You've invited a prospective postdoc to interview with you, and you want to take her to lunch.
You can, as some investigators do, pull out your own credit card and consider it a good investment in your future. Or you can ask your department head to pay for the lunch from departmental funds. But how much better it would be to have a lab fund that you can dip into for this and other reasonable expenditures not covered by your grants!
Discretionary money is important for more than entertainment. You might use it to travel to a meeting, to bring an interviewee to your lab, to fund a summer student to work on an unfunded project, to buy an answering machine for your office or lab, or to do any one of many things not authorized by your grants. You may need it to patch over a few fundless months before a new grant kicks in; sometimes, if you have enough discretionary money, you might even use it to pay for new experiments that you need to write another grant proposal.
But where does discretionary money come from? Why do some people have a slush fund while others don't? How can you get one?
The most important source of unrestricted money for young investigators is start-up funds from the institution. "You have your best leverage when you are negotiating for the job," emphasizes David Carver, associate dean at the University of Medicine and Dentistry of New Jersey, Robert Wood Johnson Medical School. "It is much more difficult after that to obtain discretionary funds." Unfortunately, some institutions require that you spend your start-up money by a certain date. So negotiate a start-up package that will fill in the gaps in your own funding for several years, and be sure you can keep any unspent money at the end of each fiscal year and beyond the "start-up" period.
Keep in mind how precious these unrestricted funds are, and be very careful how you use them--they go fast! Resist the temptation to, say, line your lab with a row of computers; computers have a limited half-life, and it might be years before you have such a nice packet of discretionary money again. Be very fiscally responsible. Save for a rainy day.
Later, you can apply for grants that allow discretionary funding, but these are few and far between. Most grants are very specific in what they allow, and it is illegal to use the money in any but the designated way. Promising results may suggest a change in research direction, and a well-considered, strategic change can be justified in a grant renewal. But you are still expected to use the money in pursuit of the objectives outlined in the proposal. There is a tacit understanding that some changes in money use will occur on a project, but you must be very careful in this gray zone. Research grants that can be legally used to patch holes in other projects are rare indeed.
Departments and institutions have the same problem as individual investigators: They want money to be available where it is needed, and they struggle to ethically and legally move targeted funds into discretionary accounts to meet the realities of research. But the departmental and institutional level is where, within limits, money can be moved around, legally and legitimately. As your career grows and your start-up funds are exhausted, the continued existence of your discretionary fund will depend on your department's ability and commitment to rebudget--to transform restricted funds in your grants into unrestricted funds.
"We have a terrific grants administration officer," says David Foster of Hunter College, part of the City College of New York. "He is smart and resourceful, and he makes all the difference for our department." The amount of start-up money, grant management for investigators, the availability of funds for students or equipment or travel from the department--all flow from the priorities your department sets, and the talent of the grants administrator to redistribute funds to fulfill those priorities.
In redistributing funds, every administrator walks the line between practicality and legality. Legality is not a token concern for grant administrators; they are personally at risk if the government or other agency audits the books and finds irregularities. When the administrator says that you can't call a visit by a "trainee" applicant (not allowed) a visit by a consultant (allowed), he is protecting himself--and you. Be kind to your grant administrator, and respect their struggle to render funds to you from within a bureaucratic minefield. And help her or him by bringing in new money: Even the most creative of grant administrators can't make money out of nothing.
Here is an example: Some departments get discretionary funds to investigators by allowing investigators to recover a percentage (generally, 5% to 10%) of the indirect costs of their grants. If you get a grant worth $100,000, and indirect costs are 75% at your institution, you could have $3750 to $7500 put at your disposal. Sounds easy!
But with NIH (and most foundation grant) funds, it is illegal to do this directly. The fact that there are enough funds "left over" from institutional overhead to disperse directly to investigators suggests to NIH that there has been an overpayment of indirect funds--and overpayments are required to be returned to the granting institute. Still, a clever grants administrator may be able to provide a bonus from institutional unrestricted funds to an investigator, based on the percentage of indirect costs awarded.
Another common way to get discretionary funds is from recovered salary. This is how it works: If your salary has been paid by your department, and you then receive a grant that covers salary, you ask your department to move the salary money into a discretionary fund. So, when negotiating for a new job, try to ensure that as much as possible--go for 100%--of your salary will be paid for by the department, and that salary money can be returned to your discretionary fund if you raise your own salary money through grants.
Even something as minor as taking that postdoc out to lunch will depend on the philosophy and cleverness of your grants administrator. There are a few fortunate investigators who don't even have to think about discretionary versus nondiscretionary funds; they just hand in their receipts for lunch and pick up the check later. Some grants offices consider (and deal with) meals as research expenses, while some only consider meals at meetings to be research expenses. Other offices might fund a meal out of departmental discretionary funds, perhaps at your special request, and others won't allow it at all.
You can do some money-shifting without your grants administrator. For example, you may have a grant from a private foundation that pays for a technician. If you receive an NIH award that will now pay for a technician, call the foundation, explain that you are now able to pay for the technician on an NIH grant, and say that you would like to move the money for the technician into unrestricted funds. In most cases, this won't be a problem: Everyone wants you to get the research done, and everyone knows that the dictates of a grant are not always practical.
Whatever you do, get permission. Read the fine print, and make sure that anything you do is legal; it's easier than some people think to get in trouble with NIH and other funding organizations.
At the senior level, investigators need slush funds for all the same reasons that junior investigators do. They still need computers and other equipment that isn't always directly covered by grants, but because their labs are often bigger they need more of them. They still want money to take the lab out to lunch, dinner, or drinks once in a while, but now they have more people so they need more money. Fortunately, opportunities for obtaining discretionary money grow as a scientist becomes better known in the field, mainly because not all money comes from grants.
A variety of arrangements with industry can bring money into your discretionary account. You might host a visitor from a pharmaceutical company who will do a few experiments, or you may perform a few experiments for the company yourself. Payment will come as a check that you can deposit into an existing discretionary account, or one your grants administrator will set up for you. If you do consulting, or receive patent royalties, you usually have the choice of keeping that check for your personal use, or putting it back into discretionary funds for the lab or department. Most investigators opt to keep the money themselves--but you do have the choice, and putting this money back in the lab is the most straightforward way to build or sustain a weighty slush fund.
Got some slush-fund tricks up your sleeve that we haven't covered? Thoughts you'd like to share about this or other Next Wave articles? We might share your ideas with our readers. Even if you'd just like to chat about the site, we'd love to hear from you! Send email to firstname.lastname@example.org.
Kathy Barker is the author of At the Helm: A Laboratory Navigator published by Cold Spring Harbor Laboratory Press.
Colin Macilwain, "The Rise of the Bean Counters," Nature 415, 466 (2002)
NIH Grants Policy Statement (3/01). Part II: Terms and Conditions of NIH Grant Awards, Subpart A: General- Part 3 of 7
NIH Grants Policy Statement (3/01). Part II: Terms and Conditions of NIH Grant Awards, Subpart A: General- Part 7 of 7
Roger G. Noll and William P. Rogerson, The Economics of University Indirect Cost Reimbursement in Federal Research, Chapter Six: Challenges to Research Universities, Roger G. Noll, Editor (Brookings Institution)