The National Institute of Health’s (NIH) bombshell announcement that it is immediately capping all indirect costs at 15% for new awards will have a dramatic impact on universities, research institutions, and their workforce.
The cap is based on the de minimis rate in 2 CFR 200.414(f) of 15% of modified total direct costs (MTDC). Panelists at the Pub K Annual Review described how the announcement was made late on a Friday afternoon with no prior notice, or notice period in making this decision. The Uniform Guidance also states that grantees can’t be forced to take the de minimis rate. NIH is trying to rein in costs and recognize that their grantees receive awards from other donors that have caps as well. But a 10% cap imposed by the Gates Foundation is not the same as a NICRA in terms of how they recover costs. Ultimately, the NIH grantees will likely redirect awards through another entity or reshuffle their costs to get their indirect costs under 15% and directly allocate other costs to the grant awards.
Is this the blueprint for the development and humanitarian relief sector?
Meanwhile, a federal judge ordered a pause on the cap with a hearing scheduled for February 21, 2025.
Read more on the 15% cap here.