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 editorial director of 1105 Media's Education Technology Group and editor-in-chief of THE Journal and STEAM Universe. A 25-year publishing veteran, Nagel has led or contributed to dozens of technology, art and business publications.

He can be reached at You can also connect with him on LinkedIn at or follow him on Twitter at @THEJournalDave (K-12) or @CampusTechDave (higher education).

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