I am a mass murderer of squid. I have cut off more Loligo pealei heads than you, and watched those heads writhe around in a bucket for a good three or four minutes post-decapitation—all in the name of federally funded science.

My squid-murdering days were back in the late 1990s, as a teenager in Woods Hole, Mass. I worked for a couple of summers at the Marine Biological Laboratory, an internationally renowned independent research institute famous for its basic science work; in particular on marine model animals like squid (which have a couple of easy-to-study giant nerve cells that I dissected out hundreds of times), lobsters, sharks and many others. In certain ways it represented a unique experience: The MBL is on a relatively short list of independent research institutions around the country that are discovery- and application-oriented counterparts to the university-based research enterprise.

And that laboratory is now the latest to feel a government-induced financial crunch that has made the MBL not so independent anymore. In June, the MBL voted to form an affiliation with the deep-pocketed University of Chicago; the MBL will remain a non-profit institution, but now has a stern “parent” paying out at least some of its allowance.

NIH funding going south
The MBL’s move and other independent institutes’ latest struggles can be accredited to a single acronym: NIH. After a massive decade-long expansion of funding for the National Institutes of Health (from $10 billion in 1993 to $28 billion in 2004), in the past nearly 10 years the budget for the country’s primary scientific funding arm stagnated and even declined some years (in 2013 the budget is $29.15 billion, down five percent from 2012, and well below the 2004 budget in today’s dollars). A science-unfriendly president (President George W. Bush) and Congress seemed unconcerned as the agency’s budget failed to keep up with inflation. Acceptance rates for grant applications have dropped precipitously as a result. More acutely, this year’s federal budget sequestration is cutting more than $1.5 billion and 700 research grants from NIH. At latest count, the acceptance rate for the standard grants known as R01s was 14.9 percent, meaning more than 8 out of 10 applications go unfunded: there were more than 24,000 submitted in 2012.

“It’s going to slow down the pace of research,” says Larry Keinath, the current president of the Association of Independent Research Institutes  and VP for finance and administration at the independent Wistar Institute in Philadelphia. AIRI represents the 80 or so independent research institutes around the country. “There are so many discoveries that we’re just on the verge of making…To pull back resources now is just a terrible time to be doing it.”

Funding problems at NIH affect all corners of the scientific world, but independent laboratories in particular are feeling the crunch. Independent institutes can be very specialized—think an entire laboratory dedicated to eye and vision science, or only allergies and immunology—and a lack of teaching requirements usually let the investigators focus solely on discovery. At universities, by contrast, where the bulk of non-private industry research gets done, scientists teach, serve on committee after committee, and have numerous other good-citizen commitments that can slow down the science.

“The success and impact of independent research institutes has been huge, much larger than could be predicted based on size, and reflects the creative environment that they provide,” says Greg Patterson, the VP for Research Operations at Texas Biomedical Research Institute and incoming president of AIRI. His own institution can claim a number of important discoveries and projects, including testing and validation of the hepatitis B vaccine and strong progress toward a hep-C vaccine, as well as the identification of genes responsible for cholesterol regulation. Keinath’s Wistar Institute has also done some pioneering vaccine research, as well as developed methods for identifying cancer types based on gene expression. Research at the MBL has played a critical role in understanding cell cycles and cell division, as well as neuronal signaling and how chemical information moves along nerve cells (thanks in particular to those squid giant cells).

Patterson says independent institutes receive about 10 percent of all NIH grant funds each year, and can claim a number of Nobel Prize winners among their faculty. But with NIH funding dropping and few alternate sources of income—remember that tuition, massive endowments and other bank account stuffers support the Harvard Medical Schools of the world—virtually all independent institutes are in some kind of budgetary trouble. “More institutes, unfortunately, are likely to reach an untenable financial state,” Patterson says. Clearly, plenty of similar research goes on at the biggest university institutions, but concerning budget struggles, independent institutes represent a front line in the funding battle. They are a bellwether, and their struggles provide an indicator that  less science is getting done when the money stops flowing.

Merge, shut down or generate other income?
So far, it’s not just the MBL that has taken evasive action. The Boston Biomedical Research Institute closed its doors entirely last year, sending 16 faculty off to find other positions; the BBRI received $9.3 million in NIH funding in 2010, then saw that drop to $6 million only a year later. Others have taken the MBL route of latching on to a larger university: Fox Chase Cancer Center in Philadelphia, for example, is now officially part of Temple University after an $83.8 million sale.

But such agreements have drawbacks. “It is a challenge to merge the independent research institute with a university system in a way that preserves a creative atmosphere,” Patterson says, adding that his employer, Texas Biomedical Research Institute, “has not been immune from the challenges created by low funding rates and sequestration.” Texas Biomed has resorted to staff layoffs in recent years, and is working to create private industry partnerships that would lessen the reliance on NIH funding. Keinath says the Wistar Institute is a bit safer thanks to a robust technology transfer program that brings in royalties from some of those discoveries made there in the past. A few other institutes have other methods of survival: Cold Spring Harbor Laboratory in New York has an educational program that provides revenue, whereas Jackson Laboratories in Maine supports research efforts with help from a large business selling strains of mice to other scientists. But many AIRI members do research and little else, so NIH represents the sole golden goose around.

The MBL has framed its move to join the University of Chicago as a win-win, and on a recent trip to Woods Hole some long-time scientists told me it was an inevitable move. There was some nostalgia thanks to the Laboratory’s 125-year history of independence (it was founded in 1888), but in general there seems to be agreement that the MBL was spiraling toward a budgetary ocean trench it would not have escaped alone. At least half of its yearly operating budget of around $40 million came from federal sources, including the NIH and other granting agencies like the National Science Foundation, so dropping grant rates left an ample hole for the University to fill.* Full financial details of the arrangement were not disclosed, though one of the first steps will be a competitive grant program from Chicago’s coffers that will help fill that NIH gap as well as the savings from "the University's favorable insurance rates, financial strength, and high-performing investment management," according to a press release.

As MBL President and Director Joan Ruderman said in an email, the affiliation is “a strategic move that benefits both institutions and allows us to create a stronger foundation for the lab’s scientific and financial future.”

But of course, not every institute will find a buyer or a rich university willing to take responsibility for their financial future, meaning the NIH’s drop in funding has the potential to severely wound a significant sector of the U.S. research enterprise. That may be good news for squid, but it’s bad news for science.

Correction (9/11/13): This sentence was edited after posting to more accurately state the sources that supplied funding.