One of my core responsibilities as Vice Chancellor for Research is to ensure the continued success of our research enterprise by equipping faculty and staff with the support and infrastructure to ensure our ability to continue innovating, discovering, and changing lives.
The OVCR has approached the past year of heightened uncertainty by being proactive and transparent with our community. Many of you have asked direct questions about the current funding environment and potential outlook for Carolina, our partners, and research institutions across the U.S.
In this month’s blog, I’ll answer frequently asked questions from conversations that the OVCR leadership team is having across campus. I’ll cover the impact we saw in 2025, recent funding-related actions taken by Congress, and renewed hope for a new F&A model.
How did the federal government’s actions in 2025 affect Carolina’s research funding?
In short: significantly and unevenly. Several overlapping dynamics shaped the funding environment in 2025:
- Federal workforce reductions slowed nearly every step of the grant lifecycle, from proposal review to award processing and post-award modifications.
- The October federal government shutdown halted new awards entirely during a critical part of the funding calendar.
- Shifts in federal priorities required investigators to integrate newly introduced priorities into proposals already in development, increasing the complexity and effort required for submission.
- Canceled or reprogrammed funding introduced uncertainty about the timing and reliability of awards.
- Proposal review backlogs and staffing losses at the grant-making agencies continue to contribute to ongoing delays in peer-reviews and regular grant management business.
- Facilities & Administrative (F&A) reimbursement rates remain unsettled, creating continued uncertainty for research planning, even as potential updates to the model are being explored.
For Carolina, like all U.S. research institutions, this was (and continues to be) a time of uncertainty. Despite this, Carolina researchers submitted 6,011 proposals in 2025 — a record number. We also have record numbers of pending grants for which we are attentively awaiting notices of awards.
The sustained pace of proposal submissions during this period is a powerful testament to the courage, creativity, and resolve that defines our research community.
How is the federal government prioritizing funding for research in 2026?
While the past year has represented one of the most precarious moments for federal research investment in decades, that risk eased meaningfully this month. On February 3, a five-bill FY26 spending package became law. The bipartisan funding bill, which included the Labor-HHS-Education appropriations bill, has positive implications for federal research funding. This action provides full-year funding for most federal agencies through September 30, 2026.
This action was consequential in terms of:
- Rejecting proposed deep cuts to the nation’s core scientific agencies
- Preserving continuity across major research funding agencies amid fiscal and political uncertainty
- Signaling broad bipartisan congressional support and recognition of the value of research, education, and innovation
Additionally, Congress staved off large reductions to the National Science Foundation, NASA Science, and basic research at the Department of Defense. The bill limits NIH’s multiyear funding for grants to the FY25 level and preserves NIH’s organizational framework. The bill also includes modest increases for the National Institutes of Health and the Department of Energy’s Office of Science. And notably, the final bills reaffirm investments in education, including Pell Grants and sustained federal support for the arts and humanities.
What does this mean for F&A?
Congress included language in several FY26 appropriations bills and explanatory statements that protect the current negotiated indirect cost rate system — facilities and administrative (F&A) reimbursements — by prohibiting agencies from changing how negotiated rates are applied. This effectively prevents agencies from implementing arbitrary caps or unilateral changes to indirect cost reimbursement frameworks.
Going forward, agencies must continue using previously negotiated indirect cost rates and are barred from using FY26 appropriated funds to develop or implement rate cap changes. This protects research institutions from sudden changes mid-award cycle.
What about the newly proposed F&A model?
The FY26 appropriations included report language that helps advance long-standing efforts to modernize how the federal government understands and reimburses the true costs of conducting research. This is where the Joint Associations Group’s FAIR (Financial Accountability in Research) model comes in.
The Joint Associations Group (JAG) on Indirect Costs is a coalition of major U.S. higher-education and research associations formed to strengthen transparency, accountability, and sustainability in the federal research funding system. Representing America’s leading research universities and scientific organizations, JAG worked collaboratively with Congress, federal agencies, and the Office of Management and Budget (OMB) to provide a constructive, data-driven framework.
While FY26 bills did not enact the FAIR model into law, committee reports and joint explanatory statements accompanying the appropriations bills explicitly mention the FAIR model and signal congressional interest in further consideration. Appropriators noted that there is “room for improvement” in the current indirect cost system and that the FAIR model merits further consideration.
The recognition of FAIR model’s merits gives Congress and agencies a formal policy entry point to explore reforms, ideally in the FY27 appropriations process or standalone legislation, without disrupting FY26 research execution.
Why is the FAIR model different?
As I covered in my blog from August of last year, the FAIR model is the result of months of coordinated engagement across higher education to ensure policymakers had a clear understanding of:
- How research dollars are used
- How much universities already invest in themselves
- What instability in funding would mean for students, patients, communities, and national competitiveness
Carolina’s public mission has always shaped how we engage: as a transparent, trusted partner to lawmakers, working collaboratively to strengthen research, education, and service for the people we serve. Given this mission, UNC-Chapel Hill was naturally part of the solution-building process. In addition to me, Director of Federal Affairs Kelly Dockham, Chancellor Lee Roberts, and other UNC representatives had many conversations with lawmakers ranging from the importance of research to the nitty gritty details of indirect cost reimbursement.
The effort was fundamentally bipartisan and collaborative, bringing together leaders from higher education, Congress, OMB, and federal agencies to sustain dialogue that achieved alignment on the best path forward.
By grounding the work in transparency, facts, and stewardship, this bipartisan engagement has helped transform tension into trust, reinforcing the idea that when we lead with integrity and common purpose, we can strengthen the foundations of American research for generations to come.
Navigating Uncertainty, Together
The funding environment is challenging. There’s no benefit in pretending otherwise. But Congress’ recent actions have demonstrated something essential: when universities lead together — across disciplines, institutions, and political differences — it is possible to protect the foundations of American discovery and innovation.
As we move through this uncertainty, we will continue to be transparent with this community. A shared understanding of our funding obstacles gives us power and direction to chart a new course forward. We will move intentionally, support one another strategically, and position Carolina not just to weather uncertainty — but to lead through it together.
Thank you for your continued dedication to discovery, impact, and public service. I look forward to continuing this conversation.