Oh, we are talking about indirect costs now aren’t we?
I’m thrilled it’s being talked about but not about how we got here.
It was (and is) a big deal when the NIH (National Institute of Health) announced on this past weekend that it was only going to pay 15% in indirect costs on all funded research.
For (over) simplification purposes, the price of gas just went from $3.00 a gallon to $300.00 and their eggs just went from $6.00 a carton to $600.00. (And depending on the institution, you could add a couple more zeros before the decimal point and probably still be far off from the effect this is going to have on them.)
The argument that is being presented is that foundations and other places don’t pay the (strictly negotiated, takes months and still doesn’t cover all the costs) amount indirect fees that are actually NECESSARY and DIRECT costs to doing research. And if foundations don’t do it, why should the government?
Why indeed?
I would argue that indirect costs are inaptly named and miscategorized – in research, in non-profits and in daily life.
Indirect costs are actually direct costs.
- You need electricity, you need a building, you need a chair, you need to clean up the mess, you need to store the things, you need to get correspondence, you need a computer/device/internet of some form, you need food…
Indirect costs are just costs that are usually spread over more than one project or person and defy being put in one category (because THAT is how direct and essential they are!)
- Everyone uses the toilet paper. Everyone benefits from lights being on. Everyone benefits from storing things in a building rather than outside, where the elements (human and otherwise) can get to it.
Indirect costs (and the relevant rates and spread that companies use) take time, energy and money from lots of people (usually outside firms) to figure out what is necessary and essential.
- I have always been fascinated wherever I go to see how, when and what the indirect costs are calculated. It tells you a lot about the company, about the process and what is prioritized – particularly for non-profits. (Those who get Federal Money each have to go through the same process.)
It’s like seeing how your date treats the waiter. Just with lots of numbers and analysis.
So before we get into the government not paying, why don’t foundations pay indirect costs (or such a small amount)?
Because they can.
Because that’s how we’ve been taught to play “the game.”
Take on money, any money, even if it doesn’t support the whole thing and we’ll find the money elsewhere. Saying we got money from “So and So” will help us get more.
Sometimes, it does. Sometimes, it doesn’t.
When it doesn’t, who makes up the difference? It’s not the donors or the foundations.
Hmmm … I wonder why there seems to be such negligence in the operations? I wonder why burnout is so rampant in non-profits? I wonder why they don’t stay open after a few years?
So the government wants to do the same.
We can’t argue (well, we can and likely will but in the meantime, we have to abide).
There is one thing I can hope comes of this.
GREATER TRANSPARENCY
Because indirect costs are still direct, relevant and necessary costs.
We’ve just been trained to think of these as lesser and unimportant (until someone forgets to pay the power bill). It is what moves life along and needs to be just as visible as the widget, the services provided and the research being done.
In some ways, by putting them in a category above and beyond most day to day operations, it is not surprising that we’ve gotten complacent and unhappy about it.
Let’s bring it back down to where the work is happening and let’s have those discussions:
- How much energy do you (your program, your project, your life) use in that electric bill?
- What about heating and cooling (if not in electric), do you like it warmer than others in the winter, does the program need it?
- What about liability insurance, do you have it, why do you have it and does it cover you and others equally, or is there something special that you do that makes it more?
- Do you need more room in your office, place of business, home for your work, do you need space to store things (little things, big things, weird things, alive things) for undetermined amounts of time?
- Does someone else empty the trash bins, sweep the floor, maintain the alarms and plumbing systems? Who? How much do you pay them?
- And what about property and other taxes, are you bringing in the fair share of the money and/or using most of the property? What does that look like?
If your eyes glazed over, I get it.
However, this is a VERY short summary of what these discussions look like and to facilitate this, some standard procedures and allowances have been put in place.
Still, we need to really look at them.
Let’s really look at the cost of doing business.
Let’s see if all of it is necessary, reasonable and allowable (to borrow from research speak) to get us where we want to go.
I’m not trying to be a penny-pinching curmudgeon.
I want us to see the actual costs of what we choose to do and buy and what we don’t so the invisible labor doesn’t keep being invisible.
No matter what we are trying to do.