Financial Resources for Academic R&D
Academic R&D is a significant part of the national R&D
enterprise. Academic scientists and engineers conduct the
bulk of the nation's basic research, about one-third of its total (basic plus applied) research, and 13% of its total R&D.
To carry out world-class research and advance the scientific
knowledge base, U.S. academic researchers require adequate
and stable financial resources and the research facilities and
instrumentation that facilitate high-quality work. For a discussion
of the sources of the data used in this section, see sidebar,
"Data Sources for Financial Resources for Academic R&D."
Academic R&D Within the National R&D Enterprise
Universities and colleges play an important role in the nation's
overall R&D effort, especially by contributing to the
generation of new knowledge through basic research. Since
1998, basic research performed within institutions of higher
education has accounted for more than half of the basic research
performed in the United States.
In 2008, U.S. universities and colleges spent $52 billion
($42 billion in constant 2000 dollars) on R&D. Higher education's
prominence as an R&D performer increased slightly
during the past three decades, rising from about 10% of
all R&D performed in the United States in the early 1970s
to an estimated 13% in 2008 (figure 5-1 ). For a comparison
with other countries, see "International R&D Comparisons"
in chapter 4.
Academic R&D involves mostly basic and applied research
and little development activity. In 2008, an estimated
96% of academic R&D expenditures went for research (76%
for basic and 21% for applied) and 4% for development (appendix table 5-1 ). Universities and colleges accounted for an
estimated 31% of the U.S. basic and applied research total in
2008, down from a high of 35% in 2002 but still above the
levels prevalent until then (figure 5-1 ). Higher education's
share of total U.S. research expenditures had previously increased
by 11 percentage points between 1982 and 2002. In
terms of basic research alone, the higher education sector is
the country's largest performer, currently accounting for an
estimated 55% of the national total.
Federal Support of Higher Education R&D
Higher education R&D relies heavily on federal support,
along with a variety of other funding sources. The federal government
has consistently contributed the majority of the funds
(figure 5-2 ). It accounted for about 60% of the $51.9 billion
of R&D funds expended by universities and colleges in FY
2008 (appendix table 5-2 ). In current dollars, federally funded academic R&D expenditures rose 2.5% between FY 2007 and
FY 2008 to $31.2 billion. After adjustment for inflation, this
represents a 0.2% increase from FY 2007 and follows 2 years
of slight declines in constant dollars since FY 2005.
Another look at recent trends is provided by federal
agency-reported inflation-adjusted obligations for academic
R&D—funds going to academic institutions in a given fiscal
year, to be spent over the current and succeeding years.
In constant 2000 dollars, federal academic R&D obligations
peaked in FY 2004 at $22.1 billion and have since declined
by almost 7% to an estimated $20.7 billion in FY 2009 (appendix table 5-3 ). Constant dollar federal R&D obligations
had grown more than 10% each year between FY 1998 and
FY 2001, largely reflecting a commitment to double the R&D
budget of the National Institutes of Health (NIH) over 5 years.
Consequently, between 1998 and 2004, NIH's share of federal
academic R&D funding increased from 57% to 63%.
The American Recovery and Reinvestment Act, signed
into law by President Obama on February 17, 2009, provides
an additional $18.3 billion in appropriations for federal
R&D and R&D facilities and equipment in FY 2009. (See
"Federal R&D" in chapter 4.)
The federal government's overall contribution is the
combined result of numerous discrete funding decisions
made by several R&D-supporting agencies with differing
missions and purposes, which in turn affect research priorities
in the academic sector. Most of the federal R&D funding
to the higher education sector is allocated through competitive
peer review (see sidebar, "Congressional Earmarks").
Examining and documenting the funding patterns of the
key funding agencies is important to understanding both
their roles and that of the federal government overall. For a
discussion of a major federal program with the objective of
improving the geographical distribution of federal obligations
for academic R&D, see sidebar, "EPSCoR: The Experimental
Program to Stimulate Competitive Research."
Top Agency Supporters
Six agencies are responsible for most of the federal obligations
for higher education R&D, providing an estimated
97% of the $25.7 billion obligated in FY 2009 (appendix table 5-3 ). NIH was by far the largest funder, providing an
estimated 65% of total federal academic R&D obligations in
FY 2009. The National Science Foundation (NSF) provided
an additional 15%, the Department of Defense (DOD) 8%,
the Department of Energy (DOE) 4%, the National Aeronautics
and Space Administration (NASA) 2%, and the U.S.
Department of Agriculture (USDA) 2%.
Agency Support by Character of Work
More than 56% of federal obligations from FY 2007
through FY 2009 funded basic research projects (appendix table 5-4 ). The two agencies funding the majority of academic
basic research were NIH and NSF. More than one-third
of federal obligations for academic R&D from 2007
through 2009 funded applied research, with NIH providing
the vast majority of funds in that category as well. About
5% of R&D obligations went toward development during
2007–09. DOD and NASA were responsible for more than
80% of the small amount of federal academic R&D funds
spent on development.
Other Sources of Funding
In contrast to the recent trend in federal R&D funding,
higher education R&D funding from nonfederal sources has
grown steadily since FY 2004, and grew by 8% (6% in inflation-adjusted terms) between 2007 and 2008 (figure 5-3 ).
- Institutional funds. In FY 2008, institutional funds from
universities and colleges constituted the second largest
source of funding for academic R&D, accounting for 20% ($10.4 billion) of the total (appendix table 5-2 ). Institutional
funds encompass (1) institutionally financed
research expenditures and (2) unrecovered indirect costs
and cost sharing. They exclude departmental research, a
more informal type of research that is usually coupled
with instructional activities in departmental budget accounts
and thus does not meet the Office of Management
and Budget definition of organized research. The share
of support represented by institutional funds increased
steadily from 12% in 1972 to 19% in 1991 and has since
remained at roughly that level. Funds for institutionally
financed R&D may derive from general-purpose state or
local government appropriations; general-purpose awards
from industry, foundations, or other outside sources; endowment
income; and gifts. Universities may also use income
from patents, licenses, or patient care revenues to
support R&D. (See section "Patent-Related Activities and
Income" later in this chapter for a discussion of patent
and licensing income.)
- State and local government funds. State and local governments
provided 7% ($3.4 billion) of higher education
R&D funding in FY 2008. Even though their absolute
funding total continues to rise annually, the nonfederal
government share has declined since its peak of 10.2%
in the early 1970s. However, these figures are likely
to understate the actual contribution of state and local
governments to academic R&D, particularly for public
institutions, because they only reflect funds that these
governments directly target to academic R&D activities.
They exclude any general-purpose state or local government
appropriations that academic institutions designate
and use to fund separately budgeted research or pay for
unrecovered indirect costs; such funds are categorized as
institutional funds. (See chapter 8, "State Indicators,"
for some indicators of academic R&D by state.)
- Industry funds. Industrial support accounts for the
smallest share of academic R&D funding (6%), and support
of academia has never been a major component of
industry-funded R&D. After a 3-year decline between
2001 and 2004, industry funding of academic R&D increased
for the fourth year in a row, to $2.9 billion in FY
2008. (See appendix table 4-5 for time-series data on
industry-reported R&D funding.)
- Other sources of funds. In FY 2008, other sources of
support accounted for 8% ($4.0 billion) of academic
R&D funding, a level that has stayed about the same since
1972. This category of funds includes but is not limited
to grants and contracts for R&D from nonprofit organizations
and voluntary health agencies and all other sources
not included in the other categories.
Expenditures by Field and Funding Source
Investment in academic R&D historically has been concentrated
in a few individual S&E fields. The life sciences
have for decades accounted for more than half of all academic
R&D expenditures. In FY 2008, they accounted for
approximately 60% of both the federal and nonfederal totals
(appendix table 5-5 ). Within the life sciences, the medical
sciences accounted for 33% of all academic R&D expenditures
and the biological sciences accounted for another 19%
(appendix table 5-5).
Between 1998 and 2008, R&D expenditures in the medical
sciences almost doubled, from $7.7 billion to $14.1 billion
in constant 2000 dollars (figure 5-4 ), changing the distribution
of academic R&D expenditures across the various broad
S&E fields. The life sciences gained 4 percentage points over
the period, driven by a 4-percentage-point rise in the share
of medical sciences, from 29% to 33% of the total (appendix table 5-6 ). The physical sciences lost 2 percentage points,
from 10% to 8% of the total. Figure 5-5 shows share gains and
losses in both the 1990–2000 and 2000–08 periods.
Of the $31.2 billion in academic R&D expenditures funded
by the federal government, R&D projects in the life sciences accounted
for $18.7 billion (60%) in FY 2008 (appendix table 5-7 ). The Department of Health and Human Services (HHS), notably
NIH, contributes the majority of this life science funding (83%).
Although their share of total academic R&D funding is much
smaller, DOD, DOE, NASA, and NSF have more diversified
funding patterns (figure 5-6 ). In FY 2008, NSF was the lead
federal funding agency for academic research in the physical
sciences (29% of federally funded R&D expenditures); mathematical
sciences (47%); computer sciences (42%); and environmental
sciences (34%). DOD was the lead funding agency in
The proportion of academic R&D expenditures funded
by the federal government also varies significantly by field
(appendix table 5-8 ). The field with the largest proportion
of federal funding in FY 2008 was atmospheric sciences,
at 80%, followed by physics (76%), mathematical sciences
(72%), and aeronautical/astronautical engineering (72%).
The fields with the smallest percentages of federal funding
in FY 2008 were economics (32%), political science (37%),
and agricultural sciences, which received less than 30% of
their funds from federal sources.
Between 1975 and 1990, the federally financed proportion
of R&D spending declined in all of the broad S&E fields
(appendix table 5-8 ). Since 1990, those declines have either
stabilized or reversed, and the federal share reported in
FY 2008 was higher than the 1990 share for all fields except
mathematical sciences and physical sciences.
Non-S&E R&D Expenditures
Academic institutions spent a total of $2.2 billion on
R&D in non-S&E fields in FY 2008 (table 5-1 ). This represents
an increase of 9% over the $2.1 billion spent in FY
2007. This $2.2 billion is in addition to the $51.9 billion
expended on S&E R&D. The largest amounts reported for
R&D in non-S&E fields were for education ($880 million),
business and management ($325 million), and humanities
($254 million). The federal government funds smaller proportions
of R&D in non-S&E than in S&E fields: 37% of the
$2.2 billion in non-S&E R&D in FY 2008.
Academic R&D by Institution
The previous sections examined R&D for the entire academic
sector. This section looks at some of the differences
across institution types.
Funding for Public and Private Universities
Public and private universities rely on the same major
sources to fund their R&D projects, but the relative contribution
of those sources differs substantially (figure 5-7 ; appendix table 5-9 ). In FY 2008, the federal government provided
72% of the R&D funds spent by private institutions, compared
with 55% for public institutions. Conversely, public
institutions received approximately 9% of their $35.3 billion
in R&D expenditures from state and local governments,
compared with 2% of private institutions' $16.6 billion.
Public academic institutions also supported a larger portion
of their R&D from their own sources (24% versus 12% at
private institutions). Their larger proportion of institutional
R&D funds may reflect general-purpose state and local government
funds that public institutions have directed toward
R&D. Private institutions in turn report a larger proportion
of unrecovered indirect costs (53% of their institutional
total in 2008, versus 42% for public institutions). For both
types of institutions, these shares have declined over the past
decade, from 64% to 53% for private institutions and from
46% to 42% for public institutions (figure 5-8 ).
Both public and private institutions received approximately
6% of their R&D support from industry in FY 2008. The share of total R&D expenditures funded by all other
sources was also comparable, at 7% and 9%, respectively.
Distribution of R&D Funds Across Academic
Academic R&D expenditures are concentrated in a relatively
small number of institutions. In FY 2008, 679 institutions
reported spending at least $150,000 on S&E R&D.
Of these, the top-spending 20 accounted for 30% of total
academic R&D spending and the top 100 for 80% of all
academic R&D expenditures. Appendix table 5-10 presents
the detailed distribution among the top 100 institutions. The
concentration of academic R&D funds among the top 100
institutions has stayed constant over the past two decades
(figure 5-9 ), as have the shares held by both the top 10 and
the top 20 institutions.
It should be noted that the composition of the universities
in each of these groups varies over time as universities
increase or decrease their R&D activities. For example, 5 of
the top 20 institutions in FY 1988 were no longer in the top
20 in FY 2008.
A similar concentration of funds is found among university
performers of non-S&E R&D. The top 20 performers
accounted for 36% of the total non-S&E R&D expenditures
in FY 2008 (appendix table 5-11 ).
R&D Collaboration Between Higher Education
One way to measure the extent of collaboration among academic
institutions is to examine how much of their total R&D
expenditures was passed through to other academic institutions
or received by institutions as subrecipient funding. R&D
funds for joint projects that were passed through universities
to other university subrecipients more than doubled from FY
2000 to FY 2008, from $699 million to $1.7 billion (figure 5-10 ; appendix table 5-12 ). This amount represents 3.3% of
total academic R&D expenditures in FY 2008, compared with
2.3% of the total in FY 2000. In FY 2008, 90% ($1.5 billion)
of these pass-through funds came from federal sources.
Not coincidentally, universities receiving pass-through
funds from other universities likewise reported a rapid increase
in subrecipient R&D expenditures between FY 2000
and FY 2008, from $669 million to $1.7 billion. More than
90% ($1.6 billion) of these subrecipient funds originated
from federal sources.
Overall, $3.5 billion was passed through institutions to all
types of subrecipients in FY 2008 (including both academic
and nonacademic institutions), and $3.9 billion was received
as subrecipient funding from all types of pass-through entities
(appendix table 5-12 ). Again, the majority of these funds
were from federal sources (87% of pass-through funds and
90% of subrecipient expenditures).
Academic R&D Equipment
Research equipment is an integral component of the academic
R&D enterprise. This section examines expenditures
for moveable research equipment necessary for the conduct
of organized research projects (e.g., computers, telescopes)
and the federal role in funding these expenditures.
In FY 2008, about $1.9 billion in current funds was spent
for academic research equipment (appendix table 5-13 ). In
constant dollars, this represents an increase of 1.0% from FY
2007 but a decline of more than 10% from the 2004 level.
Overall, expenditures for R&D equipment have risen 61% in
real dollars since 1985. About 80% of FY 2008 expenditures
were concentrated in three fields: the life sciences (43%), engineering
(23%), and the physical sciences (16%) (appendix
table 5-13). After a period of steady growth between 2001
and 2004, equipment expenditures in the physical sciences,
medical and biological sciences, and engineering have declined
since FY 2005 (figure 5-11 ).
Federal funds for research equipment are generally received
as part of research grants or as separate equipment
grants. The share of federal funding for research equipment
varies significantly by field (appendix table 5-14 ). The field
of atmospheric sciences had the largest proportion of federally
funded R&D equipment (85%) in FY 2008. The overall share
of research equipment funded by the federal government fluctuated
between 56% and 64% over the past two decades.