NIH Faces 970 Fewer Grants as Forward Funding Strategy Backfires

Despite a nominally flat budget, the National Institutes of Health is on track to award approximately 970 fewer new research grants in FY2026 than in prior years, as the consequences of an aggressive forward-funding strategy come home to roost.

How Forward Funding Created a Bottleneck

Forward funding — the practice of disbursing an entire multi-year grant's funds in year one — jumped from a historical range of 5 to 15 percent of awards in FY2024 to a staggering 40 percent in FY2025. While this shielded existing grantees from potential future budget cuts, it consumed funds that would otherwise support new investigators.

The result: NIH awarded 5,564 fewer grants in FY2025 compared to FY2024, an 8.6 percent decline. The National Cancer Institute was hit particularly hard, awarding just 400 grants against an anticipated 700.

Researchers Shift to Private Funding

With NIH's $47.2 billion FY2026 allocation representing a real decrease after 2 to 3 percent inflation, principal investigators are recalibrating their strategies. "Due to the current political climate, obtaining federal funding has been a pipe dream," one independent chemist told Chemical & Engineering News, describing a broader shift toward private foundation and industry partnerships.

Compounding the pressure, OMB did not approve release of NIH's appropriated funds until March 16, leaving the agency just six months to obligate an entire year's worth of research awards.

Positioning Your Lab for What Comes Next

Researchers should consider diversifying their funding portfolio now rather than relying solely on R01 mechanisms. Private foundations, SBIR/STTR programs, and DOE's growing AI-for-science portfolio all represent viable alternatives. Tools like grantedai.com can help labs identify non-NIH opportunities matched to their expertise.

In-depth analysis of the NIH funding landscape is available on the Granted blog.