NIH Funding Shortfalls Are Forcing Universities to Rethink Research Operations

Apr 22, 2026

University research budgets have been under pressure for years, but continued NIH funding cuts which began in 2025 have put significant pressure on owners and operators of research organizations, and this isn’t just a facilities concern but reaches all the way up to the senior leadership and board levels.

According to a recent report by AAMC, the NIH has obligated $5.8 billion in funding through mid-March, 34% below what it had obligated at the same point in FY 2024. New awards are lagging even further behind, with FY 2026 awards down 63% compared to the prior five-year average, including 61% fewer R01 grants. Meanwhile, universities now need to subsidize an estimated $8–10 billion annually to support research infrastructure that federal funding doesn’t fully cover. This gap is now widening and putting pressure on entire organizational operations well beyond just research.

Funding Shortfalls Hit Indirect Costs Hardest with Labs at the Epicenter

Of the roughly $33 billion the NIH awarded in FY 2024, about 28% or $9.3 billion went towards indirect costs, according to the Congressional Research Service. These funds support building maintenance, utilities, shared lab equipment, and administrative services. When grant volume falls, those recovery dollars fall with it, but owners (universities) are left still operating these expensive buildings.

Research spaces are typically the most expensive buildings on a campus to operate by 5 to 10 times per square foot, as they require:

Higher air change rates for safety and compliance
Greater utility demand due to specialized equipment
Typically 24/7 operation

Additional challenges abound. Deferred maintenance, rising utility costs and compliance assurance all remain high priorities all needing to also be considered and addressed.

So, this is a downward spiral leading to inefficient systems consuming more energy, higher energy costs strain budgets, and tighter budgets lead to more deferred maintenance and maybe worst of all – systems that aren’t properly supporting health and safety compliance requirements. Even in a stable funding environment, these have been challenges for most operators, but the current environment requires a new solution.

Operational Efficiency Is No Longer Optional

For many universities, the old Op Ex playbook is no longer an option. When funding is constrained, capital is scarce, and deferred maintenance continues to grow, waiting for “better budget years” isn’t a strategy and especially considering when it likely will be years before a meaningful change to current mode.

Organizations are now treating operational efficiency as a research resilience strategy and not a ‘facilities’ concern.

Laboratories represent one of the largest controllable costs on campus. Every unnecessary air change, every inefficient control sequence, and every aging system operating below its potential quietly drains dollars that could otherwise support faculty, students, and discovery. In this environment, reducing the cost of operating research space can be just as important as securing the next grant.

There is good news in this grim story! Optimizing what you have is achievable and can be done with meaningful ROIs.

New Path Forward

Thrive Buildings is a purpose-built company solving these exact problems with 25 years of experience. At Thrive we help research institutions and universities unlock significant operational savings through lower operating costs and addressing deferred maintenance in a unique, turnkey & shared risk model. Here are three of our hundreds of case studies:

A Massachusetts customer wrote us a $1 PO and received $2M in efficiency and deferred maintenance projects all delivered via ‘on-bill’ financing
A NYC medical college received 70% of its funding via utility incentives which were then fully netted against the project cost requiring the client to only pay 30% for their project, delivering a less than 1-year simple payback.
One of the top tier research organizations in the world implemented airflow optimization across its campus (>20 buildings) and saw over 60% overall operational spend.

The vast majority of these projects, including addressing of deferred maintenance, provide better than 30% ROI and make financial sense even at the best of times.

Thrive is purpose built to help research organizations worldwide and has been doing so for over 25 years. Our approach is unique and comes from working with hundreds of clients over this time. Now, more than ever, a new approach is needed to meet the new operating conditions.

Senior leadership, if not acting now, will need to soon and should be fully leveraging all capital sources available and choosing to work with organizations like Thrive that provide a shared risk offering and one point of responsibility.

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