The Impact of Current Government Policies

• Total grant and contract funding for extramural R&D remains stable – budgets for 2025 are similar to 2024 – but funding priorities have shifted across agencies.
• Funding for science that strengthens U.S. competitiveness – through national security, manufacturing, and speed to market – is being prioritized.
• Pre-award requirements and foreign risk reviews are more rigorous, requiring stronger financial documentation and closely evaluating key personnel for ties to foreign activities.
• Lower application volume has improved funding odds for well-prepared proposals.
• Proposals that are closely aligned with agency priorities are highly competitive for funding.

Dr. Garland noted that recent policies have substantially impacted the grant funding landscape in the US. Key points include:

• The American Innovation and R&D Competitiveness Act of 2025 – passed by the House – would reverse Section 174 of the tax code, reinstating full R&D expense deductibility and reaffirming national investment in innovation. [editors note: this bill has been passed, as of July 4, 2025, and R&D can now be fully expensed!]
• The 2022 SBIR/STTR reauthorization introduced new requirements focused on foreign risk mitigation and performance accountability. These changes aimed to ensure that federally funded research directly benefits the U.S. economy and advances domestic competitiveness.
• Despite early-year disruptions, continuing resolutions have stabilized extramural R&D budgets across major agencies. However, shifting priorities within specific programs and agencies – such as Department of Health and Human Services (HHS), Congressionally Directed Medical Research Programs CDMRP, and Advanced Research Projects Agency for Health (ARPA-H) – make it essential for applicants to understand funding availability at the program and topic level rather than relying on agency-wide trends.

Federal agencies have increased scrutiny throughout the pre-award (or “Just-in-time”) processes. Applicants must demonstrate that they have an internal infrastructure in-place to appropriately manage their awarded funds. Systems that must be in-place prior to the award include:

• Financial controls and segregation of duties
• Conflict-of-interest management
• Policies & Procedures manual
• Timekeeping policy
• Project cost accounting systems

Proposed changes to the indirect cost rates remain under legal review, and so it is important to develop budgets that can be flexible as legislation changes.

The U.S. government continues to invest heavily in research that strengthens national defense and health outcomes. High-priority funding areas include:

• Chronic and metabolic disease (e.g., obesity, diabetes)
• Mental and behavioral health
• Domestic manufacturing and supply chain efficiency
• National security–related technologies, including energy independence, biosecurity, and artificial intelligence

Conversely, several areas have been de-prioritized – including vaccine-focused projects, COVID-19 research, and some demographic or diversity-related studies – though certain agencies, such as the U.S. Department of Agriculture (USDA), still fund targeted vaccine development.

Applicants who align their work with agency-specific strategic goals and clearly demonstrate U.S. impact are best positioned for success.

To remain competitive in the current environment, researchers must blend strategic awareness with proactive execution. Dr. Garland emphasizes ten best practices, including:

1. Remember the big picture: Why are you seeking non-dilutive funding?
2. Know your customer.
3. Focus on U.S. strategic goals.
4. Diversify your funding sources.
5. Carefully plan your budget.
6. Apply opportunistically.
7. Have your pre-award information ready to go.
8. Leverage broad expertise.
9. Be patient.
10. If you don’t apply, you can’t win!

For innovators pursuing non-dilutive funding, today’s environment offers both challenges and opportunities.

Organizations should:

• Conduct regular reviews of agency updates and program announcements.
• Strengthen internal compliance infrastructure to meet new pre-award expectations.
• Focus on topic-level targeting rather than broad agency solicitations.
• Establish relationships with Program Officers to confirm strategic fit and timing.
• Use this period of reduced application volume to advance high-quality, competitive proposals.

Despite administrative shifts and policy changes, the United States continues to prioritize investment in innovation and research. The key to success lies in understanding agency priorities, aligning research with national goals, and maintaining proactive communication throughout the funding process.

By strategically positioning proposals, scientists and entrepreneurs can continue to secure the non-dilutive funding needed to advance their work and drive meaningful societal impact. With fewer applications being submitted for the same total available funding, the paylines are anticipated to be very favorable to support high-quality applications.