New Sources Fill US R&D Funding Gap

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Total US R&D funding increased a mere 1.7% in 2016 to $457.7 billion in constant 2009 dollars, according to the latest estimates published last week by the National Science Foundation (NSF). This compares to a 3.0% boost in fiscal 2015.

The latest figures highlight the shift in funding sources for R&D performed by US businesses, higher education institutions and nonprofit organizations; namely, the declining role of the federal government as a source for R&D funding.

Source: NSF

 

One much discussed trend has been the increase in business funding for R&D at higher education institutions in response to declining federal funding. The latest NSF figures confirm this pattern, showing that the share of higher education funding from business has steadily risen over the past six years from 5% in 2011 to 6%, or $3.6 billion, in 2016. But measured in percentage points, the increase has not kept up with the decline in the share of federal funding as a source for higher education R&D expenditures, which has declined from 60% in 2011 to 51%, or $30.7 billion, in 2016.

 

Source: NSF

Also increasing their funding, seemingly to fill the gap left by a decrease in federal funding, has been universities and colleges themselves. Higher education’s percentage of its own funding for R&D has jumped from 22% in 2011 to 28%, or $11.3 billion, in 2016. But the share of total R&D funding from the federal government for higher education institutes has dropped to 51% in 2016 from 60% over five years.

Source: NSF

The same pattern is evident for nonprofits. As a source of R&D spending, federal government funding for these institutions has decreased from 37% to 31% from 2011 to 2016.  Nonprofits themselves have stepped in to fill the gap, with the share of their own R&D funding rising from 56% in 2011 to 61% in 2016. However, business funding for nonprofit R&D has barely risen, hovering at around 8% over the five-year period.