H.R. 422: No Subsidies for Wealthy Universities Act

This bill, known as the "No Subsidies for Wealthy Universities Act," aims to limit the amount of federal funding that can be used for indirect costs by certain universities when they receive federal research awards. Here’s a breakdown of its main provisions:

Definitions and Key Terms

The bill includes definitions for several key terms, such as:

• Federal research award: Funding provided to institutions for research activities.
• Indirect cost: Costs related to a project that are not directly tied to specific project activities but are necessary for the general operation of the institution.
• Endowment fund: A financial asset donated to an institution to provide ongoing funding.

Capping Indirect Costs

The bill sets specific rules governing how much of a federal research award can be allocated for indirect costs based on the size of the institution's endowment fund:

• For institutions with endowments over $5 billion: No federal research award funds can be used for indirect costs.
• For institutions with endowments between $2 billion and $5 billion: The indirect cost reimbursement rate is capped at 8% of the total project costs.
• For other institutions: The indirect cost reimbursement limit is set at 15%.

Reporting Requirements

The bill mandates that institutions must provide information on their endowment funds to the U.S. Department of Education annually. This will help identify institutions subject to these funding limits.

Oversight and Reporting

The Comptroller General will be required to submit an annual report to Congress on indirect costs reimbursed under federal research awards. This report will analyze how these funds are used, focusing on:

• Compensation for administrative staff.
• Funding related to diversity, equity, and inclusion initiatives.
• Identifying which research fields receive the most federal funding.
• Listing agencies that provide the most funding and the institutions receiving these awards.

Effective Date

The provisions of the bill will take effect one year after it is enacted, applying to all federal research awards made after that date.

Relevant Companies

• GOOG (Alphabet Inc.): Might be impacted by changes in research funding practices if they partner with institutions affected by the bill.
• MSFT (Microsoft Corporation): May experience changes in research collaborations with universities that face limitations on indirect funding.
• AMZN (Amazon.com Inc.): Could be affected if they provide grants to universities for research that are constrained by this legislation.