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I don't think that ND is limited in its ability to get grants by being a Catholic school, but I think the faculty does hold it back some. When it comes to getting grants the environment and the applicant are just as important as the idea (for NIH and NIMH at least, which are the groups I am most familiar with). ND has made steps by building a new science building, that is a start, but Clairemarie is spot on about the faculty. You have to have very good faculty to compete. Schools can transform into grant-writing machines, my grad program is in the middle of it. You have to recruit junior faculty who are recent graduates from top labs and who have had their grants funded in grad school. Then you build upon them receiving grants. It is going to be VERY hard to get a big name to jump to ND, it just doesn't happen often.
I don't often agree with MiPerson80, philosopical differences, but he is spot on in terms of ND mimicing schools focused on undergraduate education. They won't do this, and I think in the long-run it will improve the grad schools, improve ND's rankings, but also weaken the undergraduate education at ND.
Clairemarie, I somewhat disagree. I think to be a great undergraduate institution you have to have professors who care about teaching. You don't get to an elite level as far as research and research funding by caring about teaching. In fact, many professors (including my advisor) use research funding to pay the university so they don't have to teach (aka buying out of teaching) and can do more research. This is great for the reputation of the school as far as research and good for the grad students (they buy out of undergrad teaching, usually not grad teaching) but it deprives undergraduates from interacting with your top faculty members.
One must remember that Duke is a very different school. While they technically are a religious school, they really aren't, and they recruit different students than ND does. There are a lot of great students who would apply to Duke but not ND because they don't want an overly religious environment, and that is fine. I think comparing them is slightly apples to oranges.
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