Many grants come with 'indirect costs' (a.k.a. 'overhead') calculated into their budgets.
I understand why grants have indirect costs; i.e., the money that a university needs to help the grant-funded research to occur. IDC supposedly helps pay for the lights in our offices that are in buildings with climate control and support staff who help us do our research. IDC pays for the libraries that provide resources we need to do research. And so on. IDC pays for all those background costs (but not postage and maybe not photocopying, depending on which accountant is controlling access to the photocopier).
IDC rates at many universities are 50 ± 5%, but significantly higher rates are not unknown. It is not unusual for more than half of a grant to go to the university, not the researcher.
I sometimes wonder why NSF proposals don't report our direct costs as 'the' total on the cover page rather than having the total of direct + indirect costs being the most visible number on the proposal. Is not the total direct costs the relevant number for figuring out how much of the grant will be spent directly on research activities? The IDC rate, whether high or low, is something the university negotiates with the funding agency; the PI is responsible only for the coming up with a budget of direct costs (and some of those are mandated as well).
I wonder if sometimes reviewers balk at the high total of a grant proposal, despite knowing that they should divide the number on the cover page by 2 (or 3).
When writing collaborative proposals, my collaborators and I typically figure out whose university has the lowest IDC rate and then we shift more of the research expenses to that university, thus maximizing our collective grant resources.
Once a grant is funded, I am happy to report the total direct + indirect costs, as that number reflects what is being awarded to the university.
IDC as a concept is simple but in practice it is strange. Why does my university collect IDC on things like my travel to conferences or expenses related to scientific research done in/by another lab at another university? And then there is the IDC tax on fringe benefits, including for summer salary. Perhaps IDC calculations would start to get as complicated as figuring out income taxes, but I wish there were more IDC-free budget items.
All of this adds up to a lot of money. I know that universities need it and presumably are spending it well on essential things like light and heat and libraries, but as the cost of doing research goes up (e.g., travel, analytical costs, salaries of grad students and postdocs), it's hard not to look at the grant budget total and wish that more of that total was for direct research costs.
12 hours ago