Sen. Kennedy Grills Witness on NIH Overhead: “Stanford Bought a Yacht with Research Money”; “My Mama Didn’t Raise a Fool”

Sen. John Kennedy (R-LA) delivered a devastating cross-examination of a witness at the Senate Appropriations Committee in May 2025 on NIH indirect cost rates. Kennedy asked why universities couldn’t operate on 15% overhead when “the Gates Foundation limits them to 10% and the Johnson Foundation limits them to 12%.” He cataloged Stanford’s notorious misuse of NIH funds: “They bought a sailboat. They spent research money to renovate the president’s home. They applied it to depreciation on a Stanford yacht.” When the witness argued universities would suffer, Kennedy replied: “If they don’t get 35% overhead, civilization is going to melt? My mama didn’t raise a fool. And if she did, it was one of my brothers."

"Why Can’t Universities Live on 15%?”

Kennedy opened with the central question of the hearing.

“Why can’t NIH live with 15% overhead?” Kennedy asked Dr. Sudip Parikh, CEO of the American Association for the Advancement of Science.

Parikh began: “Senator, we have had a partnership that’s been going on for 75 years in this country—”

Kennedy cut through: “Yes, but why can’t NIH live with 15% overhead?”

Parikh attempted to explain: “At this point, what that would do is actually turn institutions like the ones we’ve heard about here — it would actually make it to where they are laying off researchers and the support folks—”

Kennedy pivoted to comparisons: “Well, the Gates Foundation, when they make grants, they limit overhead to 10%, don’t they?”

Parikh acknowledged: “They do, sir, but that is apples to oranges because they count different things.”

Kennedy continued: “And the Robert Wood Johnson Foundation limits overhead to 12%, don’t they?”

Parikh: “Again, apples to oranges.”

Kennedy posed the fundamental question: “Isn’t it a fact that the universities that receive the most money from NIH also have the biggest endowments?”

Parikh conceded: “I haven’t checked that, but it probably is true, Senator.”

The exchange exposed the central absurdity of the university overhead debate. The Trump administration had proposed reducing NIH indirect cost rates from approximately 40% to 15%. Universities argued this would be “crippling.” But private foundations — including the world’s largest, the Gates Foundation — limited overhead to 10-12%, and universities accepted those grants without complaint.

The difference was that NIH grants were funded by taxpayers who had no negotiating power, while foundation grants came from organizations that demanded accountability. Universities had exploited the government’s lack of oversight to inflate overhead rates far beyond what the private sector would tolerate.

The Stanford Scandals

Kennedy systematically reconstructed Stanford University’s notorious misuse of NIH research funds.

“Stanford was spending 74% of grants from NIH on overhead,” Kennedy said. “Remember that?”

Parikh hedged: “I do, although I was in high school at the time.”

Kennedy wasn’t deterred: “They audited Stanford. You remember what they found?”

He began the catalog: “They bought a sailboat.”

He continued: “They found that Stanford was spending some of that money to pay the salaries of the employees at a Stanford-owned shopping center, didn’t they?”

Further: “They found that Stanford was spending some of that money that was supposed to go to research to renovate the president’s home.”

More: “And to renovate the vice provost’s home too, didn’t they?”

The climactic detail: “Stanford took NIH research money to help children and applied it to depreciation on a Stanford yacht, didn’t they?”

Parikh confirmed: “Yes, sir.”

The Stanford audit — conducted in the late 1980s and early 1990s — had revealed that one of America’s most prestigious universities had diverted NIH research funds to pay for a yacht, shopping center employees, home renovations for administrators, and other expenses that had nothing to do with biomedical research. The scandal had been one of the catalysts for reform of indirect cost policies, but as Kennedy’s questioning revealed, the fundamental problem remained: universities were receiving vast sums of overhead money with inadequate accountability.

”Money Is Fungible”

Kennedy led the witness through the logical framework that made overhead abuse inevitable.

“What does fungible mean?” Kennedy asked.

Parikh answered: “Fungible means that you can move money from one place to another.”

“And money’s fungible, isn’t it?” Kennedy confirmed.

“Money is fungible,” Parikh agreed.

Kennedy then established the audit gap: “If it’s a five-year grant and they agree on indirect costs, they don’t audit it every year.”

He asked: “What if the universities lie to them?”

Parikh conceded: “That is absolutely a possibility.”

The fungibility problem was the core of Kennedy’s argument. If universities received 40 cents in overhead for every dollar of direct research funding, and that overhead money was fungible — meaning it could be spent on anything — then the temptation to divert funds to non-research purposes was enormous. Without annual audits, universities could spend overhead money on salaries for humanities professors, administrative expansion, building renovations, or any other institutional priority, and NIH would never know.

The Child vs. the Professor

Kennedy made the moral argument with devastating simplicity.

“What I’ve heard is the implication that anybody who is against asking hard questions about the overhead and spending is against biomedical research,” Kennedy said. “And I don’t agree with that.”

He connected overhead to outcomes: “If you care about this child here — and I know you do, we all do — then any money spent illegitimately on overhead to pay the salary of a professor in the humanities department at the university is coming out of her research.”

He stated the principle: “And it’s not wrong to ask questions. It is not wrong to ask questions.”

Parikh agreed: “No, it’s not. Not at all. And Senator, I think it’s actually important to ask those questions and optimize the situation.”

Kennedy delivered the conclusion: “I don’t understand why these universities cannot live on 15% overhead when Gates Foundation limits them to 10% and the Johnson Foundation limits them to 12%. I don’t understand it.”

He built to the punchline: “All of a sudden, if they don’t get 35% overhead, civilization is going to melt?”

He delivered: “My mama didn’t raise a fool. And if she did, it was one of my brothers. I’m not buying that.”

The “child versus professor” framing was the argument’s moral center. Every dollar diverted from research to administrative overhead was a dollar not spent finding cures for childhood diseases, developing new treatments, or advancing medical science. The universities’ defense — that overhead was essential for infrastructure and administration — could not withstand the comparison to a sick child whose research funding was paying a humanities professor’s salary.

The Policy Implications

The hearing provided the intellectual foundation for the Trump administration’s 15% indirect cost cap. The arguments were clear: private foundations operated successfully at 10-12%, universities with the largest endowments received the most NIH money, overhead funds were fungible and inadequately audited, and documented cases of waste (the Stanford yacht) demonstrated that the system was prone to abuse.

The universities’ counter-argument — that the 15% cap would destroy research capacity — was undermined by their own acceptance of lower rates from private foundations. If universities could conduct research on Gates Foundation grants with 10% overhead, they could conduct research on NIH grants with 15% overhead. The difference between the rates was not about research needs; it was about institutional comfort.

Key Takeaways

• Sen. Kennedy: “Why can’t universities live on 15% when Gates Foundation limits to 10% and Johnson Foundation to 12%?”
• Stanford scandals cited: NIH research money used for a yacht, shopping center salaries, president’s home renovation, and vice provost’s home.
• Kennedy: “Money is fungible. What if universities lie? That’s ‘absolutely a possibility.’”
• Moral argument: “Any money spent on overhead to pay a humanities professor’s salary is coming out of a sick child’s research.”
• Kennedy: “All of a sudden, 35% overhead or civilization melts? My mama didn’t raise a fool.”