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Tight Finances May Spell the End of Independence for Research Centers

As federal funding dries up, independent research institutes are looking to universities and corporations for support.

ByPeter GwynneNOVA NextNOVA Next

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The summer of 2014 was a profitable one for most organizations in the Cape Cod village of Woods Hole. Tourists flocked there, intent on catching the ferries to the nearby islands of Martha’s Vineyard and Nantucket or just enjoying the local sea air and quaintness. But one part of the village found the summer less financially secure.

Woods Hole is unique in its concentration of environmental research institutes—it’s home to the Marine Biological Laboratory, the Woods Hole Oceanographic Institution, and the Woods Hole Research Center. Like nonprofit research institutes elsewhere, they have all struggled in recent years to find support to replace declining federal funds. “The fundamental research driver that we see is obviously declining,” says Susan Avery, president and director of the Woods Hole Oceanographic Institution (WHOI). Joan Ruderman, president and director of the Marine Biological Laboratory (MBL), agrees. “Our finances have been going downhill in recent years,” she says.

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The three institutions are pursuing several potential sources of fresh funds; they include broadening their links with government departments, seeking fresh grants from foundations, contacting individual philanthropists who have expressed interest in their scientific endeavors, and even renting out their space for conferences, scientific retreats, and other events.

However, the most promising methods involve partnerships with universities and collaborative agreements with corporations, the sort of tie-ups that have been controversial in world of the independent research. Both approaches have strong promise of ensuring financial stability. But they also raise concerns about the institutes’ integrity. Along with the solutions comes the possibility that they will put the institutions in thrall to non-research interests.

“There’s a certain dance between what we think is important to do and what our financial supporters think important to do,” says Larry Madin, WHOI’s executive vice president and director of research. “That dance becomes more difficult with the private sector. They want something for their bottom line.”

Belt-Tightening

The Woods Hole research community isn’t alone in seeking replacements for reduced federal funds. In 2012, the Boston Biomedical Research Institute closed its doors after it failed to replace dwindling funds from the National Institutes of Health. In the same year, the Temple University Health System saved Philadelphia’s Fox Chase Cancer Center by buying it for $83.8 million. A similar plan would have permitted the University of Southern California to acquire the Scripps Research Institute in La Jolla, California for $600 million. But a faculty revolt torpedoed the idea this past summer and led to the resignation of the institute’s president, Michael Marletta, who had negotiated the plan. Not even such a prominent recipient of federal funds as Harvard University has been immune from federal cutbacks. Individual professors there have started to court private individuals known to support science in the effort to renew their research projects.

The finances of the three institutions in Woods Hole characterize the broad problem facing nonprofit research centers. “We’re still struggling like the others,” says Richard Houghton, acting president of the Woods Hole Research Center (WHRC). “We’re still bringing in federal money. But we don’t have the same batting average as a couple of years ago.”

The effort to replace lost federal funds has implications beyond the continuing survival of the U.S. nonprofit research sector. All three institutions train and rely on graduate students and, especially, postdoctoral fellows. Cuts in funding inevitably reduce opportunities available to those individuals. “I worry about the loss of a generation of young scientists who see the loss of federal support,” Avery says.

Avery’s institution illustrates the problem of declining federal funding. WHOI’s annual support from the Department of Defense fell from more than $35 million in 2010 to less than $16 million last year. That’s a marked drop considering the annual budget for 2012 was $220 million. Support for MBL from the National Institutes of Health, meanwhile, has fallen slightly during the past eight years despite increases in the institution’s costs. Federal funding accounts for about half of MBL’s income.

Exacerbating the problem is the fact that independent research centers lack the financial resources that universities take for granted. “We don’t have tuition from undergraduates. We have no medical school, law school, business school, and hence no alumni” in the traditional sense, Ruderman says. On the other hand, many scientists who were visiting researchers or took courses, she says, “including me, feel that the summer transformed our lives.”

Of the three centers in Woods Hole, WHRC seems most determined to remain unencumbered by financial support. “We’re still solvent,” Houghton says. “Our board of directors is interested in staying independent.” Nevertheless, the center sees the need to find fresh sources of funds. “We’ve got a development crew going after money from private individuals,” Houghton continues. “Corporations aren’t off the discussion table, but they would probably be well-behaved corporations. And we’ve been informally talking with MBL and the University of Chicago about opening a world-class environmental center here.” He emphasizes that WHRC would maintain its independence in any such venture.

WHRC’s choice of those two partners comes as no coincidence. MBL had become an affiliate of the University of Chicago on July 1, 2013, the year in which it celebrated its 125 th anniversary as an independent laboratory. The decision followed several months of impassioned discussion, but the need for financial stability ultimately won out over the institution’s loss of some independence. “Our traditional business model won’t work,” Ruderman explains. “Chicago offered a very substantial financial support over a significant period of time. It’s buying us time to figure out a business model for our educational and research programs that will get us back to being budget-neutral or budget-positive.”

Unique Problems

MBL has a unique problem that affects its financing, in that, like the tourist town it’s based in, it is largely a summer destination. “We have 230 full-time year-round employees,” Ruderman says. “But most of our more than 100,000 alumni spent at least one summer here.” That situation creates its own financial difficulty: Not only have cuts in federal grants have reduced the number of slots available for summer scientists, they have also affected a visitor scientists program under which faculty members from other institutions rent laboratory space for themselves and two or three assistants. Those scientists now have fewer funds for rent and housing. In addition, grants from foundations fail to provide the support necessary for overhead. “This is pretty much a soft money institution,” Ruderman says, referring to funding via research grants for individual scientists and their teams.

The idea that MBL should affiliate with an academic institution originated at least two decades ago, but it became concrete in 2006. Brown University, which had set up a joint Ph.D. program with MBL, suggested a more formal partnership. MBL turned it down then. But late in 2012, as MBL’s financial situation became more parlous, the idea re-emerged. University of Chicago president Robert Zimmer, who had previously been Brown’s provost, expressed interest in a partnership that would expand access to marine-based research. “In 2013, we went into serious discussions with Chicago,” Ruderman says. “It is an excellent research university. It offered a better fit and a better arrangement.”

Agreeing on the affiliation turned out to be the easy part. Ruderman and the administration then had to sell the deal to MBL’s board of trustees and its 565-member corporation. “When I started, 80% of the people were dead set against it,” she recalls. But discussions about the reality of the institution’s finances changed several minds. In the end, the corporation agreed to the deal with only two negative votes.

The Real Pay-off

With the affiliation agreed and signed, the two institutions began scientific strategic planning. “We started with taking advantage of intellectual capital of the university, as well as its real capital,” Ruderman says. Meetings and retreats at both campuses showed how MBL could cut costs—by brokering a better deal on its facilities insurance, for example, and reevaluating its real estate facilities. The meetings also led to improvements in safety and security, human relations, and communications. “But the real payoff,” Ruderman points out, “is that Chicago is starting a capital campaign, and we’re one of the initiatives. People have the opportunity to give to something different and novel through Chicago.”

For WHOI, that approach seemed less practical. “The qualities we have, including a strong science-engineering intersection, would be hard for a university to absorb,” Avery explains. “Universities wouldn’t get along with practical-development engineering.”

In fact, WHOI has previous experience in developing fresh funding support. At the end of the Cold War, the Navy reassessed its block funding of the organization, which provided substantial and consistent financing of research on physical oceanography, acoustics, and marine mammals. WHOI’s scientists compensated by obtaining grants from the National Science Foundation, which had started to ramp up support for geophysics and ocean sciences. However, Avery says, “This present situation is more serious than before because the pathway is not well defined.”

Nevertheless, administrators pulled out the old playbook about four years ago, when it became evident that federal funding was falling and that WHOI was relying on just a few departments of federal agencies—such as the National Science Foundation’s division of ocean and polar science. “We first tried to get people to diversify within the federal systems,” says Madin. “Now at NSF, we’re getting grants from the biological, engineering, and mathematics sciences directorates that we never had before. We’ve also significantly increased our NASA funding.”

Effective as they were, those initiatives weren’t sufficient. So like its two companions in Woods Hole, WHOI has pursued prospects in foundations and individual supporters. But its main thrust has focused on the for-profit arena. The vehicle to attract that sector: WHOI’s Center for Marine Robotics.

Created in 2012, the center has the goal of “changing the way people and machines work together in the marine environment.” According to James Bellingham, who will shortly become the center’s first director, “Our goals will be to foster a vibrant and innovative community and to direct new robotic capabilities at solving important ocean science problems.”

“Marine robotics is coming together as an integrated system for situational awareness,”Avery adds. “It will provide an entree for industry to work with us. It will introduce industry to our capabilities.”

Those capabilities include studies related to offshore gas and oil, wind farms, deep-sea mining, and offshore aquaculture. “Any sort of development in the ocean will need knowledge of the ocean’s characteristics and experience and skill in building and maintaining the structures required,” Madin explains. “We can offer help in instrumentation, indicate the ocean parameters to monitor, and offer autonomous instrumentation. Our knowledge of the ocean and how to work in it can be very useful.”

The institution has started to exploit that usefulness. “We’re in discussions with two international oil companies: ENI of Italy and Saudi Aramco,” Madin reports. “We can say, ‘Here are our capabilities.’ We ask them what they’re interested in doing and tell them we might have tools to help that give us scientific knowledge at the same time.”

The Issue of Integrity

Critics of the approach, among them environmentalists and some former officers of WHOI, have expressed concern that the commercial work might corporatize the institution. They question whether a research organization can engage the private sector effectively without losing its scientific integrity. Greenpeace senior investigator Mark Floegel pointed out in a recent Boston Globe article that corporate partners are unlikely to agree to publication of results that could put them in a bad light. In that same article, former institution director Robert Gagosian urged current directors to move slowly. “You can always say no,” he told the Globe .

Walter Munk, a former director of the Scripps Institution of Oceanography in La Jolla, California, and now professor of geophysics emeritus at the University of California, San Diego, puts the choice of collaborating with commercial partners in a slightly more positive light. “I have found a curious positive correlation between ocean problems that were looking for practical solutions and problems that enhanced our basic understanding of the ocean environment.” However, he adds, “some of my colleagues feel otherwise.” And he cautions that “Woods Hole and Scripps cannot back off in the slightest from our independence in choosing what we work on and what our conclusions are.”

WHOI’s administrators strongly deny that the pursuit of corporate support will sully the institution’s mission. “You have to make sure you maintain scientific integrity; that’s what the brand is all about,” Avery asserts, noting that a lot of universities have their own collaborations with for-profit organizations. “We’re very careful when we’re creating these arrangements with for-profit centers that they are partnerships, and that scientific integrity is still there,” she continues. “That means that we can publish, that the data is not censored in any way, and that intellectual property is owned by us or shared.” Indeed, Madin adds, “We walked away from a couple of million-dollar projects from an oil company because we couldn’t agree on intellectual property rights. We are obligated to retain the intellectual property on what we find. We also have a public obligation to make innovations available and useful.”

Ultimately, the degree of corporate influence will be decided by how the deals are implemented. That may be an even bigger challenge than finding new sources of funding—a task that will fall on new leadership. All three institutions will soon be under new management. WHRC awaits the arrival of a new president, Philip Duffy, in January. In May, having overseen the affiliation with the University of Chicago, Ruderman decided to depart from MBL and return to research in the laboratory; she remains in charge until her successor is named. Then early this month, Avery announced that she will leave WHOI next June, when her contract ends.

Personnel changes may be afoot in the scientific corners of Woods Hole, but the new reality appears here to stay. Even if financial good times return, WHOI at least seems unlikely to give up its collaborations with industry. “If the federal money were to come back, I’m not sure we would give it back,” Avery says.

Photo credit: Tom Kleindinst/WHOI