Funding | Research

Businesses and Nonprofits Increase Higher Ed R&D Spending as Federal and State Contributions Decline

Businesses and nonprofit organizations increased their contributions to higher education R&D in fiscal 2012 while state and federal contributions dipped.

According to the latest Higher Education Research and Development (HERD) Survey from the National Science Foundation, businesses contributed $3.28 billion in university research and development funding, accounting for about 5 percent of total reported university R&D expenditures of $65.8 billion in 2012. That's up by $101 million from FY 2011 and represents a slightly larger percentage of overall R&D expenditures (an increase of 0.12 percentage points).

Nonprofits, meanwhile, increased their higher ed R&D expenditures to $4.03 billion in FY 2012 (6.1 percent of total expenditures), up from $3.85 billion in FY 2011.

Institutions also increased their R&D spending — by more than $1 billion. Institutional spending totaled $13.67 billion in 2012 (20.79 percent of the total), up from $12.6 billion in 2011.

State and local governments combined accounted for 5.63 percent of university R&D expenditures at $3.7 billion, but that was off by more than $125 million from 2011's figure of $3.83 billion.

The federal government still made up the largest chunk of R&D expenditures by far (61 percent), but federal spending shrank in 2012 to $40.13 billion, down from $40.77 billion in 2011.

According to the NSF, a significant portion of the drop was attributable to a decrease in ARRA spending: "Higher education R&D expenditures funded by the American Recovery and Reinvestment Act of 2009 (ARRA) decreased from $4.2 billion in FY 2011 to $2.4 billion in FY 2012. ARRA funding represented 6 percent of the federally funded R&D expenditures for FY 2012."

Overall, higher ed R&D expenditures grew to $65.78 billion in 2012, up from $65.27 in 2011. However, when adjusted for inflation, the total was actually lower in 2012 by about 1.1 percent.

"This represents the first constant-dollar decline since FY 1974 and ends a period of modest growth in higher education R&D during FYs 2009-11, when R&D expenditures increased an average of 5 percent each year."

About the Author

David Nagel is the executive producer for 1105 Media's online K-12 and higher education publications and electronic newsletters. He can be reached at He can now be followed on Twitter at (K-12) or (higher education). You can also connect with him on LinkedIn at

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