Academic R&D spending has grown significantly over the past half century, reaching nearly $90 billion in 2021 compared with $255 million in 1953 (not adjusting for inflation) (NCSES HERD 2021: Table 1).^{​Unless otherwise noted, all of the data and indicators in this section are based on the NCSES HERD Survey of spending in 2021 that was published in 2022. For the HERD Survey, NSF asks institutions of higher education that spent at least $150,000 in annual R&D to report the amounts they spent for separately budgeted R&D activities as well as the sources of those funds. Financial data are in constant 2012 dollars and are reported for the respondents’ most recent fiscal years.} The federal government has been the largest funder of academic R&D since 1953; in 2021, federal funding supported 55% of academic R&D spending. Academic institutions were the second largest source of funding for academic R&D, contributing 25% of the funds. The remainder was funded by businesses, nonprofit organizations, state and local governments, and other sources, such as overseas funding (Figure URD-4). The shares of funding provided by different sources have shifted gradually over time. The share contributed by the federal government has declined from 61% in 2012 to 55% in 2021 (Figure URD-5). The federal government’s emergency funding for academic R&D during the COVID-19 pandemic in 2020 and 2021 did not reverse this trend. Although the federal government overall contributes the greatest share of funds spent on academic R&D each year, in 2021, six agencies provided more than 90% of the federal funds spent in academic R&D (Table URD-1). The Department of Health and Human Services (HHS), largely through the National Institutes of Health (NIH), has provided more than half of federal support over that period.

The share of R&D spending funded by the academic institutions themselves rose concurrently with the decrease in the share funded by the federal government, increasing from 21% in 2012 to 25% in 2021 (Figure URD-5).^{​Spending funded from “institutional sources” as reported in the HERD Survey includes institutionally financed research, cost sharing other than unrecovered indirect costs, and unrecovered indirect costs. Institutional sources do not include funding from general state appropriations spent on R&D (which are accounted as state and local government support) or philanthropic grants designated for research (accounted as support from nonprofit organizations). This amount does include funds spent from an institution’s own affiliated foundation directed at research activities, encompassing start-up packages, bridge funding, and seed funding for faculty; competitively awarded internal research grants; other departmental grants designated for research; and tuition assistance for students working on organized research. Spending on research administration and similar support services is considered an indirect cost and therefore is reported as part of federal funding support.} Between 2012 and 2021, spending funded by institutional support increased by nearly 40% (Figure URD-4). Nonprofit organizations funded about 6% of academic R&D spending in 2021, representing an increase of about 17% between 2012 and 2021 in constant dollars (NCSES HERD 2021: Table 2). Business also funded around 6% of academic R&D spending in 2021 (Figure URD-5), increasing by about 30% between 2012 and 2021 in constant 2012 dollars (Figure URD-4), reflecting in part industry’s growing reliance on research results flowing from academia. State and local governments funded around 5% of academic R&D spending in 2021 (Figure URD-5), which, in constant dollars, reflected an increase of approximately 8% since 2012 (Figure URD-4).

All other sources of support for academic R&D—such as foreign governments, other universities, or gifts from individual donors directed to research funding—provided a relatively small share of funding for U.S. academic R&D. In 2021, those sources supported 3% of academic R&D spending (Figure URD-5), compared with 1.5% of all academic R&D spending in 2012. Overall, support from foreign sources (firms, universities, governments, nonprofits, and others) amounted to approximately 1.5% of academic R&D spending in 2021 (NCSES HERD 2021: Table 1 and Table 15).