- The Research Grant Cycle at Modern Universities (http://dr-monsrs.net)
Modern research with laboratory experiments is very costly for universities, research institutes, and industrial centers (see my earlier article in the Basic Introductions category on “Introduction to Money in Modern Scientific Research”). Without financial support, research investigations are either impossible or severely limited. Most funding for scientific research in the USA comes from commercial companies and the taxpaying public (via grants from several agencies of the national government). If one steps back and looks at the overall processes whereby funds to support scientific research activities are generated, several different money cycles become apparent.
(1) The Business Profit Cycle provides funds for research and development (R&D) in industrial settings. (2) The Soft Money Cycle supplies funds to support experimental studies at research institutes, and, some large universities and hospitals.
(3) The Research Grant Cycle generates funds for laboratory investigations at modern universities.
All 3 money cycles have the general features that a relatively small input of money starts and maintains the cycle, which later produces an output of research findings (i.e., science) and additional money (i.e., profits). The scientists function in these cycles as a catalyst to make this conversion from input into output. An amazing ability of these 3 cycles is that all grow with time and become self-supporting. I now will briefly describe and explain how each of these 3 cycles operates, so that both the general public and employed scientists will have a greater understanding about how modern laboratory research is being funded.
The Business Profit Cycle
Large industries must develop new and improved products through research and engineering efforts, so as to increase their financial profits. A portion of their total annual profits is designated for R&D work by scientists and engineers, and is used to pay for the needed personnel, instrumentation, and supplies. Marketing of the new or improved commercial products then generates increased sales and additional profits; this output enables both rewards for the private or public owners, and an enlarged pool of money to pay for an increased amount of future R&D. Thus, for a successful company, the profits and the number of investigations both grow bigger with time, and their Business Profit Cycle becomes self-supporting. History clearly shows that money from this ongoing cyclic operation is very successful for enabling industrial R&D activities.
The Soft-Money Cycle
Research institutes, large universities, and some hospital centers have full-time staff scientists who receive a salary exclusively from their research grant(s). This is termed a soft-money salary, and differs from the hard-money salary of most university science faculty (i.e., their salary is guaranteed by some source, such as a state government). Typically, staff scientists with soft-money positions are not eligible to receive academic tenure, and do not have teaching obligations. In general, these scientists work in a circumscribed research area (i.e., as part of a focused group effort), have very specific job duties (e.g., operation of a complex special research instrument that provides data used by other researchers), or are successfully investigating some very hot topic. The input for The Soft Money Cycle is research grant money, and the main output is science (i.e., published research results). Scientists function to convert the input into the output via their research activities. This soft-money cycle works quite well for supporting scientific research activities at some prominent research institutions.
In all cases, scientists with soft-money salaries enter their job with full knowledge that their continued employment directly depends upon their success in obtaining research grant renewals. Due to the present hyper-competition for research grant awards (see my earlier article in the Scientists category on “Why Would any Scientist ever Cheat?”), a certain number of soft-money researchers each year must terminate their employment as a scientist. Not everything in this situation is bad, since soft-money salaries more frequently are not so restricted as hard-money salaries, and even can include some bonuses. The soft-money scientists that continue to produce good research results and high quality publications actually do have some job security without needing to be tenured.
The Research Grant Cycle
Modern universities mostly now have become just another business (see my earlier article in the Big Problems category on “What is the Very Biggest Problem for Science Today?”). University profits are cold hard cash, and traditionally are obtained from several quite different sources: donations by alumni and corporations, income from endowments, ever-increasing tuition fees obtained from enrolled undergraduate and graduate students, and, portions of research grant money brought in by their science faculty. For The Research Grant Cycle, the input is research grant money, and the output is science (i.e., published research reports) plus university profits (i.e., awarded grant money that has not been spent). The Research Grant Cycle is successful because it both supports research by the science faculty and provides universities with profits.
The greater the number and size of research grant awards acquired, the larger are a university’s profits. To fully understand this statement, it is necessary that readers comprehend what is meant here by “profits”. University profits include the total funds entering a university, which are not fully needed and used to pay for salaries and expenses of some designated group of employees (e.g., administrators, housekeeping staff, librarians, police department, secretaries, teachers, etc.), or for some specific activities (e.g., advertising and publicity, bookkeeping, painting, receiving deliveries of new purchases, safety office, etc.). In other words, if total income exceeds actual expenses, then there is a net positive profit.
University profits in any single year include the following typical examples.
(1) The sum of all tuition fees minus the actual expenditures for classroom maintenance, course handouts, faculty instructors, heating and air-conditioning, printing of course examinations, teaching assistants, etc. Any net positive balance here is a profit.
(2) Income from investments of endowed resources, minus all the costs for administration, bookkeeping, brokerage services, financial consultants, money transfers, etc. Any net positive balance here is a profit.
(3) Total research grant awards, minus actual payments for approved expenses with direct and indirect costs, financial bookkeeping, grant administration, purchases, salaries, travel, etc. Any net positive balance here is a profit.
All these profits initially are transferred into some special institutional budgets (e.g., Dean’s slush fund, fund for new building construction, fund for special programs, institutional emergency fund, reserve fund for future usage, unencumbered funds, etc.).
Can the Profit Level of The Research Grant Cycle be Increased?
Operation of the Research Grant Cycle at universities is diagrammed in the figure shown just under the title of this article. This now has been expanded by the incorporation of certain features described above for The Soft Money Cycle. By hiring some science faculty as soft-money appointments instead of into the usual hard-money positions, universities save very much money because they no longer need to provide salaries. The reduced expenses readily enable the generation of greater net profits by The Research Grant Cycle.
I suspect that another new source of additional profits involves that portion of research grants awarded to pay for indirect costs (i.e., expenses for cleaning, heating and air conditioning, painting, safety, etc.). For the necessary background, please see my recent article in the Money & Grants category on “What is Going on With the Indirect Costs of Doing Research?”. Any profits coming from unused indirect cost awards can be used to enlarge the standard operation of The Research Grant Cycle, and/or diverted to pay for other university activities. If I am correct about the use and misuse of indirect cost awards, the amount of extra profits could be quite large. Universities undoubtedly have several responses always ready to counter any inquiries or allegations about whether their actual expenses are much less than the costs in their approved budget: (1) black and white documents giving work schedules and listing the activities performed, (2) entries in official accounting documents showing that all indirect cost funds were spent completely and exactly as planned, and (3) a signed agreement with the funding agencies about approved costs, coming from the earlier negotiations establishing a university’s indirect cost rate. However, a paper document does not necessarily mean that listed work actually was done, or that the actual service activities described really do cost as much as their stated values. Based upon my personal experiences, I simply say “bunk” to such “proofs” for their stated indirect expenses!
How do the Money Cycles Actually Function?
All 3 different money cycles produce profits that support scientific research activities. The 2 money cycles at research institutes and universities can be initiated as soon as the available institutional funds become sufficient to permit hiring only one new scientist on a soft-money salary. This faculty member then wins a new research grant and also gains his or her new salary. After initial success, this faculty researcher then is encouraged to obtain a second grant, publish many research reports, and submit strong applications for competitive renewals. The total profits generated from this initial employee will enlarge the pool of unrestricted university funds, thereby ultimately permitting the hiring of some additional soft-money faculty scientists. With time, this cadre grows further and the Research Grant Cycle becomes self-supporting (i.e., research grants of the employed scientists provide enough income to give a net profit level that more than pays for all the costs of operating this cycle). The use of soft-money salaries also means that the universities never have any worries about what to do if a research grant unexpectedly is not renewed; any time that an annual soft-money contract is completed, the employing university simply can discharge the now unfunded scientist, and then hire a replacement.
Once any of the 3 money cycles starts operating, they then simply go around and around while generating more and more profits. With good administrative management, the number of people generating profits grows each and every year, and the cycle gets bigger and better! In some cases, the speed of cyclic rotation even gets faster! For all 3 money cycles, profits and the size of the cycle become larger and stronger with time!
For modern universities, a self-sustaining and growing new source of money profits has been discovered! Once functioning, only minimal further expenses are needed to maintain this ongoing cycle! The universities surely are overjoyed! Since universities have become just another business, the financially productive Research Grant Cycle now is strongly embedded within modern university operations. The success of The Research Grant Cycle in generating profits explains why medical schools often are the very largest unit at modern large universities; this condition has little directly to do with diseases, new therapeutic treatments, public health, or clinical research, and everything to do with obtaining larger profits.
Does The Research Grant Cycle Actually Operate at Modern Universities?
What is the evidence that this cyclic profit-generating system really exists in universities? Although there are several pieces of suggestive evidence, definitive proof remains lacking because so much is kept hidden and/or is off the record. Recent conditions suggesting this operation at universities include: (1) the number of soft-money science faculty holding positions as non-tenure-track employees in universities is increasing, (2) at any time, there now are quite a few individual doctoral scientists available for hire in the USA as soft-money employees, (3) new very large programs (e.g., clinical genomics research initiatives, participation in extra-terrestrial space science studies, nanoscience research institutes, etc.) now have been developed in universities, and many have received substantial funding support with very large research grant awards, and, (4) even though every year there always seems to be only limited funds available for federal support of science, new government-mandated projects and mission-based research efforts continue to be announced along with special funding programs to support them. Any new initiatives and funding programs all engage The Research Grant Cycle fully, and actually stimulate its functioning.
All 3 of the money cycles do provide the financial support needed for modern scientific investigations in the different employing institutions. The Research Grant Cycle certainly is considered to be totally good by the many parties benefitting from it. After the recent period with declining income due to economic downturns, universities must be especially delighted to have found a new very fruitful profit-generating mechanism to fund their many activities and services.
With all those positive features of The Research Grant Cycle, why then do I have a negative opinion about it? There are 3 main reasons for my viewpoint.
(1) First, my biggest reason is that this type of profit-driven money cycle subverts scientific research by making getting research grant money the chief goal of the science faculty, rather than producing new knowledge and new concepts from their experimental investigations. The money is made to be more important than the science. This shift in values directly stimulates the current abominable hyper-competition for research grant awards.
(2) Second, it forces scientists to become business entities, rather than professional researchers and scholars trying to better the world through their investigations. Basic research especially is affected negatively, since it initially has no obvious commercial importance.
(3) Third, it amplifies the increasing commercialization of university science (see my earlier article in the Big Problems category on “What is the Very Biggest Problem for Science Today?”). The Research Grant Cycle reinforces the new identity of universities as businesses, rather than as centers for academic scholarship, scientific research, teaching, innovation, and public service. That new identity in turn encourages corruption and downgrades the traditional role of universities in society.
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