Since the end of World War II, the business plan of American universities has included two key principles that now are undergoing rapid disruptive change:
- Student-athletes participate in college sports in exchange for tuition, room, and board.
- Federal funding for academic research is the primary engine for the nation’s basic science enterprise.
We’ve already seen what happens to college athletics when that first principle transforms into “Name, Image and Likeness,” transfer portals, and conference realignment — with much more yet to come. The underlying economic conditions that funded college sports shifted over time, making a long-established order vulnerable to sudden change. Now, commercial and other outside funding sources for college athletes, once strictly forbidden, are commonplace, upending decades of “tradition” by injecting new dynamics into how teams are recruited, rivalries structured, and games played.
The economic basis for academic research has also been shifting gradually over the past several decades, turning the Trump administration’s largely unrelated politicization of university science into a critical tipping point for the future of doing science in university settings:
- Although the amount of basic research supported by federal agencies has increased in constant dollars since 2000, the share of basic research funded by federal agencies has declined from 60% to 40% — with business support for basic research having grown during that same period to roughly equal federal support (37%).
- Business expenditures for all research and development activities (basic, applied, and experimental) surpassed federal R&D expenditures in 1980 and now are more than double overall federal R&D expenditures.
- In 2023, though, federal grants and contracts still accounted for more than 73% of the external research funds expended by universities.
- Overall, less than 7% of academic research was funded by businesses in 2023.
- Businesses annually account for more than 80% of utility patents awarded to U.S. entities while universities range between 2% and 5% each year.
Clearly, universities have failed to take advantage of the steady growth in basic and other kinds of research sponsored by businesses, making them particularly vulnerable to the kind of political manipulations the Trump administration is in the process of deploying. Why has this happened?
In 1980, business surpassed the federal government in paying for R&D. That same year, the Bayh-Dole Act also was passed. Bayh-Dole gave universities rights to the intellectual property created by their faculty, staff, and students working on federal grants and contracts. Subsequently, Bayh-Dole has been implemented in a uniform manner that requires universities receiving federal grants to account for and manage the commercialization of inventions created by their employees, resulting in a significant compliance and administrative obligation.
Beyond just federally funded research, though, Bayh-Dole additionally created the potential for university claims on business-sponsored IP whenever university employees become involved in its development. In effect, giving universities property rights in IP established them as competitors with businesses, even though the ultimate goal for universities in exercising that property right is to sell their IP to the private sector. Up to that point of sale, however, universities have become hypervigilant about defending their IP property rights — to the measurable detriment of their collaboration on basic research with businesses, which are equally defensive about their IP rights.
While many universities can cite anecdotal successes in licensing IP or using IP to start new companies, the most measurable result of Bayh-Dole has been the continued low rates of business sponsorship of academic research and of academic patents. Creating a university property interest in IP has contributed to building a wall between academic research and business research. While that wall is scalable when both sides are willing to make the effort, in practice it has directed the flow of scientific research to one side or the other.
Bayh-Dole is only one example of federal “uniform guidance” in academic research that now has made universities vulnerable to the simplistic sloganeering of national politics. In my previous role as vice president for research at Old Dominion University, setting up a business-sponsored research project required the application of an array of uniform rules designed for federal contractors to a commercial entity that often was not in the business of federal contracting — an awkward and time-consuming fit of a venture-oriented peg in a federally mandated hole.
Much like the NCAA in the case of college athletics, trying to extend a uniform standard based on federal funding to the conduct of all academic research has resulted in rules and incentives that have restricted and perverted the public policy goals supposedly being pursued. Just as business was becoming more engaged in paying for basic science, federal rules effectively fenced off academic researchers from participating in that upward trend in business-funded basic science.
Fifty years ago, most basic research projects could be designed and carried out by individual PIs working with collaborators and students at a single institution. Today, basic science is much more complex, and more often requires multiple PIs, collaborators, data sources, and facilities from many different kinds of institutions, including businesses. Barriers to working with the latter make academic research less rich and less competitive, as well as more vulnerable to the federal budget and national politics. The relative scarcity of business-sponsored research in universities also makes academic training experiences less like the larger world of scientific research.
There are several ways universities can become more engaged in the growth of business-sponsored basic and other research:
- Apply federal rules only to federal grants and contracts, letting universities and businesses enter into more flexible agreements about IP ownership and other conditions of doing research either on a project-by-project or longer-term basis. This would allow individual scientists, universities, and businesses to make their own bespoke agreements about working together.
- Allow universities to opt out of ownership of inventions developed from federally funded projects — leaving any potential IP to the federal agency that funded the project or in the public domain. The current Bayh-Dole regime requires increasingly expensive compliance and tech transfer administration that often can be more costly than the licensing royalties realized from federal grants. An “opt out” from Bayh-Dole requirements either on a project-specific or blanket basis would free up limited university resources and reduce the extent to which those universities are competing with business-funded basic science.
- Create NIL-style funds in which businesses and others can invest in collectives that pay for access to IP developed by university researchers, resulting in membership collectives that fund basic research across entire universities in exchange for non-exclusive options to buy or license inventions. These collectives could take on most of the tech transfer functions that currently are carried out (and paid for) by universities, thus creating more enduring end-to-end partnerships with businesses across the innovation pipeline.
If universities weren’t competitors for IP ownership, they could play a larger role in brokering research partnerships among competing businesses and other organizations. That brokering role increasingly is important as science becomes more complex, requiring multiple data sources and specializations that no single entity is best able to provide and some of which (as in the case of artificial intelligence) necessarily comes from companies providing everyday services (such as health care). Were barriers reduced or removed, universities could become pivotal organizers of research consortia that extend across higher education, nonprofits, philanthropy, government agencies, community organizations, and business.
Like college athletics, academic research needs new tools with which to navigate a rapidly changing funding environment in which one size of uniform no longer fits all.
Morris W. Foster is president of the School for Advanced Research.