Claire M. Morris

Funding the full costs of university research is critical to Canada's global competitiveness

By Claire M. Morris

Canada boasts cutting-edge research facilities. We have exceptional researchers in our universities. And we've shown research excellence in a broad range of fields through new breakthroughs, innovative products, ideas that transform our understanding of the world and practical solutions to complex social and technological problems.

Yet we are not living up to our potential. Canadian researchers are at a funding disadvantage compared to their competitors such as the US and the UK. In Canada, we don't reimburse our universities for the full costs of research – which means that institutions must cover the shortfall from their operating budgets, often at the expense of other essential programs.

This is not just a university issue. It's one that affects all Canadians. By not funding the full amount of the costs of doing research in universities, we're stalling competitiveness and stunting productivity. In essence, we're limiting the effectiveness of our public investments in research.

University researchers compete for grants from the federal research granting agencies to cover the direct costs of research. These grants are extremely important and cover, for example, the costs for research assistants, equipment and supplies, support services and project-related travel. Yet universities are reimbursed for only a portion of the institutional or "indirect" costs that they must incur to provide a well-functioning research environment for their researchers – including operating and maintaining research facilities, complying with regulatory and safety requirements, addressing accountability and reporting issues and preparing grant proposals. It's as though you bought a car but had insufficient money to pay for insurance or maintenance.

This funding shortfall for institutional research costs has serious ramifications. Meeting these costs is increasingly critical to the success of Canadian universities which, in turn, is increasingly critical to Canada's competitiveness in a global knowledge economy where knowledge and innovation determine the winners.

Today, the overall rate of reimbursement in the federal Indirect Costs Program is only about 25 percent, even though numerous studies show that these institutional costs actually equate to a minimum of 40 percent of the direct research costs.

In other words, for every $100 that research funders provide for the direct costs of research, universities incur at least $40 in related expenses to support that research. The Canadian government only reimburses about $25 of these costs. In the US, by comparison, universities receive roughly $50 for every $100 in grants.

This gap between the reimbursement rates for indirect research costs between Canada and the US puts our universities at a competitive disadvantage before they even start the research. And institutions that don't receive the minimum 40 percent must either find the missing dollars by redirecting resources from their operating budgets or compromise on the quality of the environment they provide for research and knowledge transfer. The shortfall is roughly $185 million today and will rise to about $270 million annually by 2010-2011.

Insufficient funding of institutional costs puts Canada's universities at risk of losing their best researchers to competitor countries that recognize the importance of fully funding the entire research enterprise – including institutional costs – and fostering a more supportive environment. If we want to derive full value from our public investments in research talent, infrastructure and the direct costs of research, we must fund the institutional costs at an internationally competitive level.

The bottom line is clear: to compete globally, Canada must ensure that its universities can create the environment for research excellence. We have the potential. Let's realize it.

Claire M. Morris is president and CEO, Association of Universities and Colleges of Canada.