SCIENCE & ENGINEERING INDICATORS

R&D conducted by higher education institutions (“academic R&D”) is a key component of the overall U.S. R&D system. In 2017, the higher education sector performed 13% of the overall $548 billion in U.S. R&D, a proportion that has fluctuated within a narrow range for several decades (Figure 5b-1; NCSES NP 2018: Table 2).^{​Data in this section are drawn from the National Center for Science and Engineering Statistics National Patterns of R&D Resources, the same source used in Indicators 2020 report “Research and Development: U.S. Trends and International Comparisons.” Totals from this source may differ from those used in the rest of the report, which are from the Higher Education Research and Development Survey (2010 onward) and its predecessor, the Survey of Research and Development Expenditures at Universities and Colleges (1972–2009), for reasons outlined in more detail in endnote 4. The 13% in this sentence is calculated based on $71.3 billion in higher education R&D expenditures from NCSES NP 2018.} Although universities perform all types of R&D, they have long been the nation’s largest performers of basic research. For examples of basic research, see National Institutes of Health (2019).^{​A concise description of the differences between basic and applied research is available at http://www.sjsu.edu/people/fred.prochaska/courses/ScWk170/s0/Basic-vs.-Applied-Research.pdf.} After a period of increase beginning in the early 1990s, the proportion of U.S. basic research performed by the higher education sector declined from 58% in 2007 to 48% in 2017.^{​U.S. basic research in 2017 totaled $91.5 billion. Businesses were the second-largest performer of basic research (27%).} Higher education institutions also performed about 18% of all U.S. applied research and 2% of all U.S. experimental development in 2017; these percentages have increased over the last 10 years.

The federal government provides more R&D funding to higher education than to any other sector, including federal intramural R&D (NCSES NP 2018: Table 6). In 2017, the higher education sector performed around 30% of all federally funded R&D, a proportion that has generally increased over time (Figure 5b-2; NCSES NP 2018: Table 6). Academic institutions performed around 60% of federally funded basic research, 27% of federally funded applied research, and 6% of federally funded experimental development. The share of federally funded basic research performed by universities declined from a high of 64% in 2008 while the shares of applied research and of experimental development increased since then.

In inflation-adjusted dollars, total academic R&D has grown every year since 1975, and in 2018, academic institutions performed $79.4 billion in R&D (NCSES HERD 2018: Table 1).^{​In the rest of this report, financial data on academic R&D are drawn from the National Center for Science and Engineering Statistics (NCSES) Higher Education Research and Development (HERD) Survey (2010 onward) and its predecessor, the Survey of Research and Development Expenditures at Universities and Colleges (1972–2009). HERD data are in current-year dollars and are reported on an academic year basis. For example, FY 2018 covers July 2017–June 2018 for most institutions and is referred to in this report as 2018. Comparisons over more than 1 year are made in inflation-adjusted constant 2012 dollars using gross domestic product implicit price deflators based on calendar year. Gross domestic product deflators come from the U.S. Bureau of Economic Analysis and are available at https://www.bea.gov/national, accessed August 2019. The totals presented from HERD differ from similar totals reported in NCSES’s National Patterns of R&D Resources and Indicators 2020 report “Research and Development: U.S. Trends and International Comparisons.” These other sources remove approximately $6 billion in pass-through funds that are double-counted in the HERD totals because such funds are counted by the universities initially receiving the money and by the universities to which the funds are passed. These other sources also present calendar year approximations based on fiscal year data.} Nearly two-thirds (62% in 2018, or around $49 billion) of the R&D performed by academic institutions is basic research, a percentage that has declined slightly in recent years (NCSES HERD 2018: Table 7). After a long period of increase, federal support for basic research at academic institutions has declined over the last 10 years (Figure 5b-3; note that the federal amounts in this figure include funds from ARRA). Basic research support from nonfederal sources has continued to increase. Around one-quarter of university R&D is applied research, and around one-tenth is development (NCSES HERD 2018: Table 8). Applied research, and development, have increased slightly since 2010 as percentages of overall academic R&D.^{​Applied research has increased from 25% to 28%, and development has increased from 9% to 10%.} Federal and nonfederal support for applied research and development increased (Figure 5b-3).

Most academic R&D is funded by a small number of sources (Figure 5b-4). The federal government is by far the largest funder of academic R&D, although its share of total academic R&D has declined. Academic institutions themselves are the second-largest funder, and their share of total academic R&D has grown. Nonprofit organizations and businesses contribute small but slowly growing shares, while the share from state and local governments has declined.

The federal government is the largest funder of academic R&D, providing more than half (53%, or around $42 billion) of total funds in 2018 (Figure 5b-5). When adjusted for inflation, federal funding for higher education R&D increased by 1.8% between 2017 and 2018 (Figure 5b-6; NCSES HERD 2018: Table 1). After several previous years of declining funding levels, federal funding for academic R&D has increased by 5% since 2015.

In the federal government, six agencies provide more than 90% of support for academic R&D (Figure 5b-7). HHS, largely through the National Institutes of Health, is by far the largest, providing more than half (55%, or $22.9 billion) of federal support in 2018. The Department of Defense (14%, or $5.9 billion) and NSF (13%, or $5.3 billion) are next, followed by DOE (4%, or $1.8 billion), NASA (4%, or $1.5 billion), and USDA (3%, or $1.2 billion).^{​The remainder, $3.3 billion (8%), is awarded by all other federal agencies.} The percentage of total federal academic R&D funding provided by each of these agencies has changed little over the last 10 years.^{​The largest changes were the funding shares of the Department of Defense, which increased from 10% in 2008 to 14% in 2018, and HHS, which decreased from 58% to 55% during this same interval.}

Institutional support represents an increasingly larger share of total academic R&D (Figure 5b-8). Institutions provided more than $20 billion of academic R&D funding in 2018 (Figure 5b-5), and institutional funds constituted more than one-quarter of university R&D, up from less than one-fifth in 2010. When adjusted for inflation, institutional funding for higher education R&D increased by nearly 50% between 2010 and 2018. The increase over this period, while faster than in the past, continues a longer-term trend of a rising share of institutional funds; for comparison, institutions contributed 11%–12% of academic R&D funds in the early to mid-1970s.

Institutionally funded R&D expenditures include three main components: direct funding for R&D, cost sharing, and unrecovered indirect costs.^{​Unrecovered indirect costs are calculated as the difference between an institution’s negotiated indirect cost rate on a sponsored project and the amount that it recovers from the sponsor. Committed cost sharing is the sum of the institutional contributions required by the sponsor for specific projects (mandatory cost sharing) and the institutional resources made available to a specific project at the discretion of the grantee institution (voluntary cost sharing). For more on unrecovered indirect costs, see the section Cost Components of Academic R&D.} Each has increased since 2012, with the largest increase in direct funding for R&D (Gibbons 2019: Figure 2).

Institutionally financed research includes organized research projects fully supported with internal funding and all other separately accounted-for institutional funds for research. It 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 derive from sources including 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. For more on the topic of institutional funding sources, see Council on Governmental Relations (2019).

Precise accounting of institutionally financed R&D is difficult, and the trends described here represent increased institutional contributions to R&D and improved measurement of those contributions over time.^{​The accounting systems or administrative practices of some universities, including some with highest research activity, do not enable the separation of the R&D component of multipurpose accounts. Because the HERD Survey measures only spending that is fully budgeted as R&D for these institutions, reported institutional funds are less than the full amount of academic R&D that the schools fund. More details on efforts to improve the measurement of institutionally financed R&D are in the HERD Technical Notes, available at https://ncsesdata.nsf.gov/herd/2018/herd18-tech-notes.pdf.}

Nonprofit organizations provided $5.4 billion (about 7%) of academic R&D funding in 2018 (Figure 5b-5). When adjusted for inflation, nonprofit funding for higher education R&D increased by about 27% between 2010 and 2018, representing a big rise from a small base.

Businesses provided $4.7 billion (around 6%) of academic R&D funding in 2018 (Figure 5b-5). When adjusted for inflation, business funding for higher education R&D increased by about 28% between 2010 and 2018. As with nonprofit funding, this represents a big rise from a small base.

State and local governments provided $4.3 billion (around 5%) of academic R&D funding in 2018 (Figure 5b-5). When adjusted for inflation, state and local government funding for higher education R&D declined by more than 3% between 2010 and 2018.

In 2018, all other sources of support—such as foreign-government funding, other universities, or gifts designated for research—collectively accounted for $2.5 billion (3%) of academic R&D funding (Figure 5b-5). About half ($1.3 billion) of these funds come from foreign sources. More detail on funding from foreign sources is available in NCSES HERD 2018: Table 14.

Most academic R&D is performed by a small percentage of U.S. higher education institutions. Out of approximately 4,400 postsecondary degree-granting institutions in the United States (Indicators 2020 report “Higher Education in Science and Engineering”), fewer than 1,000 reported R&D expenditures in 2018.^{​The 2018 HERD Survey included 915 institutions that had reported $150,000 or more in R&D expenditures during the previous fiscal year. For more detail on the survey population, see (NCSES HERD 2018: Table A-4).} An even smaller number of universities, the 115 doctoral universities with highest research activity, perform three-quarters of all academic R&D. Public and private institutions show different patterns of support, as do institutions with medical schools.^{​Whether an institution is operated by publicly elected or appointed officials, or by privately elected or appointed officials and derives its major source of funds from private sources, is referred to as its control.}

Academic R&D and doctoral training often occur at the same higher education institutions, as reflected by the historic partnership between the federal government and the nation’s research universities to integrate basic scientific research performance with the education and training of the next generation of scientists and engineers (National Research Council 2012). The 115 doctoral universities with highest research activity, based on Carnegie classification, performed three-quarters ($59.4 billion) of all U.S. academic R&D in 2018 and awarded around the same percentage of U.S. S&E doctoral degrees (Indicators 2020 report “Higher Education in Science and Engineering”).^{​The Carnegie Classification of Institutions of Higher Education (http://carnegieclassifications.iu.edu/) is widely used to characterize differences in academic institutions. The Basic Classification categorizes academic institutions primarily based on highest degree conferred, level of degree production, and research activity. This report uses the 2015 Carnegie classification. This categorization does not include some academic institutions that are top R&D performers but whose training programs are exclusively focused on a small number of fields (i.e., exclusively biomedically focused institutions). Note that although the 2018 Carnegie classification contains revised names and institutional memberships in some categories, it does not change the main findings in this report. In 2018, the Carnegie-classified “highest research activity” doctoral universities received around three-quarters of the totals provided by each main academic R&D funding source, with the exception of state and local government funding (about 63%). These institutions also received the vast majority of funds from the top six federal agencies, ranging from 70% (USDA) to 86% (DOE).} Even in this group, R&D activity is concentrated in relatively few institutions: the top 25 R&D performers among the highest research activity doctoral universities are responsible for nearly half ($29 billion) of total R&D performed by these types of institutions and more than one-third of the national total. The concentration of most R&D activity in a small number of institutions is a long-standing trend (see Indicators 2018: Figure 5-5 for illustration).

Although only about one-third of doctoral-granting institutions are public universities (Indicators 2020 Table 2-1), they performed two-thirds ($52.1 billion) of academic R&D in 2018 (NCSES HERD 2018: Table 69). Additionally, more public universities than private universities report R&D expenditures.^{​Of the 915 institutions included in the 2018 HERD Survey, 523 (57%) were public institutions and 392 (43%) were private institutions (NCSES HERD 2018: Table A-4). Among the 115 highest research activity doctoral universities, 81 (70%) are public. Among the 60 U.S. institutions that are members of the Association of American Universities, 34 (57%) are public (https://www.aau.edu/who-we-are/our-members). Additionally, public universities, although less numerous overall, tend to be larger, as they enroll more students and award more degrees (Indicators 2020 report “Higher Education in Science and Engineering”).} The top 25 public universities performed $23.8 billion in R&D, around 46% of the public university total (NCSES HERD 2018: Table 36). The concentration of R&D performance in a few institutions is greater in private universities: the top 25 performed $20.9 billion in R&D, more than three-quarters of the total performed by private universities (NCSES HERD 2018: Table 37).^{​These summations are of top R&D performers overall and include some institutions not in the highest research activity category. Johns Hopkins University includes the Applied Physics Laboratory, with $1.5 billion in total R&D expenditures in FY 2018.}

The relative shares of funding sources differ between public and private institutions (Figure 5b-9). Private universities receive a higher proportion of their academic R&D funding from the federal government (nearly 60%) compared with public universities (50%). Public universities derive a higher percentage from their own institutional funds and from state and local governments.

Public and private institutions also differ in the relative importance of particular federal agencies as funding sources (Figure 5b-10). For example, private universities derive more than one-third of their R&D funding from HHS, compared with about one-quarter for public universities. Although USDA provides a relatively small amount of academic R&D funding, public universities, primarily land grant universities, derive a much higher proportion of funds from this agency.^{​In 2018, public universities received $1.1 billion (92%) of USDA’s funding for academic R&D. Almost all of that funding ($1.0 billion) went to the 77 public land grant institutions reporting expenditures.}

In 2018, 156 institutions with medical schools reported R&D expenditures (NCSES HERD 2018: Table 18 and Table 71).^{​A total of 94 of these universities are public, and 62 are private.} These institutions, around half of which are also doctoral universities with highest research activity, performed nearly $56 billion of academic R&D, or 70% of the total.^{​Of the 115 doctoral universities with “highest research activity,” 71 reported medical school expenditures, including 47 public universities and 24 private universities.} Roughly half of these expenditures ($28 billion) were associated with the medical schools themselves, whereas the other half were associated with other parts of these same institutions.

Institutions with medical schools received nearly $31 billion from the federal government (nearly three-quarters of all federal funding for academic R&D), including $20.1 billion from HHS, or about 88% of the HHS total. The remainder comes from nonfederal sources and constitutes two-thirds of nonfederal funding for academic R&D. Institutions with medical schools received more than half the funding from each federal agency except USDA and from each main type of nonfederal funding source except state and local government (Figure 5b-11).

The relative amount of resources provided to different fields has changed little over the last 10 years. The life sciences—primarily biological and biomedical sciences and health sciences—have long accounted for the bulk of academic R&D: $45.8 billion in 2018, more than half the total (Figure 5b-12; NCSES HERD 2018: Table 12). Life sciences and engineering ($12.4 billion, or 16%) together constitute nearly three-quarters of academic R&D, with other fields making up smaller shares of 7% or less. Consistent with the overall pattern, academic R&D funding across most broad S&E fields comes primarily from the federal government, with academic institutions themselves as the second-largest source. In the federal government, each federal agency funds a portfolio across fields that is consistent with its mission.

The percentage of total academic R&D funding provided by the federal government varies across fields, from around 35% for social sciences to nearly 70% for computer and information sciences in 2018 (Figure 5b-13).^{​As shown in Figure 5b-13, the percentage of total support for non-S&E fields provided by the federal government was lower, at less than 30%.} Although life sciences receive the most resources, funding for academic R&D in this field is split nearly evenly between the federal government and nonfederal sources.

Each of the six primary federal agencies that sponsor academic R&D funds a portfolio across fields consistent with its mission (Figure 5b-14). For example, the vast majority ($20 billion, or nearly 90%) of the academic R&D funded by HHS is in life sciences. Around 80% ($1.4 billion) of DOE’s academic R&D funding is in physical sciences and engineering. NSF supports substantial amounts of academic R&D across a range of S&E fields. Unsurprisingly, agencies’ academic R&D support patterns across S&E fields largely mirror their support patterns for graduate students (Indicators 2020 Figure 2-4).^{​However, the amount of academic R&D provided by each agency is not proportional to the number of graduate students supported. For example, for the most recent year of data, HHS funded more than four times as much academic R&D as NSF but supported about the same number of graduate students as NSF.}

In each S&E field, the portion of R&D supported by specific agencies differs (Figure 5b-15). For example, HHS provides 84% of total federal support for academic R&D in life sciences and about two-thirds of such support for psychology. NSF contributes just under half of total federal academic R&D funding for mathematics and statistics, as well as significant portions of the totals for several other fields. Agencies sometimes target funds narrowly to specialized fields (NCSES HERD 2018: Table 13). USDA, for example, provides around two-thirds of federal support for academic R&D in agricultural sciences (most of this support is allocated to public land grant universities). NASA provides around two-thirds of federal support for academic R&D in astronomy and astrophysics, and NSF provides nearly half the federal support for academic R&D in anthropology.

Unlike federal agencies, nonfederal academic R&D sources represent aggregations of funders, each of which may have its own funding priorities. However, in 2018, more than half of the total funding from each type of nonfederal academic R&D source—academic institutions themselves, nonprofit organizations, businesses, and state and local governments—was allocated to life sciences (Figure 5b-16). Engineering was the second-largest recipient for all but nonprofit funding. Underlying this pattern were smaller-scale differences in how these types of sources allocated funds. Businesses, for example, devoted nearly a quarter of their total academic R&D funding to engineering and less than 1% to social sciences. Nonprofit organizations, by contrast, devoted slightly more funds to social sciences than engineering (around 7% for each).

Academic institutions contributed half or more of nonfederal academic R&D funding for all broad fields (Figure 5b-17; NCSES HERD 2018: Table 12). Nonprofit organizations contributed nearly one-quarter of total nonfederal academic R&D funding for social sciences. Businesses contributed around one-fifth of nonfederal academic R&D funding for engineering. State and local governments contributed smaller percentages more uniformly divided among a range of fields.

Academic R&D expenditures are composed of direct and indirect costs (NCSES HERD 2018: Table 16; see also Council on Governmental Relations ). According to a report from the National Research Council, direct costs of research are those that can be attributed to a specific project, such as researcher salaries, travel, and the costs of laboratory materials. Indirect costs include outlays for facilities and administration, including library costs and other elements that support multiple projects or an institution’s entire research program (National Research Council 2012).^{​An infographic displaying the difference between direct and indirect costs is available at https://www.aau.edu/sites/default/files/Costs-of-Research-Infographic.pdf. The history of indirect cost reimbursement in the context of the university–government research partnership is reviewed in Droegemeier (2017).} A key distinction between these types of costs is that while funders, including the federal government, pay the direct costs of R&D, they may also reimburse institutions for all or part of the indirect costs associated with that R&D.

In 2018, direct costs were around three-quarters ($61.0 billion) of total academic R&D spending. The largest direct cost component includes the salaries, wages, and fringe benefits of those who conduct the R&D; in 2018, this was $34.8 billion, or around 44% of total academic R&D spending. Other direct cost components include software and equipment purchases, as well as funds passed to subrecipients.

Indirect costs include those recovered by institutions and unrecovered costs for which institutions are not reimbursed.^{​The academic R&D reported here includes separately accounted-for R&D and related recovered indirect costs. It also includes committed cost sharing and institutional estimates of unrecovered indirect costs associated with externally funded R&D projects. Some indirect costs are recovered as a result of indirect-cost proposals that universities submit based on their actual costs from the previous year.} The relationship between levels of federal funding and levels of institutional funding, including the unrecovered indirect cost component, is complex. As mentioned earlier, precise accounting of institutionally financed R&D is difficult, and funds may be derived from many sources (for more, see Council on Governmental Relations ; Droegemeier ). As shown in Gibbons 2019: Figure 2, while the total amount of unrecovered indirect costs increased slightly in inflation-adjusted dollars between 2012 and 2018 (from around $4.6 billion to $5.0 billion), institutional direct funding for research increased much faster (from $7.7 billion to $12.0 billion). During this time, unrecovered indirect costs as a percentage of total institutionally funded R&D expenditures decreased from around one-third to around one-quarter.

As a percentage of total indirect costs, unrecovered indirect costs are higher for public institutions (around 35%) than for private institutions (around 23%) (NCSES HERD 2018: Table 16). However, when compared with total institutional spending on R&D, the proportions are about the same.^{​Unrecovered indirect costs as a percentage of total institutional spending on R&D were about 27.5% for private universities and 27.0% for public universities.}