A couple things:

1) We refuse them when we can. Like if you have a lower indirect rate, my institution's policy is that has to be located somewhere that's documented, you can't just do it. I did have one where the sponsored programs folks just said no.

2) As mentioned, they're sort of a drop in the bucket, and also important to junior faculty, so they're a little bit accepted as loss leaders.

3) At several institutions, it was made clear to me that if you relied on these, and not "full fat" grants, by the time you came up for tenure, things would be bad.

The great irony is every research administrator I know (and I know a lot) sort of hates these. If they had wanted to, "You cannot charge a private organization a indirect rate lower than your negotiated federal rate of the same type" (there are different rates depending on the nature of the project) would probably have been met with "Yeah, that tracks."

Instead, they're trying to use it as an excuse to absolutely gut research.