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Comment by cvwright | Hacker News Reader

Even more baffling, there are studies showing that most US universities actually manage to lose money on federally funded research.

Yes, the overhead rates are obscene, but somehow the compliance costs are even greater.

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Having tried to write a large grant recently, can slightly comment. I attempted to work with a university, because like most grants, never available without an academic tie-in. In a pithy way, the only individual grants are mostly NEA/NEH grants about writing books about writing books (also applied for those).

The university I worked with had a 40+% overhead rate auto-included. This could not be negotiated. If you want to work with us, we add this amount to our Govt. request.

The university added a lot of extra work because of this. I basically brought them a proposal, I literally walked over to their partnership office and said "I've written a proposal I'd like to work with you on." It was mostly written, and said I think "some number" would be reasonable. They said, we don't apply without 40+% overhead, rewrite the whole grant so it works with our overhead and faculty tie-in requirements. I said that seems very large, and then none of the other numbers work. They said, write with 40+%.

The eventual result was that the university wanted me to work as a sub-contractor being paid less than a different contractor they were going to hire as a specialist, so I could have the pleasure of partnering with them.

Also, it needs to be completed a month before the deadline, because then all our internals need to churn over the money numbers (and predictably came back a check mark). I was glad it lost.

See also How Hollywood Studios Manage To Officially Lose Money On Movies That Make A Billion Dollars

For example, consider the case of Winston Groom who was promised 3% of the net profits of a film based on a little book he wrote called Forrest Gump. As noted, Paramount would later argue that the film, which cleared almost 13 times its production budget, a total of $700 million at the box office or about $1.2 billion today, had actually lost $62 million, all in an attempt to weasel out of paying Groom, among others.

https://www.todayifoundout.com/index.php/2020/06/how-hollywo...

wikipedia EN does not make that so clear, but they do also mention that the book itself by Winston Groom sold a million+ more copies after the movie came out..

there are remarkable stories of swindling of all kinds out of Hollywood, of course! great movie too

Why obscene? Is rent obscene. Building, supporting, and growing research space does have expenses. And federal grants require much administrative support. Overheads are typically 50% on top of the direct research support-$1 support for every $2 of research effort. Completely reasonable.

50% was on the low end, 10 years ago when I submitted my first proposal. I’ve been out of the game for a while now, but I don’t think the rates have gone down.

My kingdom for someone, someday sitting down and figuring out what the average corporation's overhead rate would be if they had to account for it like universities. Because as much as it seems high, there's no real comparison, because no sane company would accept an accounting scheme where their internet connections, phone lines, lights and heat, administrative assistants, copy paper, building maintenance, etc. couldn't be included as part of the cost of doing business, but had to be shuffled to some other category.

In my experience, when universities are allowed to submit straightforward total cost bids for things like contracts, we're often fairly competitive with private industry.

They actually have gone down. Feds have tightened up. I would guess the national average is about 52% and at that overhead rate university do lose money!

Here is old news that the HN community needs to catch up on.

https://www.science.org/content/article/nih-plan-reduce-over...

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