Research Business Models Subcommittee Workshop

1
Research Business Models Subcommittee Workshop

• University of North Carolina
• November 17, 2003
• Randy Main
• Vice President and Chief Financial Officer
• Fred Hutchinson Cancer Research Center

2
Characteristics of Independent Research Institutes

• Single mission institutions Research
• Generally small in size, average research budget
  of 28 million
• Awarded 10 of total NIH budget
• Very competitive, NIH success rate much higher
  than national average
• Subject to OMB Circular A-122

3
General Reimbursement Observations

• Non-profit institutions are not reimbursed full
  costs, thus are expected to lose money on
  sponsored research awards
• Commercial contractors are awarded full costs
  plus a profit
• What gives here?
• Its all about attitude

4
Additional Consequences of the Attitude

• Non-profit institutions cant be trusted to make
  responsible business decisions
• Particularly decisions to construct new
  facilities Lease Purchase Analysis
• But we are putting our own capital at risk
• Or the capital markets weigh in and will only
  finance projects of reasonable risk

5
Other Common Misperceptions

• Indirect costs are not real costs
• Indirect cost reimbursement provides a profit
  margin or slush fund
• Non-profit institutions have no incentive to
  manage costs

6
Our Reality

• Facilities and Administrative costs are part of
  the real costs of conducting research and must be
  reimbursed
• We cannot shift costs to other lines of business,
  we only do research
• Discretionary funds come from fund raising and
  investment income and are the only sources
  available to fund new initiatives and pilot
  projects

7
Other Inequities

• Inconsistent cost policy interpretation between
  regional offices
• Lack of central office efforts to eliminate
  inconsistencies between regions

8
One Size Will Not Fit All

• Funding agencies and recipient institutions must
  be flexible
• Models must be flexible
• Developing cooperative working relationships with
  agencies does yield results

9
The Issue and Solution

• The federal government wants us to be good
  stewards of the tax payers dollars, and we are
• They want us to comply with the growing mountain
  of regulations, and we do
• Now they must uphold their end of the bargain and
  reimburse our full costs of stewarding the
  research dollars and complying with regulations