In the last few years, freedom of information act (FOIA) requests have revealed a loophole that allows corporations to hide funds given to university-based researchers and academics, thereby also hiding their behind-the-scenes collaborations to promote corporate viewpoints while maintaining an air of independence. A recent defamation suit offers an intriguing opportunity to shed even more light on this, what appears to be, common practice.

FOIA Documents Revealed Professor’s Big Ag Links

Kevin Folta — a plant scientist and professor at the University of Florida and an outspoken advocate of genetic engineering — became a posterchild for this kind of disclosure avoidance when, two years ago, a FOIA request by the California-based activist group US Right to Know (USRTK) produced correspondence revealing Folta had instructed Monsanto on how to avoid disclosing funding his work by depositing the money into the university’s SHARE (Special Help for Agricultural Research and Education) contribution account.

As noted by Folta in his proposal to Monsanto,¹ “a SHARE contribution … is not subject to IDC and is not in a conflict-of-interest account. In other words, SHARE contributions are not publicly noted. This eliminates the potential concern of the funding organization influencing the message.” Put another way, by making a SHARE contribution, the link between Folta and Monsanto would remain hidden, and his public promotion of biotech would not be tainted by obvious suspicions of conflicts of interest.

This is one of the biggest scams going. Universities have very strict conflict of interest rules in place, all of which are effectively circumvented by giving the funds as a grant to the University of Florida Foundation, which operates as a separate, non-public entity. The foundation then issues the money to individual researchers’ programs. Yet, even though the money can be easily earmarked for a specific individual or program, financial contributions to the foundation do not need to be publicly disclosed.

While this loophole is news for many, evidence suggests researchers and academics have routinely used it to avoid conflicts of interest disclosure rules. Bruce Chassy was caught doing the same thing. An investigation by Chicago WBEZ news discovered Monsanto paid the now retired University of Illinois’ professor more than $57,000 over two years for travel, writing and speaking expenses, yet Chassy never disclosed his financial ties to the company on state and university conflict of interest disclosure forms.²

How Universities Incentivize Nondisclosure of Conflicts of Interest

Nondisclosure of conflicts of interest are in some ways actually incentivized at universities. Most donations to university foundations are granted a waiver for indirect costs (IDCs).

As explained by the National Science Foundation, IDCs are “costs which are not readily identifiable with a particular cost objective (e.g., direct organizational activity or project), but nevertheless are necessary for the general operation of an organization.”³ Examples of such overhead costs include salaries for accountants and miscellaneous personnel, rent, utilities, computers and software, just to name a few.

This was the case for both Chassy and Folta. By being granted a waiver for IDCs, the burden of these costs is shifted to the students of the university and taxpayers by way of tuition and government funding. So, corporations are essentially piggybacking on students and taxpayers by getting waivers of IDC while simultaneously keeping their funding hidden. Papers have been written about how this system impacts taxpayer funded research (research funded by government grants). 

As noted by the Sponsored Research Administration⁴ at Florida State University, “It is important to remember that the inclusion of these charges results in the support of research efforts across the campus. To request waivers of negotiated and allowable charges means a decreased SRAD [Sponsored Research and Development Trust Fund] pool and a corresponding reduction in the research and creative activities that the university stimulates and supports.”

In their paper, “The Economics of University Indirect Cost Reimbursement in Federal Research Grants,” Roger Noll and William Rogerson write:⁵

“The federal government has been the most important source of funds for academic research since the 1950s. Nearly a third of this support takes the form of indirect cost recovery (overhead). Long a source of conflict between universities and the government, in recent years the indirect cost controversy has escalated, with most research universities intensively investigated for alleged abuses …

[B]oth universities and the federal government would be better off if the existing indirect cost reimbursement system were replaced by a system of fixed reimbursement rates that were not related to a university’s actual indirect costs.”