Dear Colleagues, 

As many of you know by now, the National Institutes of Health (NIH) issued a directive on Friday, Feb. 7, which stated that allowable Facilities and Administrative (F&A) Cost Recovery rates will be capped at 15% going forward for both existing and future grants to institutes of higher education. This change is effective tomorrow, Monday, Feb. 10, and carries significant financial impact for all research universities across the country. 

For reference, since the 1950s, the federal government has recognized that the cost of supporting research and discovery goes beyond the direct cost of the researchers’ time and equipment. The facilities supporting the research must be kept in good condition, researchers need the right tools and equipment to push knowledge to the next level and a significant number of trained staff are required to apply regulations, manage financial reporting and oversee compliance responsibilities and requirements. These “indirect” costs are determined through a regular negotiation process with the federal government and require significant documentation. The current negotiated F&A rate for Temple is 58%, based on demonstrated real costs to the institution. Grant funding, alone, is insufficient to fund university research enterprises.   

Over the weekend, university administration has been actively engaged with stakeholders across the Commonwealth and the nation, as well as with our professional associations. Our initial work has been focused on estimating the potential impacts of this directive—both for internal planning purposes and to communicate the negative impacts to federal decision makers. In addition to the immediate impact on Temple and other research universities, the negative long-term implications for U.S. leadership in research, discovery and innovation is substantial. 

This is a fluid situation, and we are developing guidance for both current awards and grant proposals under development. The latest guidance will be posted on the Office of the Vice President for Research’s (OVPR) federal funding guidance portal and our OVPR News and Announcements Teams site.   

It is very likely that litigation will be filed seeking to enjoin these changes. We will update our research community as we learn more. 

As the situation evolves, we will work diligently to mitigate the impact to the extent feasible and vigorously advocate to state and federal decision makers for the reversal of this change. 

Sincerely, 

John Fry 
President 

Gregory N. Mandel 
Senior Vice President and Provost 

Josh Gladden 
Vice President for Research