference for higher education when federal funding is flat.
But this trend is not sustainable. The indirect costs reimbursed by granting agencies have been crucial to building and maintaining the infrastructure needed to undertake academic research. Institutional funding does not provide for these overhead costs, and the shortfall is compounded for public universities; when they do recover indirect costs, they’re generally reimbursed at lower rates than their private peers. For example, here at the University of Minnesota, increasing investment of institutional funds from $237.3 million to $287.3 million (2013-2015) resulted in a loss of 1.5 percent in indirect cost recovery. That’s about $500,000 we don’t have to spend on research, tuition assistance or the campus’ physical plant.
Less money, more competition
Out of the over 4,500 colleges and universities in the U.S., the top 115 research universities garner 85 percent of all federal research funding for higher education. The next group of 107 schools share another 11 percent. These top institutions are locked in a fierce battle for resources.
When an agency increases funding substantially, such as when the National Institutes of Health budget doubled between 1998 and 2003, the top institutions scramble to capture a proportional share of the increase in order not to lose relative standing among their peers. Many institutions expanded their infrastructure during this time with the expectation that federal support for higher ed research would continue to increase. But now the top research institutions are fighting over a diminishing pool of resources. The result is increased competition.
Most of these competing universities are locked into long-term debt to pay off the infrastructure they built in the expectation of increased research funding – things like new buildings, expensive equipment and enhanced faculty recruitment. To fill the space with rainmakers, universities use the promise of high salaries and plentiful resources to try to poach one another’s already successful scientists. While this approach may help some universities, it works against the development of a robust talent pipeline as short-term goals trump longer-term ones.
The tough funding environment influences many aspects of the research life and academia itself.
Younger researchers now find that pursuing a career in higher education is increasingly risky for the return on many years of hard work. They look toward other careers that are more personally and financially rewarding.
The battle for funding increases the pressure on scientists to produce, leading to still lower success rates on grant submissions, and publication inflation. In the worst cases, it leads to less reproducible science and perhaps even the cutting of ethical corners to survive. Today, a National Academies-sponsored survey finds that faculty members spend over 40 percent of their time on administrative aspects related to obtaining research funding – essentially halving the effective productivity of our research engines.
As institutions rely more on their own funding, tensions between the desire for research excellence and the needs of the local and regional community intensify. Universities have increasingly tried to align themselves with funder priorities for translational and collaborative research by choosing a few areas of excellence; they then let other areas of study recede.
While appealing on its surface, this approach runs counter to universities’ unique mission. Traditionally they’ve provided broad access to higher education for the economic benefit of their communities (local, state, national, international) through training and educating the workforce. And a broad research mission has spurred overall innovation. A laser-like focus on a handful of research programs ignores much of the broader societal expectations for higher education – particularly for our public universities.
What’s to be done?
Are there potential short and long-term solutions worth considering?
It’s possible more coordination and collaboration between institutions could help. By sharing resources, materials, data and infrastructure, schools could utilize economies of scale. Cutting down on the duplicative nature of some of these enterprises could result in significant cost savings that could be reinvested in the research enterprise. For instance, NSF and NIH have programs that support research equipment and capabilities to be shared between multiple investigators and research institutions.
Harvard economist Michael Porter posits a bolder solution. He argues that historically there’s been a trade-off between social and economic performance – business can actually make a profit by causing a social problem. Increasingly, business leaders and entrepreneurs recognize that private sector solutions can help scale up enterprises to solve societal problems in ways that the public sector cannot, and they see that these ventures can also turn a profit. Porter cites the example of pollution: Businesses initially resisted reductions, but later on, some learned how to generate profits from cutting pollution. Business is increasingly realizing the need for a “shared value: addressing social issues with a business model,” Porter argues.
How would this help higher education R&D? The concept of shared value means that we could create social and economic value at the same time. Aligning industry and academic interests would mean providing incentive for businesses to invest more resources in higher education R&D to tap into what research universities do best: arriving at innovative solutions that are then transferred to industry for scaling up and turning into economic value.
Partnering up certainly doesn’t look like a losing business proposition. One estimate puts the return on investment for publicly funded basic research at 43 percent. The NIH places the value at $10 to $80 for every dollar spent on basic research.
Yes, this needs to be done carefully to avoid inappropriate conflicts of mission. But the promise of business placing a value on solving societal grand challenges in partnership with higher education would represent a strong alliance, leading to a reinvigoration of the creation of new knowledge that simultaneously serves the needs of society and business.