Where does the money for research come from?

The answer to that question depends critically on the definition of "research." The broadest term used is "research and development" (R&D), which includes the translation of new knowledge into products or services. There is about $350 billion spent on R&D broadly defined. Development of products and services is why the majority of R&D is funded by (and takes place in) industry. The Federal government is the biggest non-industrial sponsor of R&D, spending a bit over $100 billion a year. More than half of that money goes for military applications. A more important distinction is separating out basic from applied research and development efforts. Basic research gets about $8 billion goes to "general science and basic research" (including both military and civilian funding). Biomedical research, including the applied areas of translational and clinical research gets an additional $28 billion in federal support. A final important distinction to keep in mind is the funding for scientists in academic institutions rather than industrial ones. Federal research support goes to a variety of businesses, and academic research is supported by a variety of non-federal sources.

The National Science Foundation offers a wide variety of information about science funding in the US. As the following chart demonstrates, the vast majority of research and development funding comes from private industry ('other' is primarily charitable organizations). The largest investments come from computer and electronic product manufacturers (about $57 billion), pharmaceutical companies (about $39 billion), and the information industry (about $27 billion); see table 2 of this NSF report for details. The federal government pays for about 10% of industrial research.

US R&D spending


About 60% of federal research and development money, about $81 billion in 2008, is spent on national defense (including Department of Defense military activities, Department of Energy atomic energy defense program, and defense-related R&D of Department of Homeland Security). In 1955 (the beginning of the NSF's record), about 85% of federal R&D was defense related. In 1978 and 1979, cilivian R&D expenditures slightly exceeded military ones, but that is the only time in US history that was true.

Internationally, the US expenditures on R&D are the highest in absolute dollar terms, but lags Israel, Sweden, Finland, Japan, South Korea, Iceland and Switzerland relative to GDP (see table 3 of this NSF report). China, although below these countries as a proportion of GDP, still spends nearly $87 billion a year on R&D, more in absolute terms than any country but the US.

About $8 billion of the total federal outlay for research and development (to academic and industrial scientists) goes into the category of "general science and basic research," split roughly 50-50 between NSF and the Department of Energy (the latter mostly for nuclear physics). The roughly $28 billion NIH budget is divided among more than 20 institutes, ranging from the National Cancer Institute, the largest at $4.7 billion per year, to the National Center for Complementary and Alternative Medicine, which gets $118 million. More than 1/3 of the NIH budget is spent on intramural (that is, by NIH employees) research, and about 10% goes to support corporate research. NIH also divides its research into basic versus applied and development categories, with each getting about half of the available funding.

Academic research is a modest portion of the R&D budget

This report on academic research funding shows that federal government spends about $28.7 billion dollars, about 1/4 of total expenditures, on science and engineering research at universities. More than half of that, about $16 billion, is spent by the Department of Health and Human Services (which includes NIH and also the Agency for Healthcare Research and Quality). The National Science foundation spends about $3.2 billion, the Department of Defense about $2.8 billion, NASA and the Department of Energy about $1 billion each, the Department of Agriculture about $740 million, and other agencies ranging from Homeland Security to the Environmental Protection Agency a total of about $800 million more. A small number of universities capture most of this research support. The top 20 get more than $10 billion (in case you are curious, CU was #17 with $371 million in federal research funding in 2006, the most recent year I could find data). State and local governments contribute about $3.1 billion to academic scientific R&D, a substantial portion of which comes from California's voter-passed stem cell research fund.

Industrial funding of academic research is about $2.7 billion per year, about 1/10th that of the federal government, (see table 1 of this NSF document to see that after a drop between 2001 and 2004, industrial support for academic research has started to climb again).

Academic institutional funds support about $9.6 billion dollars of R&D, and other sources (nonprofit charities and other non-governmental, non-industrial entities) adds about $3.5 billion more. These figures, and a breakdown of the field of research by federal agency can be found here. A 2005 article in the Journal of the American Medical Association focuses on the finances of biomedical research, and includes a table of the leading charitable supporters of research.

Academic funding

Although the focus of this class is the US, where most basic research is performed, it is definitely worth looking at basic research outside of the US as well. The United Nations Educational, Scientific and Cultural Organization (UNESCO) is a good source for information about both its own activities and that of other organizations around the world. The European Union sponsors research activities (through the European Research Council) and coordinates national sponsorship across Europe. The current five year plan is called Framework Program 7 (FP7). The FP7 budget doesn't use the same definition of basic research, and hence is not directly comparable to the US figures, but totals about 4 billion Euros a year (roughly $5.4 billion). China has recently created a National Natural Science Foundation which funds about $530 million in total research.

Now that you know where the money comes from, consider what motivates the sponsors of scientific research.






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