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In 1988 Congress passed legislation that allowed Department of Veterans Affairs (VA) medical centers to establish nonprofit research corporations (NPCs), forming a unique public/private partnership that dramatically broadened VA’s ability to benefit from private and non-VA public support for research conducted at VA medical centers.
With passage of P.L. 100-322 in 1988 [codified at 38 U.S.C. §§7361-7366], Congress authorized VA medical centers to establish nonprofit research corporations to serve as “flexible funding mechanisms for the conduct of approved research and education” [§7361(a)]. Twenty-five years after enactment, VA has some 80-85 separate, state-chartered corporations scattered throughout the country, all subject to VA oversight and regulation.
Prior to 1988, private and non-VA federal funds available to support VA-approved research could be administered only through ill-suited mechanisms such as General Post Funds. These were established primarily to give gifts to veterans and to administer their bequests, and they are subject to restrictive policies regarding use of funds. Alternatively, non-VA funds were administered by the affiliated medical school which charged substantial "overhead" rates and generally retained such amounts for university purposes. Clearly, a more effective mechanism for handling non-VA research funds was needed.
After deliberation, Congress settled on allowing VA medical centers to establish independent, state-chartered nonprofit corporations. The objective was to delineate separation between VA and the corporations, and to provide the convenience and oversight of local management. Making them subject to federal oversight provided assurance that they would be operated in accordance with the highest standards of fiscal and administrative management.
The initial purpose of the VA affiliated NPCs was to facilitate research at the VA medical centers where they were established. Subsequently, Congress expanded their authority to include supporting VA’s patient and staff education and training missions.