The federal government needs to increase funding for the indirect costs of Canadian research impacted by the Trump administration’s cuts to research and science programs, says the vice-president (research) at the University of Calgary.

Canada’s Research Support Fund “is widely considered to be suboptimal, and recent analysis found the rates paid [to be] insufficient to support the full indirect costs of doing research in Canada,” William Ghali (photo at right) said in a commentary in the Canadian Medical Association Journal.

Other factors, such as cuts to and restrictions on postsecondary institutions, contribute to an environment that compromises Canada’s international competitiveness and productivity in science, he said.

Elon Musk’s Department of Government Efficiency has led to the U.S. National Institutes of Health (NIH) implementing a new, reduced rate for indirect costs of 15 percent to be applied to NIH grant funding – about half the average rate of 28 percent in recent years, according to the NIH.

“This represents a cataclysmic change to the U.S. research funding landscape and one that is likely to hurt universities and the world-leading U.S. research enterprise,” Ghali said.

Many Canadian researchers rely on the U.S. to fund their work, largely by participating in international projects or collaborating with American colleagues who receive the US funds.

Indirect costs are distinct from the costs incurred when conducting a research project, he pointed out.

Direct costs of research include the cost of personnel who conduct research, expendable supplies for research, and any specialized services purchased to enable it.

Indirect costs of research are usually not tied to individual researchers or projects. Rather, these are typically costs borne by institutions to enable research by the collective.

They relate to the operation, maintenance, and upgrade of research facilities; animal care infrastructure; resources such as library holdings and information technology systems; management and administration of institutional research; costs associated with regulatory requirements and accreditation for research; and costs associated with intellectual property management and knowledge mobilization.

For NIH funding in the U.S., research institutions have historically made detailed submissions regarding their indirect costs to the Department of Health and Human Services, from which a negotiated institutional NIH indirect cost rate is determined, Ghali said.

This results in institutional rates that vary – from a low of 15 percent to more than 70 percent – with most research-intensive universities receiving awards at the upper end of that range.

Therefore, the new across-the-board indirect cost rate of 15 percent associated with NIH grants in the U.S. will, for leading research universities, result in an annual funding loss of more than $100 million, Ghali said.

“Such cuts cannot simply be absorbed by university budgets, and they represent a major setback to the conduct of research.”

A court petition to the U.S. District Court in Massachusetts yielded an injunction issued by Judge Angel Kelley that temporarily paused the NIH change to indirect costs until Kelley makes a permanent decision on the proposed change.

The Trump administration also has ordered the NIH to eliminate $2.6 billion in contracts, Science magazine reported. Contracts make up much of NIH’s overall $47.4 billion budget, supporting many activities and much of its workforce.

Canada’s Research Support Fund is “insufficient”

Under Canada’s Research Support Fund, indirect cost rates vary from a high of 80 percent paid for the smallest institutions with little tri-council funding to a low of about 19 percent for Canada’s most research-intensive universities, Ghali said.

“The rates paid by the RSF are insufficient to cover the full indirect costs of doing research in Canada,” he said. A 2023/24 analysis, by the University of Toronto, estimated the true indirect costs of research to be 61.7 percent while the federal government’s 2017 Fundamental Science Review reported true indirect costs in Canada to be between 40 percent and 60 percent of the value of grants.

Recognizing this shortfall in Canadian research funding relative to peer countries, the Fundamental Science Review recommended that RSF funding levels be increased over time toward a target of 40 percent for research-intensive institutions.

This call for increased RSF funding has been echoed more recently, such as in U15 Canada’s recent prebudget submission for the 2025 federal budget.

Other sources of funding for indirect costs mitigate the situation somewhat, Ghali said. For example, other federal granting programs, specifically the Canada First Research Excellence Fund and the Canada Excellence Research Chairs allow up to 25 percent of indirect costs to be included in submitted budgets.

Also, the Canada Foundation for Innovation (CFI) provides universities with funding through an Infrastructure Operating Fund that supports the operation and maintenance of CFI-funded research infrastructure.

Moreover, Canadian institutions are increasingly diligent in applying institutional overhead charges to their research contract and grant arrangements with industry partners; for these, most institutions are now applying a 40-percent rate, Ghali noted.

“However, these cannot be relied upon to make up for RSF inadequacies, particularly in a time when the postsecondary sector in Canada is facing unprecedented financial stress,” he said.

In recent years, many provinces have cut provincial grants to postsecondary institutions, while also restricting the extent to which compensatory tuition fee increases can be imposed. Furthermore, the federal government has recently applied limits on the number of international students that can be recruited by each province, which has meant international student quotas assigned to individual universities.

“Ultimately, these measures have the potential to not only compromise Canada’s international competitiveness in science, but also to limit national productivity and prosperity,” Ghali said.

“As the U.S. stands on the brink of tearing down its exemplary system for covering the full costs of research, Canada, with its flawed federal system for indirect costs, should heed the recent[ly] commissioned science policy report and a chorus of advocacy calling for an enhanced indirect cost system.”

Kirsten Patrick, editor-in-chief of the Canadian Medical Association Journal (CMAJ), in supporting Ghali’s call, pointed to other scientific journals that have raised significant concerns with Trump’s policies on research and science.

Governments should ensure sufficient funding for conducting health research as an urgent priority, as outlined by Ghali, Patrick said.

“Moreover, they should heed repeated calls to facilitate the timely sharing of health data between provinces in Canada through legislation that includes provisions for linkage to administrative health data – deidentified at the patient level – with a waiver of consent, so that up-to-date disease trends for Canada can be shared with international collaborators.”

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