Who Funds University Research and Where Is the Headroom for Growth?
A recent New York Times analysis found that 2025 NIH grant funding was about 13% below the 2015 to 2024 average, with roughly 22% fewer awards. Given this significant drop in NIH funding, it's more important than ever to understand who funds university research and where there is opportunity for growth.
The Long View: HERD Survey Data
The NSF Higher Education Research and Development (HERD) Survey has tracked U.S. university R&D funding since 1953. Over that time, total university R&D funding has grown from about $0.3B in 1953 (~$3.5B in 2023 dollars) to nearly $109B in 2023 (~31x growth).
The Mix of Funding Sources Is Surprisingly Stable
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Federal funding is still the anchor, making up about 55% of all university R&D in both 1953 and 2023, after a peak in the 1960s.
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Universities have much more of their own skin in the game, with institutional funding rising from roughly 14% to 26% of total R&D.
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State support has faded in relative terms, with its share dropping from about 15% to 5%.
Since 2010, HERD has broken out nonprofit organizations (foundations and other grantmaking nonprofits) separately. By FY 2023, universities reported about $6.7B from nonprofits and $6.2B from business, each roughly 6% of total R&D and together equal about 20% of federal R&D funding.
Two Important Realities
1. Most traditional sources are constrained:
Federal, state, institutional, and business funding are all limited by tight budgets, existing obligations, and short-term pressures. HERD shows business support stuck in the mid single digits for decades. Most corporate R&D is tied to products and services, not fundamental research.
2. Nonprofit headroom is huge:
Nonprofits already funding at least one university distribute $100B+ in annual grants, yet only $6.7B shows up as university R&D in HERD.
Where the Growth Opportunity Lies
If the goal is new research funding:
| Source | Headroom | Constraints |
|---|---|---|
| Federal | Limited | Budgets and politics |
| State | Limited | Declining share, budget pressures |
| Business | Limited | Tilted toward commercialization |
| Nonprofits | Large | Long tail of foundations largely untapped |
Nonprofits, especially the long tail of foundations already giving to higher education, represent the largest untapped opportunity for university research funding.
Sources: NSF HERD Survey, 1953 to 2023; IRS Form 990 & 990-PF analyses