NIH Is Funding Fewer Grants Than Any Time in a Decade. Forward Funding Is Only Part of the Problem.

The National Cancer Institute planned to fund 700 new grants in fiscal year 2025. It funded 400. The difference was not a budget cut — Congress actually increased NIH's topline by $216 million. The difference was a payment structure called forward funding that quietly consumed nearly half the agency's capacity to make new awards, and the ripple effects are now visible in laboratories, hiring decisions, and research portfolios across the country.

NIH awarded 5,564 fewer grants in FY2025 than it did in FY2024 — an 8.6 percent decline. If the pattern holds through FY2026, an estimated 970 additional grants will disappear from the pipeline. And forward funding, while the most quantifiable driver, is far from the only force compressing the system. (Granted News)

This is the most hostile environment for NIH-funded research in at least a decade. Understanding exactly what is happening — and why — is the first step toward navigating it.

The Forward Funding Mechanism

Forward funding is an accounting practice in which an agency disburses the full multi-year cost of a grant in its first year rather than spreading payments across the grant's performance period. For a four-year R01 funded at $250,000 per year, traditional funding charges $250,000 against each fiscal year's appropriation. Forward funding charges the full $1 million against Year One.

The arithmetic is brutal. If 40 percent of new grants are forward-funded — up from 5-15 percent in FY2024 — then every forward-funded four-year grant consumes three future awards' worth of budget in the year it is made. The total dollars flowing to researchers do not change, but the number of distinct projects the agency can support collapses.

Why did NIH shift to forward funding? The stated rationale is budgetary certainty — forward-funded grants are insulated from future continuing resolutions or sequestration because the money has already been obligated. In a fiscal environment where Congress has failed to pass timely appropriations for most of the last decade, the logic is not unreasonable. But the cost is measured in research projects that will never begin, laboratories that will never open, and early-career scientists who will never get their first independent funding.

The FY2026 numbers are still taking shape, but the trajectory is clear. NIH received $47.2 billion for the fiscal year — a 0.5 percent nominal increase over FY2025 that translates to a real-terms cut once 2-3 percent inflation is factored in. Congress preserved funding against the administration's proposed 40 percent reduction, which was a significant political victory. But flat funding in an environment of expanding forward funding commitments means the number of new awards will continue to decline unless the practice is reversed or the budget is meaningfully increased.

The Payline Compression

Success rates tell the story more vividly than budget tables. At the National Cancer Institute, the payline — the percentile score below which applications are funded — tightened from the ninth percentile to the fourth percentile. In practical terms, this means an R01 application now needs to be scored in the top 4 percent of all submissions to receive NCI funding. Applications that would have been funded two years ago are now rejected.

Across all NIH institutes and centers, the aggregate success rate has dropped below 20 percent for the first time since the post-sequestration years. For new investigators submitting their first R01, the numbers are worse. The demographics of NIH funding have shifted accordingly — the average age at which a researcher receives their first R01 has crept past 45, and the pipeline of early-career investigators entering independent research is narrowing at exactly the moment when retirements in the existing workforce are accelerating.

The payline compression also creates perverse incentive structures. Researchers who would historically have submitted innovative, high-risk proposals instead retreat to safer, more incremental work that they believe study sections will score favorably. Innovation suffers — not because the science is lacking but because the funding environment rewards predictability over ambition.

The Politicization Problem

Forward funding is a structural challenge. The politicization of NIH grant review is something else entirely.

Reports have emerged that NIH is screening grant applications for ideologically disfavored terminology. The specific terms and the screening methodology have not been publicly documented by the agency, but researchers across multiple institutes have reported receiving guidance — formal and informal — to avoid language associated with diversity, equity, and inclusion in their applications. Study section reviewers have reported being instructed to evaluate whether proposed research aligns with current administration priorities in ways that extend beyond traditional scientific merit review.

The chilling effect is measurable even if the screening itself is opaque. Behavioral health researchers have reported reframing health disparities research to avoid terms that might trigger administrative scrutiny. HIV/AIDS researchers — whose work is intrinsically connected to marginalized populations — face particular pressure to navigate language that accurately describes their study populations without using terminology that has been flagged as politically sensitive. (Granted News)

Sixteen of NIH's 27 institutes and centers currently lack Senate-confirmed directors. The leadership vacuum means that individual program officers and review staff are making consequential decisions about application screening and funding priorities without the institutional backing that permanent directors provide. Acting directors, by definition, are temporary — and temporary leaders are less likely to push back against political pressure than those with confirmed mandates and longer time horizons.

The Indirect Cost Threat That Did Not Materialize — Yet

In 2025, the administration proposed capping NIH indirect cost reimbursement at 15 percent, down from negotiated rates that typically range from 50 to 70 percent at major research universities. The proposal would have effectively cut total NIH funding to institutions by 20-40 percent, devastating the research infrastructure that universities have built over decades.

Congress blocked the cap in the FY2026 appropriations bill, requiring NIH to honor indirect cost rates at FY2017 or FY2024 levels, whichever was higher. This was a significant congressional intervention — one of the few areas where the spending bill explicitly overrode an administration proposal on research policy.

But the threat has not disappeared. The administration's proposed 15 percent cap remains official policy, and it could resurface in FY2027 budget negotiations or through executive action if Congress does not continue to block it legislatively. Universities that depend on indirect cost recovery to fund core research infrastructure — libraries, compliance offices, research computing, animal facilities — are operating under a cloud of uncertainty that affects hiring, construction, and long-term planning.

The Department of Energy has already implemented a 15 percent standardized rate for grants to institutions of higher education. While DOE's research portfolio is smaller than NIH's, the precedent is concerning. If the cap becomes normalized across federal science agencies, the financial model that sustains American research universities will need fundamental restructuring.

The Delayed Disbursement Problem

Even grants that are awarded face operational headwinds. The Office of Management and Budget did not approve the release of FY2026 NIH funds until mid-March — more than five months into the fiscal year. During that delay, institutes operated under continuing resolution authority, unable to make new awards at FY2026 levels. Existing grants continued to receive payments, but the pipeline of new awards was effectively frozen.

For researchers who received study section scores in the fall that should have resulted in January or February awards, the delay meant months of uncertainty. Postdoctoral researchers whose positions depend on new grant funding faced contract gaps. Laboratory staff hired in anticipation of funded projects worked without the formal award documentation that institutions require to activate spending accounts.

Jenna Norton, a program director at the National Institute of Diabetes and Digestive and Kidney Diseases, summarized the cumulative effect: "We need more protections to ensure that NIH's mission is actually able to be carried forward."

What Researchers Should Do Now

The instinct to wait for the environment to improve is understandable but counterproductive. The constraints on NIH funding are structural, political, and bureaucratic — and none of them are likely to resolve quickly. Researchers who adapt their strategies to the current reality will be better positioned than those who submit the same proposals to the same institutes and hope for different results.

Diversify your funding portfolio. NIH should remain a core target, but researchers who depend exclusively on NIH funding are exposed to all of the risks described above simultaneously. The Department of Energy's Genesis Mission is funding AI-driven biomedical research. The Department of Defense's CDMRP programs fund disease-specific research through a congressional appropriation that bypasses NIH's budget constraints entirely. The NSF's new biological sciences initiatives overlap with NIH's basic research portfolio. Foundation funding from organizations like the Howard Hughes Medical Institute, the Simons Foundation, and the Chan Zuckerberg Initiative can bridge gaps between federal awards.

Target institutes with higher paylines. Not all NIH institutes are equally constrained. Institutes with dedicated congressional appropriations — such as the National Cancer Institute, which receives its budget as a separate line item — have more flexibility than those funded through the NIH common pool. NIGMS, which funds basic biomedical research, has historically maintained higher paylines than disease-specific institutes. Research the payline history of every institute relevant to your work and submit where the numbers are most favorable.

Resubmit strategically. The A1 resubmission, where you respond to study section critique and resubmit a revised application, remains the highest-success pathway at NIH. Applications that score in the 10th-20th percentile on first submission and are revised to address specific reviewer concerns fund at rates significantly higher than new submissions. If your application was close, the revision process is worth the investment.

Build collaborative proposals. Multi-PI applications, program projects, and center grants face different review dynamics than single-investigator R01s. While they are more complex to assemble, they spread risk across institutions and investigators, and they often address the kind of large-scale questions that program officers are eager to fund even in constrained environments.

Consider SBIR/STTR. NIH's SBIR/STTR allocation — 3.65 percent of the extramural budget — is calculated before forward funding adjustments and is protected by statute. Researchers with translational projects or industry partnerships can access this pool through a review process that evaluates commercial potential alongside scientific merit. The recently reauthorized SBIR/STTR program, with its new $30 million Strategic Breakthrough Awards, opens pathways that did not exist six months ago.

The Longer View

The United States built the world's most productive biomedical research enterprise on a foundation of sustained, merit-reviewed federal funding administered through NIH. That enterprise produced the mRNA vaccines that ended a pandemic, the immunotherapies that are transforming cancer treatment, and the genomic tools that are enabling precision medicine. It did so because researchers could trust that good science, rigorously reviewed, would be funded — and that the review process itself would be insulated from political interference.

Every element of that compact is under pressure. Forward funding reduces the number of projects the system can support. Politicization undermines the integrity of merit review. Leadership vacancies leave institutes without the institutional authority to protect their missions. And flat budgets in an inflationary environment ensure that the pressure will intensify before it eases.

The researchers who will sustain their programs through this period are those who understand the constraints clearly, diversify their funding strategies aggressively, and submit proposals that are so scientifically compelling that even compressed paylines cannot exclude them. The system is harder than it has been in a generation — but the science has never been more promising, and the funding, while constrained, is not gone. Tools like Granted can help you identify alternative funding sources and build stronger proposals across multiple agencies while the NIH landscape stabilizes.