Reimagining Research Funding in Higher Education
Academic research has led to fundamental discoveries for the benefit of society, in healthcare, energy, technology, and beyond.
Academic research has led to fundamental discoveries for the benefit of society, in healthcare, energy, technology, and beyond. The engine of academic research has traditionally been government grants and contracts which, in the U.S., have provided more than half of the funds needed to support institutions’ research and discovery (R&D) missions. These funds have been complemented by state funds, private foundations, and philanthropy, which together provided the resources necessary for discovery-based research.
The role of the U.S. federal government in funding basic scientific research has been consistent over time, aimed at creating national competitive advantage, economic progress, and the advancement of well-being for Americans. At the core of this policy is a belief in the essentiality of strengthening academic institutions and increasing the number of institutions performing high-quality research. As President Lyndon Johnson stated in 1965, “We must, I believe, devote ourselves purposefully to developing and diffusing – throughout the Nation – a strong and solid scientific capability, especially in our many centers of advanced education . . . not only with a view to producing specific results, but also with a view to strengthening academic institutions and increasing the number of institutions capable of performing research of high quality.”
New federal policies and procedures have paused and threaten to reverse the growth and preeminent role of government funding for higher education in the U.S., causing academic and research institutions to look for new ways to support R&D, which in turn support the educational mission.
This is a serious matter, of course, and not just for the institutions themselves. Most companies that develop and commercialize products cannot afford to invest in, or sustain, a discovery-based research operation. Academic institutions provide them with an invaluable service. Further, universities’ core business model is to facilitate the discovery and transfer of new knowledge from faculty to trainees. Having a discovery-based research mission attracts the best faculty and the best students, further feeding the pipeline of discovery and expanding the broader mission of the university.
At the same time, a variety of challenges – ranging from declining enrollment rates to constraints on international students – threaten academic institutions’ abilities to continue self-support of research activities at current levels. Currently, institutional funds constitute roughly 25% of R&D funding sources. State grants and contracts, private foundation funding, and philanthropy can only support so much of this ongoing critical mission. Federal grants and contracts pay for the salaries of faculty, students, and trainees. They provide support for supplies for the critical experiments to be conducted that reveal new insights, advanced technology for the discovery of new knowledge, as well as support for travel to enable faculty and students to share their discoveries with the broader research community, in turn garnering input and further development. With less funding to support research, there will be fewer faculty engaged in research, fewer students and fewer trainees learning how to do research, fewer opportunities to discover new knowledge and to share this knowledge with the research community, and fewer discoveries that promote the welfare and safety of communities globally.
A real danger, of course, is that academic institutions in the U.S. could lose their preeminent role as innovation and discovery engines, limiting their relevance and societal impact. Or, as is starting to happen, U.S. universities could experience a brain drain of their best and brightest to other countries. So, how to adapt to a changing environment where federal grants and contracts are less accessible? How can institutional leaders – from trustees to presidents to deans – reframe their approach to obtaining essential research funding to secure their futures and continued relevance?
Paths Forward
One solution for some institutions is to build a better infrastructure to develop and monetize discoveries by faculty in the form of intellectual property to reinvest in the research mission. Here, increasing the number of invention disclosures by faculty, recognizing which discoveries can be advanced for patent protection, improving the infrastructure for commercializing those discoveries through multiple alternative pathways, and developing legal strategies to protect the use of those discoveries by the private sector would contribute to the R&D mission.
It is important to note, however, that universities only account for a small fraction of the number of patents awarded each year in the U.S. The challenge here is that a vast majority of faculty are not incentivized to develop invention disclosures. Further, only a fraction of invention disclosures advance to patent protection, which can take 2-3 years to secure. Also, only a small fraction of academic patents has sufficient value that could provide meaningful support for the overall R&D mission. Thus, this solution does not seem sufficient to fulfill the need for increased revenues required for the research mission.
We believe that the immediate future of funding and support of the R&D enterprise at academic and research institutions will be best achieved through targeted partnerships that are mutually beneficial. These types of partnerships will require that the faculty complement their pure discovery-based research that focuses on developing new knowledge, to include applied research, where R&D is focused on specific problems with specific solutions that benefit a funding partner and the people they serve.
Examples might include a cancer or health-related academic research program that, when partnered with, and supported by, a hospital system, enables a focused research mission that discovers new standards of care that can be developed and offered by the healthcare system for the benefit of the patients they serve. This in turn expands the hospital’s patient-catchment area, further driving revenue growth and subsequent investments in R&D. (MD Anderson Cancer Center is one example of where this is already happening.)
Another example might be an engineering firm that develops technology or products that benefit society, national security, or new and efficient technologies for consumers. Here, corporations could partner with an academic or research institution that develops prototype technologies, which in turn can be licensed or shared via investment directly to the funding partner. New products drive growth and leverage further investments in the academic partner. (We’ll cite Lockheed Martin as one company paving this route.)
Mindset Shift
Pursuit of these types of partnerships requires a shift in philosophy regarding how faculty are incentivized, expectations for application of their research discoveries, and how academic institutions protect and license these discoveries.
Academic institutions need to modify the incentives that provide academic rewards toward promotion and tenure, including placing a greater value on invention disclosures, provisional patents, awarded patents, licenses and startup companies, all of which could be factored into professional advancement.
Further, academic institutions need to be open to pre-arranged partnerships whereby academic research programs work directly with a corporate or philanthropic partner that funds a targeted research program. Here, the partners work collaboratively to develop new discoveries that can be invented in the academic research laboratories and further developed by the sponsor, in preparation to go to market. These discoveries would be directly licensed to the funding partner.
Academic institutions and their faculty have an intrinsic advantage in basic R&D, in that they are paid for by the institution, and by the grants and contracts they secure. They are provided with access to institutional core technology, laboratory infrastructure, students, and trainees. The private sector is rarely able to invest in a discovery-based R&D program because of the risk and cost. There have been companies driving discovery (Bell Labs, Lockheed Martin, and Genentech/Roche come to mind), but most have not seen a favorable risk-reward ratio when discovery, translation, and commercialization are factored in.
The faculty and administration of academic institutions that want to adapt to this new environment will have to create new funding models, new ways to reward and incentivize faculty, and new partnership models that directly license discoveries to these funding partners. In this way, the R&D mission of an academic institution can realize a unique role in the continuum of research and discovery, by providing that initial engine of discovery that can be further developed by dedicated partners that provide the financial support needed to promote that mission.
Here are ways institutions can begin to shift in this direction. Universities must:
- Create a new arm of the research mission that focuses on applied research that can perform research with, and targeted for, industry partners;
- Develop policies to promote, tenure, acknowledge and/or reward faculty and students who engage in applied research;
- Develop policies that reward and encourage faculty to envision how their discovery-based research can benefit society, through invention disclosures, patents, startup companies and licensing of technology;
- Institute policies and procedures that enable the rapid transfer of IP to the private sector, including IP sponsored by industry partners.
Over time, this applied research mission can become a new facet for institutional funding, acting as a parallel partner to basic discovery-based research, if and when those federal funding models return.
