Research grants are a critical source of funding for universities, research institutions, and individual researchers to carry out impactful work that advances knowledge and tackles complex problems. But where exactly does the money for research grants come from? There are a variety of public and private sources that provide research funding, from government agencies to philanthropic foundations to corporations.
Government funding agencies
One of the largest sources of research grant funding comes from government agencies. In the United States, major federal agencies that provide research grants include:
- National Institutes of Health (NIH)
- National Science Foundation (NSF)
- Department of Defense (DOD)
- Department of Energy (DOE)
- National Aeronautics and Space Administration (NASA)
- U.S. Department of Agriculture (USDA)
In fiscal year 2022, the NIH awarded over $34 billion in research grants, the NSF awarded $9.5 billion, the DOD over $4 billion, the DOE $2.6 billion, NASA $1.2 billion, and the USDA $1.8 billion. These government agencies have large annual research budgets funded through taxpayer dollars, and a portion of that funding is distributed through competitive grant programs that researchers can apply to.
Other federal agencies like the Environmental Protection Agency (EPA), Department of Education (ED), National Endowment for the Humanities (NEH), and National Endowment for the Arts (NEA) also offer research grants in their domains. Additionally, state governments provide funding opportunities for research through state agencies and public universities.
Philanthropic foundations
Private philanthropic foundations are another key source of research funding. Major foundations like the Bill & Melinda Gates Foundation, Gordon and Betty Moore Foundation, Alfred P. Sloan Foundation, and Howard Hughes Medical Institute award billions of dollars in research grants every year. Other examples include:
- The William and Flora Hewlett Foundation
- Andrew W. Mellon Foundation
- John Templeton Foundation
- Walton Family Foundation
- Chan Zuckerberg Initiative
Philanthropic foundations support research in areas aligned with their mission and values. They fund research in fields like health, science, technology, education, climate change, equity, and more. The process to apply for foundation grants can be highly competitive.
Corporations
Corporations provide another avenue of research funding, particularly in areas closely tied to their business interests and R&D priorities. Technology firms like Google, Intel, IBM, and Microsoft offer research grants in computer science and engineering. Pharmaceutical companies like Pfizer, Merck, and Novartis fund medical research. Oil and gas companies support research in geology, engineering, and energy. Defense contractors fund research relevant to national security and defense capabilities.
While corporate research grants serve business needs, they also enable academic researchers to pursue discoveries that can translate to wider societal impact. Companies may work with universities, fund faculty research, sponsor graduate fellowships, or have their own in-house research labs.
Nonprofit organizations
There are many nonprofit organizations outside of private foundations that also provide research funding, such as:
- Professional associations (e.g. American Medical Association, IEEE)
- Research institutes (e.g. Dana-Farber Cancer Institute)
- Advocacy groups (e.g. American Cancer Society, March of Dimes)
- Membership organizations (e.g. Phi Kappa Phi)
Nonprofits fund research relevant to their respective fields, issues, and constituencies. They offer grants, scholarships, awards, and fellowships across diverse disciplines.
Universities
Colleges and universities themselves allocate funding for faculty research through their overall budgets. University research funding includes:
- Internal grants awarded by the university
- Endowed chairs, professorships, and centers supported by university funds
- Seed funding for early-stage projects
- Bridge funding to support researchers between external grants
- Start-up packages for new faculty
- Cost-sharing for external grants that require university matching
While not their primary role, universities do self-fund faculty research activities to help underwrite overhead costs, fill funding gaps, and invest in their research enterprise and strategic priorities.
Hospitals
Research hospitals and medical centers provide funding for biomedical research, usually focusing on clinical and translational research with direct patient applications. Funding sources include:
- Clinical revenue used for internal research
- Philanthropic donations earmarked for research
- Joint ventures with companies on R&D initiatives
- Partnerships with academic institutions
Major hospital research centers include Dana-Farber Cancer Institute, Mayo Clinic, Cleveland Clinic, Brigham and Women’s Hospital, and others. Their investments enable discoveries in areas like cancer, cardiovascular disease, genetics, infectious disease, and more.
Venture capital and investors
For research with strong commercial potential, venture capital firms and angel investors may provide funding. This type of funding is usually for later stage research closer to commercialization or for start-up companies spinning out of university research. Investors expect a ROI in these cases but also enable access to capital to translate lab breakthroughs into real-world technologies and products.
Individual donors
While not the largest source, individual donations also support research funding. Wealthy philanthropists may fund specific projects or institutes. General crowdfunding campaigns raise smaller donations from many individuals for particular research initiatives. And annual giving by alumni to academic institutions helps underwrite broader research activities.
International sources
For researchers and institutions engaged in global collaboration, grants may come from international government bodies, such as:
- European Commission
- European Research Council
- UK Research and Innovation
- National Natural Science Foundation of China
- Japanese Society for the Promotion of Science
There are also multinational public-private partnerships, corporate research collaborations across borders, and global health funders that support worldwide research efforts.
Cross-sector partnerships
With large-scale complex research projects often exceeding the funding capacity of any single entity, cross-sector partnerships between government, industry, academia and philanthropy are on the rise. Some examples include:
- National Photonics Initiative funded by NSF, DoD, and companies
- Renewable energy research hubs backed by DOE and corporate partners
- Grand Challenges Explorations sponsored by Gates Foundation and USAID
- Chan Zuckerberg Biohub involving academia, philanthropists, and industry
By pooling resources and aligning incentives, these multi-funder partnerships take on ambitious goals requiring broad long-term investments.
Breakdown of research funding sources
Looking at available data on overall research funding sources in the U.S. provides a big picture view. According to estimates by the National Science Foundation, here is the breakdown of domestic R&D funding by source:
| Funding Source | Percentage |
|---|---|
| Business | 59% |
| Federal government | 27% |
| Universities and colleges | 10% |
| Nonprofits | 4% |
This shows that over half of all U.S. R&D is funded by private industry, while the federal government directly provides over a quarter of total funding. Most federal research dollars get distributed to recipients like academia and industry through competitive grants.
Drilling down further, the federal funding contribution breaks down by agency:
| Federal Agency | Percentage |
|---|---|
| Department of Defense (DOD) | 47% |
| National Institutes of Health (NIH) | 21% |
| Department of Energy (DOE) | 9% |
| National Aeronautics and Space Administration (NASA) | 8% |
| National Science Foundation (NSF) | 4% |
| U.S. Department of Agriculture (USDA) | 2% |
This makes it clear that defense-related research receives the largest portion of federal R&D monies, with health and medical research coming in second. But the full picture is still more nuanced considering how funding gets allocated across different fields and areas based on priorities.
Breakdown by research field
Looking at overall funding allocations across different disciplines provides more insight into priorities from both public and private sources:
| Research Field | Funding Level |
|---|---|
| Life sciences | $100 billion |
| Software | $67 billion |
| Defense systems | $58 billion |
| Engineering | $46 billion |
| Energy research | $32 billion |
| Physical sciences | $27 billion |
| Environmental sciences | $12 billion |
| Mathematics | $1.5 billion |
| Social sciences | $400 million |
| Psychology | $350 million |
Life sciences like health and medicine receive the most overall funding, but a mix of priorities are evident. There are large investments in fields like software, engineering, defense, and energy, but substantially less for disciplines like social sciences and mathematics.
Key considerations around research funding
A few important considerations around sources and priorities of research funding include:
- Diversity – Having a mix of funding sources across government, industry, philanthropy, and other sectors allows for a broader diversity of research topics and approaches.
- Market dynamics – Research priorities often align with economic and market incentives, as seen by funding levels for biomedical, software, defense, and energy research.
- Funding gaps – Some disciplines like social sciences and humanities receive relatively lower levels of research funding.
- Foundational research – There is a need for adequate government funding for foundational research without clear commercial applications.
- Global competitiveness – Research funding levels reflect strategies to maintain U.S. leadership and competitiveness in key areas like technology, health, and defense.
Balancing these different dynamics around research funding sources and allocations involves ongoing analysis, policy reforms when needed, and multi-sector coordination. But the data makes clear that a complex ecosystem of public, private, philanthropic, corporate, international, and cross-sector funding is critical for maintaining America’s leadership in science, discovery, and innovation.
Conclusion
Research funding that enables impactful discoveries and solutions comes from a multifaceted range of sources. The major funders include government agencies at federal and state levels, philanthropic foundations, corporations, nonprofits, universities, hospitals, investors, international bodies, and cross-sector partnerships. While levels vary across fields based on priorities, having diversity in funding sources helps strengthen the overall research ecosystem.
