Research institutions systematically monitor grants awarded and proposals that succeeded. Nevertheless, few organizations measure the cost of lost opportunities systematically – not pursuing funding lines they could have sought, or not pursuing opportunities that were never found. The unseen cost far exceeds most institutions’ estimates.
Quantifying the Invisible Loss
One can visualize this as a situation where a regional medical school researcher studies pediatric health disparity, precisely the grant that a family foundation offers at $200,000. The foundation program is relevant to the researcher’s area of expertise. Nonetheless, the researcher is unaware of the opportunity because it does not show up in conventional federal funding databases.
Expand this case over numerous researchers and hundreds of possible opportunities each year. The total funding missed can reach millions at even a medium-sized research institution. To large research institutions, the cost probably exceeds tens of millions of dollars a year.
In view of the decrease in federal research support, The Pew Charitable Trusts feels higher education is facing unprecedented fiscal challenges. In this environment, missed non-federal opportunities represent costs no institution can afford.
The Discovery Problem Economics
Most institutions allocate significant resources towards proposal development support, but less so towards funding opportunity discovery. The economic inefficiency is caused by this imbalance.
Professionals in research development spend a significant amount of time aiding faculty in developing proposals for known opportunities. When the most relevant opportunities are missed in the discovery processes, the proposal development gets misallocated to sub-optimal targets.
The economic logic is simple: finding the critical opportunity delivers far greater value than slightly improving proposals for incorrect opportunities. However, the majority of institutions distribute their resources in reverse order.
Researcher Time Costs
Researchers do not have access to relevant funding and thus, spend significant time searching for funding manually instead of doing productive work like research or teaching. These search costs can quickly accumulate at normal faculty salaries.
Each researcher conservatively spends 10 hours a year looking for funding opportunities. The annual search costs add up to $100,000, composed of 100 faculty members and an average cost of $100/hour. For bigger institutions, these costs usually go over half a million dollars a year.
Efficient discovery systems deliver more opportunities and allow researchers to concentrate on their fundamental work instead of seeking funding.
Opportunity Cost of Suboptimal Matches
Despite identified opportunities for researchers, they often settle for less than perfect matches as better options remain hidden.
Sub-optimal matches have a huge opportunity cost.
A researcher might apply for a federal grant with 10% odds of success because they’re unaware of a promising foundation opportunity for their expertise and the strengths of their institution, which offers 40% odds of success. Over many funding proposals, this systematic mismatch drastically reduces success.
Opportunity cost is more than just success rates. Opportunities that better match community and researcher interests entail more appropriate amounts, timelines and requirements, making their research more productive, even when proposals are funded.
The Cascade Effect
When opportunities are missed, there are hidden costs for these projects as well as future ones. Researchers who get initial funding produce preliminary data for future applications. Failure to capitalize on initial opportunities hinders or precludes this entire cascade.
Imagine early-stage foundation funding yielding preliminary data for a large federal application. Not taking the foundation opportunity results in missing out on $100,000 and jeopardizing the $2 million federal award.
The costs arising from this cascade effect are far larger than the face value of individual grants missed. Funding at an early stage from non-federal sources is especially beneficial since it can lead to larger opportunities.
Institutional Reputation Impacts
Institutional reputation is enhanced by research funding success, attracting strong faculty and students. On the other hand, difficulties in funding reduce reputation and competitiveness; when funding issues get worse, it creates a negative cycle.
Reputational dynamics are influenced by missed opportunities. Institutions that miss relevant non-federal funding opportunities over several years slowly fall behind those that systematically pursue funding from diverse sources.
The effect of school reputation is hard to quantify. However, it has a significant effect on institutional competitiveness with respect to faculty recruitment, student recruitment, and additional funding.
Infrastructure and Personnel Costs
Institutions maintain infrastructure consisting of people, systems, and processes for research administration in pursuit of funding. Discovery inefficiencies restrict opportunities pursued, causing the systems to function sub-optimally.
The infrastructure costs are fixed and do not vary whether institutions apply for 100 or 200 funding opportunities per year. Through more effective discovery, doubling opportunities will halve your per-opportunity infrastructure costs and may double your funding secured.
The need for improving discovery does not require a proportional increase in infrastructure investment, which creates an increased economy of scale.
Strategic Opportunity Costs
Most importantly, poor discovery means institutions can’t pursue strategic avenues of research because the funding is invisible.
An institution may seek to establish research on health disparities, but has great difficulty figuring out which non-federal funding is appropriate for building capacity. Invisible opportunities hinder strategic growth and institutional change.
The strategic opportunity costs incurred by such institutions build over the years as they miss developing competitive advantages in emerging research areas.
Competitive Disadvantage Amplification
While your institute loses opportunities, peer institutes with better discovery systems exploit them successfully. The difference between competitors widens over time.
Research funding success tends to cluster at institutions with higher capabilities for discovery and pursuit. Missing out on opportunities doesn’t only affect each individual grant. Your relative competitive position slowly starts to shift as those who are successful start to accrue advantages.
Calculating Your Institution’s Hidden Costs
It is important for institutions to estimate systematically their missed opportunity costs systematically. Conduct a survey to gauge researchers’ time spent on fund sourcing. Examine grants awarded and assess how many were initiated through proactive discovery or researcher self-identification. Evaluate your institution’s funding capture rate against its peers with similar characteristics.
The cost of the missed opportunity is often far greater than the costs estimated by institutions. Even moderate estimates often indicate millions in annual lost opportunities at mid-size research institutions.
The Technology Investment Case
Funding discovery technology tackles these invisible costs, generating a positive return on investment. A single major research award that is ever missed often costs you more than an annual subscription to a quality discovery platform.
Take FundFit, for example. The platform’s discovery feature, powered by AI, helps identify relevant, non-federal research funding opportunities through private foundations, corporate programs, and regional sources that institutions may miss altogether. Through the matching of opportunities to appropriate researchers and collaborators, based on expertise and funder objectives, FundFit tackles the discovery problem, creating the most missed opportunity costs.
When the discovery technology of an institution helps it to discover and pursue even a handful of relevant opportunities on an annual basis, the revenues raised from this will usually exceed the costs of the platform by orders of magnitude, even before one considers the savings of researcher time and strategic advantages.
Beyond Technology: Process Improvements
Missed opportunity costs cannot just be solved through technology. Institutions require mechanisms to ensure opportunities that are found reach the right researchers quickly and that researchers can respond to time-sensitive opportunities.
Define workflows to assign opportunities, notify researchers, and expedite proposal development assistance. Time measured between opportunity discovery and notification to the researcher is a key metric.
Taking Action
Determine your institution’s missed opportunity costs. Survey administrators analyze funding patterns and compare performance to peers. These costs are invisible in the budget reports, and most institutions understate these, which affects the performance of institutional research.
Make systematic investments in solutions such as discovery technology, process improvements, and an adequate research development capacity to convert discovered opportunities into proposals. The return to the investors of these is exceptional.
Discover how FundFit can help you stop missing valuable research funding opportunities →