Universities have a limited number of funding sources. The primary funding sources for research universities to perform their research and educational missions are tuition, research grants and contracts, philanthropy, endowment income, and, in the case of public institutions, state appropriations. When universities are unable to recover the full allowable costs of research, they must rely on other primary funding sources to make up the difference. A cap on F&A costs might result in:
• institutions refusing to accept research awards that require significant institutional subsidy;
• the deterioration of research facilities as the risk becomes too great to invest institutional funds;
• a substandard compliance environment because institutions cannot afford to pay for mandated compliance costs; and,
• increases in tuition rates to cover costs that have been shifted to the institution.
Each of these would result in harm to not only the institutions conducting research, but the nation which would lose its competitive edge in science and innovation.