Since January 2025, the Trump Administration has enacted several executive actions significantly affecting research funding across various sectors as part of the Administration’s efforts to increase government efficiency and align funding priorities. These measures have led to a level of confusion and concern among universities and research organizations whose budgets depend in large part on federal research funding. This article overviews the main executive actions taken up to the article publish date of February 10, 2025 and their impact on research teams.

Memo M-25-13

On January 20, 2025, President Trump signed executive orders pausing several federal funding streams to evaluate their alignment with the administration's policy goals. The Office of Management and Budget (OMB) subsequently issued Memo M-25-13 on January 27, halting the obligation or disbursement of all federal financial assistance pending this review. The memo also directed federal agencies to review pending federal grant announcements for alignment with the new administration’s priorities and initiate investigations when warranted into underperforming recipients of existing grants and address identified issues with remedies including cancellation of awards. This action led agencies like the National Science Foundation (NSF) to briefly suspend grant reviews, causing a great deal of concern at universities and research organizations around the country.

Before the freeze was set to take effect, however, on January 28 the Federal District Court of the District of Columbia ordered a stay of the freeze until February 3. Shortly after the stay was issued, the OMB rescinded the memorandum. However, the Administration clarified that the rescission of M-25-13 was not a rescission of the federal funding freeze. White House Press Secretary Karoline Leavitt stated that the intent of the rescission was to “end any confusion created by the court’s injunction” but that the executive orders remain in full effect.  On January 31, a federal court in the matter of New York et al. v. Trump issued a temporary restraining order prohibiting the executive agencies from pausing or canceling awards based on the OMB memo or the Executive Orders.

Implications for the research community

In the US, basic science research is largely supported by the federal government, which funds over 40% of the total spend.  The National Institutes of Health (NIH) alone disburses over $40 billion every year to propel the scientific community forward, providing grants to more than 300,000 researchers at more than 2,500 universities, medical schools and other research institutes across the globe, with nearly 6,000 scientists performing research in its own labs.

Delays in issuance of funds on existing grants can have significant impacts on the ability of research teams to make progress. Research staff may be forced into unpaid leave if funding is not available to cover salary expenses, and materials and equipment orders may be delayed, impacting the timing of experiments. Beyond the immediate disruptions caused by the grants freeze, there may be longer-term ripple effects on the research community. Without funding, the ability of universities and nonprofit labs to attract and retain research talent would be severely diminished.

Changes to indirect cost support

On February 7, the NIH released NOT-OD-25-068: Supplemental Guidance to the 2024 NIH Grants Policy Statement: Indirect Cost Rates, which placed a 15% cap on indirect cost rates to institutions of higher education beginning on February 10, 2025. Indirect costs are additional cost overhead added into the budgets of research proposals to offset non-direct costs of conducting research, such as facilities costs, electricity and water, and the administrative costs of writing and managing grants. Indirect costs in research proposals average between 30-40% on top of direct costs, with many universities including costs at rates above 60%.  Even with this level of support, the vast majority of universities lose money on research due to the high cost of administration and infrastructure to support research activities.

As the largest external research funding agency, NIH’s action will have major impacts on the university and nonprofit research community and will set an example that may be followed by other funding agencies. Constraining the reimbursement of indirect research costs to a maximum of 15% will place severe cost pressures on research organizations as they are forced to either find ways to slash indirect costs or absorb much more of them themselves. Organizations representing universities around the country such as the Association of Public & Land-Grant Universities (APLU) have come out strongly opposed to this action. APLU President Mark Becker issued a statement shortly after the NIH announcement stating:

“NIH slashing the reimbursement of research costs will slow and limit medical breakthroughs that cure cancer and address chronic diseases such as diabetes and heart disease. Let there be no mistake: this is a direct and massive cut to lifesaving medical research… This action will slow advances for millions of patients who desperately need critical breakthroughs and imperil the U.S.’s position as the world leader in biomedical innovation.”

A mandate for efficiency

The recent actions by OMB and NIH, while shocking in many ways to the research community, align with the Trump Administration’s broader platform of radical disruption of government operations with the objective of reducing inefficiency and realigning priorities. The Administration’s stated ambitions with these changes is not to slow research progress but rather to force research organizations to streamline their operations and improve efficiency. 

A tighter funding environment could also potentially spark the development of new, more affordable technologies and novel methods of research and collaboration. There are numerous examples throughout history of funding constraints leading to innovation which may not have occurred in funding-rich environments, the most recent example being the development of novel reinforcement learning algorithms by the DeepSeek team due to limitations on GPU access for model training.

Our mission at Inquisite is to accelerate scientific progress through technology, and we believe that for science to move forward at an accelerated pace it requires consistent commitment and financial support. We also believe that there are significant opportunities to streamline processes and reduce inefficiencies in the systems that underpin research. The NIH’s drastic reduction in indirect cost reimbursement may provide the catalyst needed to spark a much sharper focus on efficiency of research support systems and infrastructure, which will enable more federal funding to flow directly into research.