Sample Direct costs

To give an idea of the actual costs of research, here is an example of my annual budget on a grant proposal.

This represents actual direct costs of research based on my historical research costs, as well as what I have requested on recent grant proposals. In practice, I have spent much less than this since leaving academia because I have not had consistent funding. I have not included costs on grants for student training and other educational activities, since I want to focus on research costs here.

Conference travel, supplies, and equipment repair are the same costs and budget whether I am doing research at a university or independently. Universities pay for some journal subscriptions through indirect costs, although this is a negligible part of the overall cost either way. The big difference here from a university budget is how the salary is allocated. As an independent researcher, the researcher salary and benefits pay my own salary, as I am the primary researcher. This is a different allocation from a university, where the majority of the funding would instead typically go towards a graduate student researcher and their tuition, and the professor would get 1 month of salary from the grant. These different allocations roughly balance each other out, depending on university salary and tuition rates. Considering that universities have multiples sources of funding including student tuition payments and private donations, the source of funds to pay for a professor to do research, teaching, etc. is not well-defined. In a small organization, the accounting is simpler. The sum total of one of my grant requests (counting indirect costs below, and student training expenses of $13,000/yr) is about $118,000/yr, which is a little under the average university grant request. One grant can now support my entire research program, without the need for multiple grants (which was expected at a research university), and my salary doesn't have to be supplemented by other sources of income like it did at a university.

What are indirect costs?

Sample indirect costs per year

These represent the actual indirect costs of my research independently. In some cases they are averaged over several years because the cost doesn't come up every year (like purchasing an office computer)

Adding up all of the indirect costs oof $4510/yr and dividing by the direct costs results in my overhead cost rate of 4.5%

Facilities and equipment

Equipment: I was fortunate enough to negotiate the transfer of my old lab equipment from my university to my new research organization, so major equipment didn't really cost me anything. One of the important roles a university plays is to provide a startup package to new researchers which provides funds for major equipment and a lab space, which is an important benefit career-wise of starting research in a university. How should we value equipment in overhead costs? The total value of my equipment was about $200,000 when it was new. It was originally intended to support a lab with several researchers, where some of the equipment was useful for multiple projects and could be shared by students. If I were splitting up this equipment for individual researchers, it could easily be split into 3 distinct major sets of equipment to support 3 independent full-time researchers, so about $70,000 in equipment for a researcher. Lab equipment is usually assumed to depreciate with a 10 year lifetime. Prorating the cost of equipment over 10 years comes out to $7,000 per year per researcher. Assuming I only need one grant to support my research program, results in a contribution to an indirect cost rate of 7%.

Lab renovation: My independent lab facilities require $20,000 for heating, air conditioning, and humidity control, $3000 for an air compressor, and $300 for a deionized water supply. This is in an environment where I control the budget. At Yale where the priorities were much different, the cost was many times higher. Prorating this over 10 years (and replacement/maintenance beyond that) for 1 researcher comes out to an additional indirect cost rate of 2.3%.

Research support facilities at Yale amounted to about 2% of research staff, equipment, and space, so that account for an addition of about 2% to indirect costs. While it is a small amount of costs, $2000/yr is enough that I could buy enough equipment to turn my garage into a full machine shop within a few years, so that within a few years I would have more access to research support facilities than I had as a professor.

Lab space: I was able to fit my lab into my basement and garage, so this did not add a cost. Universities with high overhead rates typically do not pay property taxes, nor are indirect costs intended to buy new property.

Office space: most university researchers keep a home office or some sort of space with a computer to do work at off-hours. As an independent researcher, it is my main office. While a home office is a real overhead cost of research, it is generally not included in funding, university or otherwise.

Adding all of these costs together justifies an indirect cost rate of around 16%.

Bureaucracy

Variation of indirect costs among researchers

About half of fundamental research does not require laboratories or field work, but uses computer simulations, computations, or analytical work. Such work requires a computer, office supplies, and office space, which most people already have. In most of these cases, utility costs are lower, and insurance, building maintenance, supplies, and equipment are mostly irrelevant. This would still leave overhead rates around 4% for simulations, computations, or analytical work.

There is much more variation of costs among laboratory and field research. Equipment varies widely in cost. Electricity use can vary significantly.

For my research, a 15% indirect cost rate is a comfortable budget which leaves me a lot to spend on a machine shop. Most research can do with less than this. I do think there is a role for universities or research groups with higher overhead costs if they are spent on lab facilities and research support facilities. But when indirect costs get high, all they do is create a bureaucracy that gets in the way of research.