Chapter 5 | Academic Research and Development
Expenditures and Funding for Academic R&D
Academic R&D is a key component of the overall U.S. R&D enterprise. Academic institutions conduct just under half of the nation’s basic research and, importantly, train young researchers in the process. (For an overview of the sources of data used, see sidebar Data on the Financial and Infrastructure Resources for Academic R&D.)
National Academic R&D Expenditures in All Fields
R&D expenditures by U.S. colleges and universities totaled $71.8 billion in 2016., The vast majority (94%) of this spending was in S&E fields (Table 5-1). The chapter will also present Higher Education Research and Development Survey (HERD) data that are not distributed by field. Such data include institutions’ estimates of spending for basic research, applied research, and development (Table 5-2; Appendix Table 5-1); data on R&D funds that universities and colleges pass through to other institutions (or receive from others); detail on institutionally financed R&D; and the types of costs universities incur as they conduct R&D.
R&D expenditures at universities and colleges, by field: FY 2016
Academic R&D spending is primarily for basic research—in 2016, 63% was spent on basic research, 28% was spent on applied research, and 9% was spent on development (Table 5-2), percentages largely unchanged from 2015. The estimated percentage of spending on basic research from 2010 to 2016 (around 65%) is less than institutions had reported throughout the late 1990s and the 2000–09 decade (around 75%) (Appendix Table 5-1). Improvements to the survey question in 2010 likely affected how universities reported these shares.
Higher education R&D expenditures, by source, character of work, and institution type: FYs 2012–16
National Academic R&D Spending
Academic R&D expenditures are made up of a variety of direct and indirect cost components. The largest cost component is the salaries of those who conduct the R&D. In 2016, salaries, wages, and fringe benefits constituted 44% of total spending ($31.5 billion). The remaining 56% was divided between all other direct costs (33% of total spending) and indirect costs (23% of total spending). Other direct costs include, among other things, funds passed through to subrecipients for collaborative projects and purchases of software and equipment. Indirect costs include both recovered and unrecovered costs (together totaling $16.5 billion in 2016) (Table 5-3).
Higher education R&D expenditures, by Carnegie classification, institution type, and type of cost: FY 2016
Sources of Support for Academic R&D
Academic R&D relies on funding support from a variety of sources, including the federal government, universities’ and colleges’ own institutional funds, state and local government, businesses, and other organizations (Appendix Table 5-2). The federal government has consistently provided the majority of funding for academic R&D, generally around 60%, although the share has been less in recent years. Institutional funds contribute a sizeable share of this funding (25% in 2016), while state and local governments, businesses, and nonprofit organizations (such as philanthropic foundations) each provide less than 10% of R&D funds. Funding from all other sources results in about 3% of total R&D spending.
The federal government allocates R&D funding to academia primarily through competitive review processes, and overall support reflects the combined result of many discrete funding decisions made by the R&D-supporting federal agencies. Varying agency missions, priorities, and objectives affect the level of funds that universities and colleges receive and how those funds are spent. The American Recovery and Reinvestment Act of 2009 (ARRA) was an important source of federal expenditures for academic R&D during the economic downturn and recovery from 2010 through 2012 and continued to contribute to such spending, although in smaller amounts, in 2013 and 2014. By 2015, all ARRA funds had been spent.
Excluding ARRA funds, the proportion of R&D paid for with federal funds has declined gradually since 2004 (from 64% to 54%). This decrease has contributed to a decline over this period in success rates for research grant applications at some federal funding agencies discussed in this chapter’s section on doctoral scientists and engineers in academia. Taking a longer perspective, the proportion of academic R&D paid for with federal funds, at 69%, was highest in 1973 (Figure 5-1). This proportion then declined fairly steadily throughout the remainder of the 1970s and the 1980s. During the 1990s, the federal share, with some fluctuations, remained at or just under 60%. However, during the first half of the 2000–09 decade, the federal proportion of academic R&D spending gradually increased to 64%, reflecting rapid increases in the budget of the National Institutes of Health (NIH), a major academic R&D funding agency. The federal proportion fell during the latter part of the 2000–09 decade but rose in 2010 and 2011 with the infusion of ARRA funds. It has been on a steady decline starting in 2012. In 2016, the federal government was the source for $38.8 billion (54%) of the $72 billion total in R&D spending, an increase of only $400 million from 2015 after adjusting for inflation (Figure 5-2).
Academic R&D expenditures, by source of funding: FYs 1972–2016
Totals for FYs 1972–2009 represent R&D expenditures in S&E fields only. Beginning in FY 2010, totals include R&D expenditures in S&E fields and non-S&E fields. Academic institutions' funds exclude research funds spent from multipurpose accounts. Percentages may not add to 100% becaue of rounding.
National Science Foundation, National Center for Science and Engineering Statistics, Higher Education Research and Development Survey (HERD).
Science and Engineering Indicators 2018
Federal and nonfederal funding of academic R&D expenditures: FYs 1997–2016
Gross domestic product deflators come from the U.S. Bureau of Economic Analysis and are available at https://www.bea.gov/national/, accessed 12 July 2017. See Appendix Table 4-1. Totals for FYs 1997–2002 represent R&D expenditures in S&E fields only. Beginning in FY 2003, totals include R&D expenditures in S&E fields and non-S&E fields. However, from FY 2003 through FY 2009, some institution totals may be lower-bound estimates because the National Science Foundation did not attempt to estimate for nonresponse on non-S&E R&D expenditures before FY 2010.
National Science Foundation, National Center for Science and Engineering Statistics, Higher Education Research and Development Survey (HERD). See Appendix Table 5-1.
Science and Engineering Indicators 2018
Top Federal Agency Supporters
Six agencies are responsible for the vast majority of annual federal expenditures for academic R&D: the Department of Health and Human Services (HHS), particularly NIH; the Department of Defense (DOD); the National Science Foundation (NSF); the Department of Energy (DOE); the National Aeronautics and Space Administration (NASA); and the Department of Agriculture (USDA). In 2016, these six agencies were the source of more than 90% of the estimated $38.8 billion federal expenditures for academic R&D (Appendix Table 5-3; Chapter 4 provides data on these agencies’ obligations for academic R&D).
Among these six agencies, HHS is by far the largest funder, the source of $21 billion (53%) of total federal expenditures in 2016. DOD was the next largest funder, providing $5.3 billion (just under 14%); it was followed closely by NSF, which provided $5.1 billion (just over 13%) of federal funding for academic R&D. DOE, NASA, and USDA provided smaller shares of between 3% and 5%, and all other agencies together provided 8%. For at least the last decade, the relative ranking of the top six funding agencies in terms of the amount of R&D funding has remained quite stable, with DOD experiencing the greatest gains in share (from 9% in 2007 to 14% in 2016) (Table 5-4).
Top six federal agencies' shares of federally funded academic R&D expenditures: FYs 2007–16
The federal government’s role in funding R&D in the various fields of S&E hinges on each agency’s mission focus (Figure 5-3). Federal funding has played a larger role in overall support for some fields than for others (Appendix Table 5-4). The federal government is the dominant funder in fields such as atmospheric sciences (82% in 2016), physics (72%), computer sciences (69%), and aerospace engineering (71%). It plays a smaller role in other fields, such as economics (28%), agricultural sciences (30%), and political sciences (27%).
Federally financed academic R&D expenditures, by agency and S&E field: FY 2016
DOD = Department of Defense; DOE = Department of Energy; HHS = Department of Health and Human Services; NASA = National Aeronautics and Space Administration; NSF = National Science Foundation; USDA = Department of Agriculture.
SOURCE(S): National Science Foundation, National Center for Science and Engineering Statistics, Higher Education Research and Development Survey (HERD), FY 2016. See Appendix Table 5-3.
Science and Engineering Indicators 2018
Although fields vary in their dependence on particular agencies, most receive the majority of their funding from only one or two agencies. HHS—primarily through NIH—supports the vast majority of federal funding in life sciences (83%) and the majority (66%) of federal funding in psychology. NSF and DOD together play key roles in computer sciences (83%), mathematical sciences (79%), and engineering (59%). Funding sources for R&D in geosciences and social sciences are more diversified, with NSF and NASA providing large proportions of geosciences funding and HHS providing the largest proportion of social sciences funding (Table 5-5). In 2016, as in previous years, NSF was the lead federal funding agency for academic research in physical sciences, mathematical sciences, and geosciences. In 2016, DOD was the lead funding agency in engineering and computer sciences.
Federal support for academic R&D historically has been concentrated in the nation’s most research-intensive higher education institutions. Recognizing that human talent is widespread, federal government agencies have long supported a program to develop academic research capability in states that are less competitive in obtaining federal research grants. See sidebar Established Program to Stimulate Competitive Research for an overview of the program and recent statistics on its activities.
Federal funding of academic S&E R&D, by agency and field: FY 2016
Institutional Support for Academic R&D
Notwithstanding the continuing dominant federal role in academic R&D funding, nonfederal funding sources have grown steadily over the past 20 years (Figure 5-2). Adjusted for inflation, nonfederal funding for academic R&D grew at a 4.5% average annual rate between 1997 and 2016, compared with a 3.6% average annual growth rate for federal funding for academic R&D. Growth has been particularly strong in institutions’ own funds, the largest source of nonfederal funding. In 2016, institutional funds reached $18 billion (25% of the total) (Appendix Table 5-2). This share grew rapidly from only 11% in 1973 to around 18% by 1990 (Figure 5-1). With some fluctuation, universities’ and colleges’ share of R&D spending increased more slowly during the decades of 1990–99 and 2000–09. With the infusion of federal ARRA funds, the institutional share dipped slightly in 2010 and 2011 but has since climbed to 25%, its highest-ever share (Figure 5-1; Appendix Table 5-2).
In addition to internal funding from general revenues, institutionally financed R&D includes unrecovered indirect costs and committed cost sharing (discussed in greater detail as follows, where differences between public and private research institutions are highlighted).
Institutionally financed research includes organized research projects fully supported with internal funding and all other separately accounted-for institutional funds for research. This category does not include funds spent on research that are not separately accounted for, such as estimates of faculty time budgeted for instruction that is spent on research. Funds for institutionally financed R&D may also 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 and licenses or revenue from patient care to support R&D. (See Chapter 8 section USPTO Patenting Activity for a discussion of patent and licensing income.)
Other Sources of Funding
State and local government funds
State and local governments provided $4 billion (5.6%) of academic R&D funding in 2016. Public institutions received over 90% of the total (Figure 5-1; Appendix Table 5-2). The state and local government funding share has declined from a peak of 10% in the early 1970s to below 6% in recent years. However, actual amounts may be understated, particularly for public institutions, because they reflect only funds specifically targeted for R&D, while general-purpose funds may be designated by the recipient institutions for R&D or indirect cost recovery and may thus show up as institutional research support. (See State Indicators for some indicators of academic R&D by state, and see Chapter 2 section Trends in Higher Education Expenditures and Revenues for a discussion of trends in higher education spending and revenues.)
Nonprofit organizations provided $4.6 billion (6.4%) of academic R&D funding in 2016 (Appendix Table 5-4). About two-thirds of nonprofit funding (66%) is directed toward R&D in life sciences, with health sciences being the largest recipient field within life sciences.
Businesses provided $4.2 billion (5.9%) of academic R&D funding in 2016, slightly less than the amount provided by nonprofit organizations and slightly more than that provided by state and local governments (Figure 5-1; Appendix Table 5-4). Business funding is largely directed toward R&D in the life sciences (61%) and engineering (25%).
In 2016, all other sources of support, such as foreign-government funding or gifts designated for research, accounted for $2.2 billion (3%) of academic R&D funding (Appendix Table 5-4).
Academic R&D Expenditures, by Field
The life sciences have long accounted for the bulk of research spending: $41 billion in 2016, 57% of the total. The other S&E fields, in declining order of expenditures, are engineering (16%), physical sciences (7%), geosciences (4%), social sciences (3%), computer sciences (3%), psychology (2%), and mathematical sciences (1%) (Appendix Table 5-5). Together, the non-S&E fields constitute 6% of total spending. In addition, just under 2% of academic R&D spending is allocated toward sciences that include multidisciplinary or interdisciplinary work that could not be classified within a broad field. This estimate is not comprehensive of all multidisciplinary or interdisciplinary R&D. HERD asks respondents to categorize their spending within the various S&E fields to the maximum extent possible. When R&D spans more than one field, the survey asks respondents to estimate how much is in each field.
Over the past decade, engineering grew faster than the other S&E fields, at an average annual rate of more than 3% after adjusting for inflation. Computer sciences, life sciences, social sciences, and psychology each grew by roughly 2%–3% annually. The mathematical, physical, and geosciences grew more slowly, at around 1% or less annually. All fields of S&E saw slower average annual growth in recent years (from 2006 to 2015) than earlier (from 1996 to 2005) (Table 5-6).
Growth of academic R&D expenditures, by field: FYs 1997–2016
The largest field for academic R&D, life sciences, at $41 billion, accounted for 57% of total academic spending and a slightly smaller share (56%) of federally supported academic R&D in 2016 (Appendix Table 5-4). Within life sciences, health sciences accounted for more than one-half of this field’s spending (and 31% of total academic R&D), while biological and biomedical sciences constituted just under one-third of spending in the life sciences (and 18% of total academic R&D). The remainder was spread between agricultural sciences (just under 5% of total academic R&D), natural resources and conservation, and other life sciences—life sciences R&D that could not be classified into one of the subfields. Academic R&D expenditures in health sciences almost doubled from 1995 to 2004 and then grew more slowly from 2005 to 2016. The sizeable increase from 1995 to 2004 resulted, in large part, from a near doubling of NIH’s budget from 1998 to 2003.
In 2016, universities spent $11.4 billion on academic R&D in engineering, the second largest field for academic R&D after the life sciences (Appendix Table 5-4). Engineering R&D—constituting 16% of total academic R&D spending and a slightly higher share (17%) of federal spending—has generally seen robust growth over the past decade. Bioengineering and biomedical engineering ($1.1 billion in 2016) and aerospace engineering ($883 million) each grew steadily over the past decade. Although these engineering fields are smaller in size than electrical ($2.5 billion), mechanical ($1.4 billion), and civil engineering ($1.3 billion), they grew faster over the past decade. Bioengineering and biomedical engineering grew by more than 75%, and aerospace engineering grew by just under 65% from 2006 to 2016 after adjusting for inflation. Chemical engineering ($885 million) grew by just under 30%, and metallurgical engineering ($772 million) increased by only 7% after adjusting for inflation (Appendix Table 5-5).
The remaining six broad fields of S&E, as well as multidisciplinary or interdisciplinary science that has not otherwise been apportioned among fields, together accounted for about 21% of total spending in 2016. Spending in physical sciences totaled $4.9 billion. These sciences—consisting of physics, chemistry, astronomy, and materials science—constituted 7% of total spending and a slightly higher share (8%) of federal spending in 2016 (Appendix Table 5-4). In 1995, by contrast, spending in physical sciences constituted more than 10% of total academic R&D spending that year (and more than 12% of federal spending).
At $3.1 billion in 2016, spending on academic R&D in geosciences was distributed among atmospheric, geological, and ocean sciences. In 2016, geosciences constituted about 4% of academic R&D and a slightly higher share (5%) of federal spending (Appendix Table 5-4). Among the geosciences, only atmospheric science grew from 2007 to 2016 after adjusting for inflation (23%). Inflation-adjusted spending decreased in geological and ocean sciences.
Universities spent $2.4 billion on R&D in social sciences in 2016. This spending constituted 3% of total spending and a lesser share (2%) of federal spending. Spending was fairly evenly distributed among economics, political science, and sociology, each receiving roughly 15%–20% of total social sciences funding, while the smaller field of anthropology received a smaller share (4%). The remainder (42%) was spent on archaeology, criminology, geography, linguistics, urban studies, and other disciplines (Appendix Table 5-4).
With academic R&D spending levels of $2 billion or less each in 2016, computer sciences, psychology, and mathematical sciences are the smallest broad S&E fields. Universities spent $2 billion on R&D in computer sciences, just over $1 billion in psychology, and just under $700 million in mathematical sciences.
Universities spent $4.2 billion in non-S&E fields in 2016. This spending constituted just under 6% of total spending and a much smaller share (3%) of federal spending. Spending was mainly allocated among education R&D (at $1.4 billion), business management ($650 million), and humanities ($435 million). The remaining non-S&E fields, including communications, law, and social work, each spent less than $210 million on R&D in 2016 (Appendix Table 5-4 and Appendix Table 5-5).
Academic R&D, by Public and Private Institutions
For their research support, private universities rely more than their public counterparts on the federal government (60% versus 51% of their total R&D) (Figure 5-4). Conversely, public institutions derive more of their R&D funds from state government sources than private ones (8% versus 1% of their total R&D).
Institutional funds, as noted earlier, play a prominent role in academic R&D spending, particularly by public universities. In 2016, public universities paid for about 27% of their R&D from their own institutional funds, while private universities paid for a smaller share (21%) (Table 5-7). Public and private institutions reported similar proportions of unrecovered indirect costs in their institutional total (28% versus 29%) (Table 5-8).
In addition, private universities rely somewhat more than their public counterparts on R&D funding from businesses (6.7% versus 5.4%) and nonprofit organizations (8.1% versus 5.6%) (Figure 5-4).
Total and institutionally funded R&D expenditures at universities and colleges, by fiscal year, institution type, and Carnegie classification: FYs 2012–16
Higher education R&D expenditures at all universities and colleges financed by institutional funds, by source, fiscal year, institution type, and Carnegie classification: FYs 2012–16
Sources of R&D funding for public and private academic institutions: FY 2016
Academic institutions' funds exclude research funds spent from multipurpose accounts.
National Science Foundation, National Center for Science and Engineering Statistics, Higher Education Research and Development Survey (HERD), FY 2016. See Appendix Table 5-2.
Science and Engineering Indicators 2018
Distribution of R&D Funds across Academic Institutions
Academic R&D expenditures are highly concentrated in a relatively small number of institutions. In 2016, out of approximately 3,000 baccalaureate-, master’s-, and doctorate-granting institutions, 640 reported spending at least $1 million on R&D. The top-spending 20 institutions accounted for more than 30% of total academic R&D spending in 2016, and the top-spending 100 institutions accounted for just under 80%. The relative shares of the large research universities have been remarkably stable over the past two decades (Figure 5-5).
The more numerous public institutions account for a significant share of overall academic R&D spending (Appendix Table 5-2). Among the top 100 universities and colleges in academic R&D expenditures in 2015, approximately two-thirds were public, and one-third was private (Appendix Table 5-6).
Share of academic R&D, by institution rank in R&D expenditures: FYs 1997–2016
Totals for FYs 1996–2002 represent R&D expenditures in S&E fields only. Beginning in FY 2003, totals include R&D expenditures in S&E fields and non-S&E fields. However, from FY 2003 through FY 2009, some institution totals may be lower-bound estimates because the National Science Foundation did not attempt to estimate for nonresponse on non-S&E R&D expenditures before FY 2010.
National Science Foundation, National Center for Science and Engineering Statistics, Higher Education Research and Development Survey (HERD). See Appendix Table 5-6.
Science and Engineering Indicators 2018
Collaboration via Pass-Through Funding
In recent years, pass-through funding arrangements for collaborative projects among universities and other institutions have continued to grow in similar fashion to overall academic R&D spending. In 2016, public universities and colleges provided $2 billion in pass-through funds to other educational institutions and an additional $1.5 billion to other subrecipients. Their private counterparts provided $1.1 billion in pass-through funding to other higher education entities and about the same amount ($1 billion) to other subrecipients. Public universities received just under $2 billion in pass-through funds from other educational institutions and an additional $2.8 billion from other entities. Their private counterparts received $1.1 billion in pass-through funds from other higher educational institutions and about the same amount (just over $1 billion) from other entities. In a reflection of federal initiatives to encourage collaborative research, the large majority (over 80%) of pass-through funding arrangements are federally financed (Appendix Table 5-7).