Foundation vs. Federal Research Funding

Private foundations now fund a meaningful share of US biomedical and basic-science research outside the federal system — foundations like the Burroughs Wellcome Fund, the Simons Foundation, the W.M. Keck Foundation, and dozens of others each run their own competitions, on their own calendars, with their own rules. Individually, these programs look similar to a federal grant: a proposal, a review process, an award. Administratively, they are not similar at all. There is no Uniform Guidance (2 CFR 200) that applies across foundations, no single negotiated F&A rate that travels with an institution from sponsor to sponsor, and no government-wide application portal. Each foundation sets its own cost principles, its own indirect-cost ceiling, its own reporting format, and often its own eligibility gate before a researcher can even submit.

This page is the concept-level hub for that difference. It does not repeat the eligibility rules or award amounts of any single funder — CASRAI has dedicated guides for that, linked throughout and listed at the end of this page. What this page covers is the structural stuff that cuts across all of them: why foundation indirect-cost rates are so much lower than a federal NICRA, how limited-submission foundations force an internal competition before the external one, what a letter of inquiry is and how it differs from a full federal application, how nomination-only programs work, who inside an institution actually owns the foundation relationship, and how IP, publication, data-sharing, and reporting terms diverge from federal defaults.

How foundation funding differs from federal funding, at a structural level

A federal grant from NIH, NSF, or another federal agency is governed by a common rulebook regardless of which agency issues it: the Office of Management and Budget’s Uniform Guidance (2 CFR 200), the institution’s Negotiated Indirect Cost Rate Agreement (NICRA) with its federal cognizant agency, standard cost-principle definitions of allowable/unallowable costs, and (for most agencies) a common reporting instrument such as the RPPR. A private foundation is under no obligation to follow any of that. It is a private, generally 501(c)(3), grantmaking organization, and its board sets whatever grant terms it wants, subject only to IRS rules on private foundations and its own governance policies.

The practical consequence that catches PIs and research offices most often is indirect costs (F&A). A university’s federally negotiated F&A rate is often in the 50-65% range of modified total direct costs. Most foundations cap recovery far below that — commonly in the 0-15% range, sometimes calculated on a different cost base entirely (see the “cost base” note below), and sometimes not permitted at all. This is the single biggest gap between what a PI expects a foundation award to net the institution and what it actually does, and it is a recurring source of friction between principal investigators (who want the funding) and sponsored-programs offices (who have to absorb the shortfall or decline the award).

A second structural difference is the application route itself. Federal programs publish a Notice of Funding Opportunity or Program Announcement that is open to any eligible applicant who wants to respond. Many foundations do not run open competitions at all — they work by letter of inquiry, by internal limited-submission nomination, or by invitation only, sometimes with no public call whatsoever. Knowing which mode a given foundation uses, before starting to write anything, is the first real skill in foundation fundraising.

Cost principles and F&A: why the foundation number is not your federal number

Because foundations are not bound by 2 CFR 200, three things change simultaneously, not just the headline rate:

The cost base can differ. Federal F&A is typically calculated as a percentage of Modified Total Direct Costs (MTDC). A foundation may instead cap indirect costs as a percentage of total project costs, or of direct costs before certain exclusions — a lower-looking percentage on a different base does not always mean a proportionally smaller recovery, and research offices should model it rather than assume.
What counts as “indirect” can differ. The Bill & Melinda Gates Foundation’s published Indirect Cost Policy (effective February 1, 2017; docs.gatesfoundation.org/documents/indirect_cost_policy.pdf) sets maximum indirect-cost rates of 0% for government agencies and other private foundations, up to 10% for US universities and community colleges, and up to 15% for NGOs, multilateral organizations, non-US universities, and for-profit organizations — explicitly stated as ceilings, not entitlements. The policy’s own FAQ explains why this doesn’t reconcile to a grantee’s federal NICRA rate: Gates classifies certain dedicated project-management and administrative-support costs as direct costs, where federal Uniform Guidance would treat the same costs as indirect. That reclassification, not just a lower percentage, is what produces the gap.
The policy can be a flat, non-negotiated number. Some large foundations have moved to a single flat indirect-cost rate applied to every grant rather than a case-by-case negotiation. Multiple foundation-relations and philanthropy-press sources report that the MacArthur Foundation adopted a flat 29% of project costs for grants beginning in 2020 (derived from a study of IRS Form 990 data identifying 29% as the rate associated with financially healthy nonprofits), and that Ford, Hewlett, Open Society, and the Packard Foundation made comparable commitments to raise or standardize their own indirect-cost minimums (Ford reported raising its floor from 20% to 25% of project costs effective January 1, 2023). These are reported via foundation-relations and philanthropy-sector coverage rather than independently confirmed against each foundation’s own page in this session, so treat the exact current figures as directional and re-verify against the foundation’s own published policy before budgeting a specific proposal.

For the full side-by-side of specific foundation rates against a federal NICRA, see CASRAI’s comparison: Foundation vs. Federal Indirect Cost Rates: Gates, Ford, MacArthur vs. NICRA. For how a federal negotiated rate itself works, see Indirect Cost Rate Agreement (NICRA) and How to Calculate Indirect Costs (F&A) vs. Direct Costs on a Grant Budget.

Limited submissions: the internal competition researchers discover too late

Many of the foundation programs researchers most want — Searle Scholars, Beckman Young Investigator, Rita Allen Foundation Scholars, and others in this validated cluster — cap the number of applications a single institution may submit, often to one or two per cycle. That cap turns the foundation competition into two competitions stacked on top of each other: an internal one, run by the research office or a dedicated foundation-relations function to select which candidate(s) the institution will put forward, and the external one, run by the foundation itself.

This is the highest-value thing this hub page can tell a researcher or a research administrator who is new to foundation funding: find out whether a program is limited-submission before investing time in a proposal, not after. Institutions typically run their internal limited-submission process on their own timeline — often weeks to months ahead of the foundation’s own deadline — with an internal call for pre-proposals, an internal review committee, and a notification of who is cleared to submit externally. A researcher who contacts a program officer or starts drafting without first checking whether their institution restricts submissions can find out only at the deadline that someone else was already nominated. CASRAI’s dedicated guide, Limited Submissions: Managing Internal Competitions for Restricted Funding Opportunities, covers how research offices structure and run that internal process — this hub only flags why it matters specifically for foundation funding: limited-submission caps are far more common among private foundations than among federal agencies, and they are frequently undocumented outside a research-development or foundation-relations office’s internal tracking, which is exactly why researchers miss them.

Letters of inquiry and pre-proposals vs. a full federal application

A large share of foundation funders — especially in the validated cluster this hub covers — do not accept a full proposal cold. They require a short letter of inquiry (LOI), sometimes called a letter of intent or pre-proposal, before inviting (or declining to invite) a full application. An LOI is typically two to three pages: a summary of the problem, the proposed approach, the budget range, and organizational fit with the foundation’s mission — a fraction of the length and specificity of a federal Specific Aims page plus Research Strategy. Foundations use the LOI stage to triage volume before committing reviewer time to a full proposal, and because there is no standard LOI form the way there is a standard federal application package (e.g., NIH’s SF424 R&R), format and required content are funder-specific by design — always follow the individual foundation’s own instructions rather than assuming a template developed for one funder will transfer to another. CASRAI’s dedicated guide, Letter of Inquiry for Grants: Format and When Funders Require One, covers format and timing in depth.

The practical implication for a research office: an LOI decision point is a second go/no-go gate that a federal application usually doesn’t have, and it happens earlier and faster than a federal review cycle. Build LOI deadlines into internal tracking separately from full-proposal deadlines, not as the same milestone.

Nomination-only and invitation-only programs

Some of the most prestigious programs in this validated cluster are not open applications at all. Sloan Research Fellowships are awarded by nomination, typically initiated by a department chair, not by direct researcher application. Other programs restrict eligibility to researchers at a defined, invited set of participating institutions (for example, the Searle Scholars Program invites applications only from a standing list of eligible institutions, curated by the funder). These structures shift the decision of “who gets a shot” partly or entirely onto the institution rather than the individual researcher — a department chair, dean’s office, or foundation-relations function decides who to nominate, on what basis, and by when.

For a researcher, the operational takeaway is the same as for limited submissions: find out early whether a target program is nomination-based, and if so, who at the institution controls the nomination, well before the cycle in which you’d want to be nominated.

Who owns the relationship: foundation relations vs. the PI

Federal program officers generally expect and welcome direct researcher contact about a specific funding opportunity — it’s a normal, encouraged part of the federal proposal process. Foundation program officers operate inside a much smaller applicant pool and a much more relationship-driven process, and many research institutions maintain a dedicated foundation relations function (sometimes inside the sponsored-programs office, sometimes in institutional advancement/development) specifically to manage institutional-level relationships with major foundations over time — tracking what each foundation funds, which programs are limited-submission, when LOI windows open, and how prior awards from that funder were stewarded.

A PI who cold-contacts a foundation program officer outside that coordination can genuinely work against the institution’s own strategy: foundations frequently track how many proposals or contacts they’re fielding from a single institution, and an uncoordinated approach can crowd out — or contradict — a parallel conversation the foundation-relations office is already having about a different project or a different, already-nominated candidate. The practical guidance for researchers new to foundation funding: check with the research office or foundation-relations office before initiating direct contact with a foundation program officer, the same way one would check on limited-submission status before drafting a full proposal.

IP, publication, and data-sharing terms that differ from federal defaults

Federal grants default to well-established, statutory frameworks for intellectual property (principally the Bayh-Dole Act for IP arising from federally funded research) and to agency-specific public-access policies for resulting publications and data. Foundations set their own terms by contract, grant agreement, or award letter, and those terms vary funder to funder — there is no single default to point to. Common areas where a foundation grant agreement diverges from what a federally funded PI is used to include:

IP ownership and licensing terms that may be more restrictive, more permissive, or simply differently structured than Bayh-Dole’s march-in and government-use provisions — read the specific grant agreement rather than assuming Bayh-Dole-equivalent terms apply.
Open-access requirements that some foundations attach as a condition of funding, independent of and sometimes stricter than a federal agency’s public-access policy (for example, the Gates Foundation has published its own open-access policy for grantee publications — see CASRAI’s Gates Foundation Open Access Policy guide).
Data-sharing expectations that are stated in the award letter or grant agreement rather than governed by an agency-wide data management and sharing policy — foundations vary considerably in how prescriptive they are here, and a research office should read the specific agreement rather than assume a federal-style data management plan requirement applies.

Because these terms are set contractually per foundation rather than by a common statute or regulation, a sponsored-programs or technology-transfer office should treat each foundation award agreement as its own negotiation, not as a variant of a federal template.

Reporting and stewardship: narrative and relationship-driven, not RPPR-style

Federal progress reporting (an RPPR for NIH, for example) follows a standard structural template tied to a common reporting system. Foundation reporting is typically narrative, funder-specific in format, and often explicitly framed around relationship stewardship rather than compliance: a foundation program officer is frequently a continuing point of contact who expects to hear not just what was accomplished against the proposed aims, but how the funded work fits into the foundation’s broader programmatic goals and what the relationship might look like going forward (a renewal, a different program, a referral to another funder in the foundation’s network). Missing or perfunctory foundation reporting has a different, more relationship-specific cost than a late or thin federal report: it can affect the institution’s or the individual PI’s standing with that funder for future limited-submission nominations or future LOI invitations, independent of any formal compliance consequence.

Cost sharing and matching: far more common with foundations

Federal agencies generally do not require cost sharing except where a specific program announcement mandates it, and unrecovered indirect costs are not typically treated as cost sharing under current federal rules. Private foundations, by contrast, request or effectively require institutional cost sharing or matching funds much more often — sometimes as an explicit proposal requirement (demonstrating institutional commitment to the project), sometimes implicitly, through the gap between the foundation’s capped indirect-cost recovery and the institution’s actual overhead cost, which the institution absorbs whether or not it’s labeled “cost sharing” in the award letter. Research offices evaluating whether to pursue or accept a foundation award should model the real net cost to the institution — award amount, minus capped or absent F&A recovery, plus any explicit match requirement — rather than treating the headline award amount as the full picture.

Federal vs. foundation funding: a structural comparison

Dimension	Federal grant (NIH, NSF, etc.)	Private foundation grant
Governing cost framework	Uniform Guidance, 2 CFR 200, applied government-wide	Set by the individual foundation’s own policy; no common framework
Indirect costs (F&A)	Institution’s negotiated NICRA, often 50-65% of MTDC	Typically capped far lower — commonly 0-15%, sometimes on a different cost base, sometimes a flat non-negotiated rate, sometimes disallowed entirely
Application route	Open Notice of Funding Opportunity / Program Announcement, available to any eligible applicant	Varies widely: open call, letter of inquiry gating a full proposal, limited-submission institutional nomination, or invitation/nomination-only with no public call
Internal competition	Rare (occasional limited-submission federal mechanisms exist but are the exception)	Common — many major programs cap institutional submissions to one or two per cycle
Relationship management	Program officer contact is normal and encouraged per opportunity	Often relationship-driven and institutionally coordinated through a foundation-relations function; uncoordinated PI contact can cut across institutional strategy
IP default	Bayh-Dole Act framework for federally funded inventions	Set by individual grant agreement; no statutory default
Reporting style	Standard structural template (e.g., RPPR)	Narrative, funder-specific, often stewardship-oriented
Cost sharing / matching	Required only where a specific program mandates it	Requested far more often, explicitly or through the F&A recovery gap

Frequently asked questions

What is private foundation research funding?

Private foundation research funding is grant support provided by a private, typically 501(c)(3) philanthropic organization rather than a government agency. Each foundation sets its own eligibility rules, application process, cost principles, and reporting requirements — there is no government-wide rulebook equivalent to 2 CFR 200 that applies across foundations. See CASRAI’s dictionary entry on the foundation grant for the base definition.

How do I apply for foundation funding?

The process depends entirely on the specific foundation. Start by checking whether the program requires a letter of inquiry before a full proposal, whether it is limited-submission (capping how many applications your institution may put forward), or whether it is nomination/invitation-only. Then check with your institution’s research office or foundation-relations function before drafting anything or contacting a program officer directly — many of the highest-value programs run an internal institutional process ahead of the external one.

What is a letter of inquiry for a foundation grant?

A letter of inquiry (LOI), sometimes called a letter of intent, is a short document — typically two to three pages — that a foundation requires before it will invite a full proposal. It summarizes the problem, proposed approach, budget range, and fit with the foundation’s mission, and lets the foundation triage a large applicant pool before committing to full-proposal review. See CASRAI’s dedicated guide: Letter of Inquiry for Grants.

Why are foundation indirect cost rates so much lower than federal rates?

Because foundations are not bound by the federal Uniform Guidance or by an institution’s negotiated NICRA. Each foundation sets its own indirect-cost ceiling — commonly far below a typical federal negotiated rate — and some calculate it on a different cost base or classify certain costs as direct rather than indirect, which further widens the gap. See the F&A section above and CASRAI’s foundation vs. federal indirect cost rate comparison for specific published examples.

What is a limited submission in foundation funding?

A limited submission is a funding program that caps the number of applications a single institution may submit — often to one or two per cycle. This forces an internal, institution-run competition to select who gets nominated before the external foundation competition even begins. See CASRAI’s dedicated guide: Limited Submissions.

Foundation-specific guides on CASRAI

This hub covers the structural differences that apply across foundation funders. For the specific programs, eligibility, award amounts, and application requirements of individual foundations in this cluster, see:

Several other validated funder terms in this cluster — including the Spencer Foundation grant and a dedicated HHMI Investigator Program page distinct from the Gilliam Fellowship — do not yet have dedicated CASRAI guides; these are planned as future spoke pages in this subcluster. The Klingenstein Fellowship, Dreyfus Foundation grant, and Whitehall Foundation grant are now covered, alongside Pew Biomedical Scholars, by Whitehall, Klingenstein, Dreyfus, and Pew Biomedical Scholars: Niche Discipline-Specific Research Foundations. The American Heart Association research grant term is now covered, alongside the broader disease-focused-charity funding category (American Cancer Society, Michael J. Fox Foundation, Alzheimer’s Association, Susan G. Komen, Cystic Fibrosis Foundation, JDRF/Breakthrough T1D, Muscular Dystrophy Association, American Diabetes Association, and Leukemia & Lymphoma Society), by Disease-Focused Charity Research Funding: How AHA and Peer Funders Differ From NIH.

Last verified: August 16, 2026. Foundation-specific indirect-cost figures should be re-confirmed against each foundation’s own current published policy before use in a proposal budget, as these figures change without a fixed public schedule.