Technological innovation has hinged on science and research funded by the U.S. government. That's all at risk right now
From NASA to the Consumer Financial Protection Bureau, Trump's reform agenda has thrown numerous federal agencies under the microscope and brought the threat of steep budget cuts or, in the worst cases, attempted dismantling. But within the startup and venture capital sector, the fate of one agency in particular—the National Science Foundation—is causing alarm after DOGE turned its attention to it a few weeks ago.
On Friday, the Office of Management and Budget proposed slashing roughly 57% of the NSF's budget, cutting it from about $9 billion down to $3.9 billion. Shortly before that, on April 24, the director of NSF—a Trump pick during his first term—resigned, and NSF staffers received memos encouraging them to consider deferred resignation and early retirement programs, and notifying them that NSF would no longer process supplements to any existing grant awards for the remainder of this fiscal year.
'We are taking this step to ensure alignment with NSF priorities…And to prepare for an uncertain NSF budget future,' read one of the memos seen by Fortune, while another memo warned of 'significant workforce reductions,' and encouraged staffers to consider early retirement or deferred resignation.
NSF is considered to be a cornerstone of U.S. research and tech leadership. The billions of dollars it funds each year for research in areas like AI, quantum, and mathematics has led to breakthroughs in everything from semiconductors to digital assistants to magnetic resonance imaging. And it's an important part of the public-private partnerships that have buoyed America's tech sector over the years. NSF Engines, one of NSF's newest programs that's focused on semiconductors, advanced manufacturing, and biotechnology research, has invested $150 million in funding across 10 different regions and stirred up more than $1 billion in subsequent investments from venture capitalists, nonprofits, and state and local governments, the agency has said.
Adam Hammer, who is the CEO of Roadrunner Venture Studios, a startup studio that helps scientists and researchers spin their work out of national or university labs and into companies, described these NSF programs as playing an 'indispensable role' in complementing private investment and a 'key mechanism that helps de-risk early-stage technologies for private investors.'
'Sustaining them is vital if we want U.S. innovation to keep pace with national competitors who continue to invest heavily across both basic research and commercialization,' he told Fortune in an email, noting that there has been a 'broader, cumulative trend of underinvestment in the translation of research into companies.'
The administration's efforts to downsize the NSF are especially puzzling to some within the tech industry, given that President Trump has emphasized technological innovation—particularly in AI, quantum, and space exploration—as a priority. Just a few weeks ago, Michael Kratsios, a Peter Thiel protege and Trump-appointed director of the Office of Science and Technology Policy, emphasized the importance of public-private partnerships in igniting American innovation.
The stakes feel high for anyone who sits close to the NSF, including those who have recently left it. In his resignation note to staff, former NSF director Sethuraman Panchanathan wrote of the significant role the agency has played over the years and its stature as the 'envy of the world.' This a 'pivotal moment for our nation in terms of global competitiveness,' he warned.
Morale is in 'bad shape. It's very low—heartbreakingly low. People are scared,' says a current employee at the NSF, who spoke on condition of anonymity because they were not authorized to speak on behalf of the agency. Staffers are wondering whether they will have a job and whether the careers of the students and researchers they have been trying to support might end, the person said.
Since an internal review process began around February—scanning for grants focused on Trump-abhorred topics like diversity, equity, and inclusion—funding has been cut to more than 1,300 NSF grants, according to a tally maintained by Grant Watch, a project tracking grant cuts from scientific agencies that have happened under the Trump Administration.
Congress will still have to approve any budget cuts to the agency, which is currently being overseen by its chief of staff until President Trump appoints a new director. NSF and DOGE could not immediately be reached for comment.
Despite all the uncertainty and turmoil at the NSF, there's still an underlying thread of commitment to the stated mission: to promote the progress of science, advance the national health, prosperity and welfare, and secure the national defense.
'As long as I am able to be here, and NSF is able to keep me employed—as long as I don't feel pulled in another direction—I'm not going to walk away,' the employee said.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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This story was originally featured on Fortune.com
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