If you were to consult the magic 8-ball about the future of research funding in higher education, it might say “Outlook uncertain” or “Reply hazy, try again later.”
As if the demographic cliff, state funding challenges, and rising operational costs weren’t enough, government funding for research, a vital revenue source for many institutions, is facing mounting policy-driven threats.
The challenges are both immediate and long-term.
From abrupt NIH funding cuts to funding delays and new restrictions tied to compliance, higher education leaders must adopt a more proactive stance.
One of the most underutilized levers for strategic advantage? Procurement.
This article highlights overlooked strategies in higher education procurement and research funding that can help institutions maintain operational stability, protect research investments, and stretch every dollar further.
To understand where the risks lie, it helps to talk about who funds most of the research in higher education. If you said it’s the federal government, you’re right. In 2023, federal sources accounted for 55% of all higher education research funding, totaling nearly $60 billion. Of that, the Department of Health and Human Services (HHS), including the National Institutes of Health (NIH), contributed $33.1 billion, making it the largest single funder.
FY 2023 was a good year for private and NIH funding opportunities. As a whole, higher education institutions saw a record 11.2% increase, the largest growth in two decades, amassing more than $108 billion.
Fast forward to today. The updated list of terminated HHS grants spans more than 49 pages as we write this and may be longer by the time you read this. Billions of dollars have been cut at some 220 institutions and research organizations. Those are NIH funding opportunities that no longer exist, and it’s causing an urgent challenge for research-focused institutions. Federal funding for research and other programs accounts for about half of total revenue, and since research typically generates revenue, cuts are multiplied.
Proposed changes to indirect cost recovery caps, lowering them to 15%, threaten core funding models. According to Inside Higher Ed, such a move could strip colleges of $4.3 billion in reimbursements. Individual institutions could lose $9.6 million on average, with some facing losses exceeding $50 million.
Delays in grant reviews, threats to revoke funding for perceived DEI policy violations, and legal challenges have created a climate of profound uncertainty. Some universities have already begun cutting staff, pausing projects, and even revoking admissions for graduate students.
Further compounding the issue is the Department of Education’s restructuring. The Department of Government Efficiency (DOGE) initiative led to significant layoffs, including a 95% reduction in staff at the National Center for Education Statistics (NCES). The loss of this infrastructure and research on funding in higher education also weakened oversight of Pell Grants and FAFSA processing could reverberate across campus operations.
Listen to our podcast: DOGE, the DOE, and the Higher Education Funding Cuts: Navigating Turbulent Waters to Ensure a Smooth Ride For your Campus to get expert insights on managing these challenges.
Credit analysts at Moody’s updated their guidance on the higher education sector. In March 2025, they changed the outlook for the year from stable to negative despite talking about potential growth opportunities just three months earlier. For those relying heavily on NIH funding opportunities or medical education research funding, the stakes are even higher.
Procurement is often seen as a compliance function, a department that ensures the rules are followed, fulfills needs, and negotiates prices. While that’s true, higher education procurement has evolved dramatically into a more strategic partner. The role now includes advising leadership on cost scenarios, identifying savings opportunities, and facilitating continuity for mission-critical services.
Today’s procurement professionals have insight into enrollment strategy, research funding dependencies, and faculty priorities to anticipate needs and be proactive. Scenario planning is an essential tool. Institutions must evaluate what-if scenarios tied to Pell Grant fluctuations, F&A recovery rate changes, and enrollment volatility. Procurement must be at the table as institutions model different outcomes and adjust course.
With indirect cost recovery rates at risk and federal grants in flux, procurement can play a critical role in sustaining research operations.
Procurement and finance teams must help stretch limited resources. That means scrutinizing facility investments, standardizing lab supply procurement, and negotiating service-level agreements that accommodate volatile funding conditions.
Capital planning requires particular caution. New lab construction or equipment acquisition should align with long-term funding forecasts. Flexible contracts and vendor payment terms can reduce exposure if grant cycles slow or awards are postponed.
Supporting core labs and research faculty is another vital function. Procurement can broker partnerships, vet suppliers, and provide purchasing options that enable innovation, even in lean years. This support ensures that critical research funding in higher education continues despite fiscal turbulence.
Several practical, actionable strategies can help institutions stabilize their budgets and protect research output.
One of the most effective but underleveraged tools is cooperative buying in education. Through cooperative contracts, institutions can scale their purchasing power, reduce administrative overhead, and access pre-negotiated agreements tailored to higher ed needs.
When used effectively, cooperative contracts empower procurement teams to focus on unique or mission-specific investments while relying on cooperatives or group purchasing organizations (GPOs) for key categories.
E&I Cooperative Services offers an edge in this space with higher-ed-specific contracts and flexibility for customization to unlock savings while preserving quality and compliance.
Many institutions may not realize the strategic flexibility available within cooperative agreements, such as those offered by E&I Cooperative Services. These contracts come with pre-vetted pricing, terms, and supplier relationships-providing a strong foundation for compliant and efficient procurement.
While the core contract terms remain consistent, procurement teams can often work with suppliers to tailor elements like service levels, delivery timelines, or product bundles to better align with their institution’s local needs. This allows members to realize the speed and compliance benefits of cooperative purchasing while still meeting their unique operational goals.
In times of fiscal pressure, one of the most immediate ways to gain flexibility is through spend deferral and contract restructuring. Procurement leaders can proactively work with vendors to push certain costs into future fiscal years, or conversely, accelerate spending when budget surpluses risk being eliminated.
These adjustments help smooth year-over-year budget variances and also open opportunities to lock in favorable pricing or avoid inflationary cost increases. The key is in strong vendor relationships and early, transparent conversations about institutional needs and constraints.
While the traditional model of “fund first, spend later” still dominates research funding, some institutions are taking a more entrepreneurial approach.
If a research initiative is expected to generate revenue through licensing, partnerships, or future grants, financing the upfront costs becomes a strategic investment. Higher education procurement professionals can collaborate with finance and research offices to explore bridge funding, equipment leasing, or philanthropic match models.
This allows high-potential projects to move forward even when federal or state dollars are unavailable, preserving the university’s research momentum and revenue generation.
Facilities and Administrative (F&A) rates play a major role in the total funding received from federal research grants. These rates are negotiated with federal agencies and can influence a university’s competitiveness.
Procurement and finance leaders should treat F&A rate negotiations with the same rigor as major vendor contracts. This means documenting facility costs thoroughly, ensuring transparency in administrative overhead, and advocating for a rate that reflects the true cost of supporting research. A well-negotiated F&A rate can substantially increase the long-term sustainability of research operations.
This might be difficult in light of NIH funding caps on indirect costs, requiring increased scrutiny of overhead and expenses.
Grants, donations, and endowments often come with unique stipulations. Procurement can add strategic value by designing contracts that are flexible enough to accommodate varied terms, including staggered disbursements, reporting obligations, or restricted uses.
Including clauses that allow partial invoicing, adjusted deliverables, or extended timelines can help align spending with the availability of funds. This approach is particularly important when managing medical education research funding or interdisciplinary grants with complex administrative requirements.
As government funding becomes less predictable, institutions must diversify their research funding sources. Procurement and finance teams can support development offices by identifying philanthropic opportunities tied to specific vendor solutions.
Think:
You can also explore alternative models like public-private partnerships, corporate sponsorships, and shared-use facilities that benefit both academic research and industry stakeholders.
In lean times, every relationship counts. Procurement teams should assess their current vendor landscape and identify partners who can offer bundled services, value-added options, or preferential pricing.
Rather than issuing new RFPs, institutions can often achieve better results by deepening existing relationships. For example, a supplier providing lab equipment might also offer training, maintenance, or data analytics—services that can extend the life and impact of a purchase. These partnerships are especially valuable when research continuity must be preserved with fewer resources.
There may also be opportunities to consolidate purchasing by selecting cooperative contracts, eliminating the administrative burden of dealing with multiple suppliers and tapping into higher volume discounts.
With hiring freezes becoming more common, institutions still need to maintain critical systems and support research administration. Procurement can explore fractional staffing models, such as contracting with part-time experts or third-party services to manage CRM systems, grant compliance, or technology platforms.
These flexible arrangements ensure essential functions continue without requiring long-term financial commitments. Fractional models also allow for quick ramp-up or scale-down as funding conditions change.
Another strategy is to reallocate resources to maximize procurement’s contribution. By offloading routine purchases to cooperative agreements, procurement professionals can focus on strategic areas like research funding support, capital project advising, or risk mitigation.
Investing in procurement training and cross-department collaboration also increases the team’s ability to contribute beyond traditional roles. In an era where efficiency and adaptability are essential, this reallocation may prove to be one of the most valuable strategies available.
Listen to our podcast: Navigating The Current Landscape & Why Members Should Lean on E&I to hear more about valuable cooperative procurement strategies.
Survival and success in this climate depend on institutional resilience. Strategies include:
Agility is crucial. As court rulings, policy changes, and economic swings reshape the environment, institutions must remain flexible enough to adapt.
In a challenging landscape of reduced higher education research funding and growing uncertainty, procurement cannot be a back-office practice. It needs to be a front-line strategy for building financial sustainability, safeguarding research revenue, and supporting the mission of higher education.
By shifting higher education procurement from a compliance-centered activity to a strategic partner in financial planning, colleges and universities can continue delivering on their promise to students, faculty, and society.
Take a closer look at how cooperative buying in education through E&I Cooperative Services can significantly reduce costs and administrative overhead. Join more than 6,200 institutions that are already part of the only member-owned nonprofit sourcing cooperative exclusive to the education sector.
Learn more about the benefits of becoming a member of E&I Cooperative Services and see how much you can save.
