NSF two-ninths salary rule vs. NIH model National Science Foundation (NSF) in US enforces a limit on salary compensation over all grants, often referred to as the two-ninths-rule:


  Summer salary for faculty members on academic-year appointments is
  limited to no more than two-ninths of their regular academic-year
  salary. This limit includes summer salary received from all NSF-funded
  grants.


So, for a 9-mo faculty who can fill up to 3 months of their own summer salary, NSF as the sole source of salary compensation doesn't work no matter how many grants one has.

Compared to the NIH model where there is no such limit, in fact 100% of salary can be recovered in theory via NIH grants, this is a rather strong limit.

What is the motivation of the NSF two-ninths-rule? Why not three-ninths to cover the whole summer salary?
I don't know for sure if this is historically accurate, but the story I've always heard is that the two-ninths rule was an attempt to avoid the vacation issue.  If you take three months of summer salary, then that leaves no time at all for any vacation, since you can't accept summer salary for any time not spent on research.  The fear was that if three months of summer salary were allowed, lots of people would request it (since a 9% salary increase would be tough to resist), but the public would be concerned that many of them were probably cheating and going on holiday with their families for part of that time anyway.  The two-ninths rule minimizes the extent to which the NSF has to deal with this issue, since there's one month reserved for vacation or other activities.

Incidentally, this fits consistently with Bill Barth's answer: solving the vacation problem this way is probably more attractive for an agency that has less money in the first place.