Ross Hyman, a computer scientist here at UChicago, writes:
I have not seen this mentioned anywhere, probably because it is impossible to keep up with all the wrong things that Elon Musk has been saying
https://x.com/elonmusk/status/1888022189984858476
But when Elon says “Can you believe that universities with tens of billions in endowments were siphoning off 60% of research award money for “overhead”?”, this is conflating the indirect rate with the percentage of the award.
The simplest way to show that these are different is to consider the extreme case of a university with a 100% indirect rate. That would mean that for each dollar that the NIH is awarding to a PI for direct costs, their university is receiving one dollar in indirect costs so the percentage of the award going to indirect costs is 50% not 100%.
For the 60% rate that Elon refers to, for every dollar to the PI’s direct costs, 60 cents goes to indirect costs. So, the percentage of the award going to indirect costs is 60/160 = 37.5%
Some of the indirect cost goes to a University’s Research Computing Center, which provides computing services to the grantee as well as all researchers on campus with or without grant awards. If Research Computing Centers were not funded by indirect costs, then researchers would need to pay for computing time out of their grants and computing time would not be available to people who are working on projects without grant money, which is necessary to develop successful pilots to get grant money, and would deprive the world of a lot of interesting research.
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