Federal Funding for Academic Research

The federal government's role in supporting research and development (R&D) in the United States has grown from a very minor one for much of the nation's history to one that was dominant during much of the twentieth century, and finally to one that at the beginning of the twenty-first century is still significant and essential but has been eclipsed in scale by industry-supported R&D. Federal support for R&D in colleges and universities paralleled this pattern in the first half of the twentieth century but has remained the primary source of R&D funding for these institutions.

Why does the federal government support R&D at all, especially if the private sector invests so much in it? First, the federal government supports R&D that clearly serves important national needs, for example, in areas such as national defense, health, energy, the environment, natural resources, and agriculture. Second, the federal government supports most of the nation's basic or fundamental research–research that is not directed toward any practical problem but is focused on gaining knowledge or understanding phenomena irrespective of any specific application. History is full of examples of such apparently abstract, undirected research providing the basis for applications that prove to be extremely important–for example, disease-fighting medicines, weapons for national defense, and the growth of information technology. According to Albert H. Teich, basic research is "the primary source of the new knowledge that ultimately drives the innovation process" (p. 6). Historically, however, such fundamental research has not been supported on a significant scale by the private sector. Private firms anticipate that they will not be able to appropriate sufficient benefits from basic research to make sizable investments in it cost-effective. Nevertheless, such research is acknowledged by all to be vital to long-term national interests, and so its support is undertaken by the federal government.

Industry and federal research laboratories rank ahead of colleges and universities in terms of federal R&D funding received (see Figure 1). Yet despite their relatively small share of federal R&D support, colleges and universities historically have played an essential role in the nation's overall R&D efforts, for several reasons. First, much of the nation's greatest scientific and technical talent is in these institutions. Second, colleges and universities are particularly well-suited for performing basic research, although they perform a great deal of applied research as well. In 2000 basic research accounted for 69 percent of all college and university R&D. Third, federally funded research at colleges and universities (whether basic or applied) plays a crucial role in educating the next generation of scientists and engineers. It is an investment in the nation's most highly skilled workforce,

FIGURE 1

which in turn will be the backbone of an innovative, growing national economy.

A Brief History of Federal Involvement in University-Based Research

The development of federal involvement in university-based R&D is intertwined with the broader issue of federal involvement in science and technology (S&T) in the United States. Federal involvement in scientific or technical matters was explicitly provided for in the U.S. Constitution only in the provisions for a system of patents and for a census to be held every ten years. For decades in the early history of the country, the doctrine of states' rights (preventing a concentration of authority in the federal government) together with a strain of populist antielitism and a faith in the indigenous development of pragmatic technologies kept the nation from realizing either Thomas Jefferson's vision of strong federal support for science, largely through agriculture, or Alexander Hamilton's advocacy of government subsidies for the advancement of technologies to the benefit of industry. From time to time, the U.S. Congress would deviate from this stance and invest in limited operations in support of exploratory or commercial interests, such as the Lewis and Clark expedition or the establishment of the Coast Survey, both in the early 1800s.

In the 1840s, two events–the establishment of the Smithsonian Institution under federal auspices and the creation of the American Association for the Advancement of Science–highlighted the growing visibility of S&T and foreshadowed the later development of a more significant federal involvement in science and technology. These events, together with what William G. Wells Jr. called a "tide of technological developments … in industry, in agriculture, in communications, and in transportation" (p.8) in the 1850s, set the stage for a qualitative change in the federal role in these areas; this change came in the 1860s as a result of several events. First, the Civil War provided the first of several recurring examples of war focusing the government's attention and resources not just on technology but on the science underlying the technology. Second, the creation of the National Academy of Sciences in 1862 put the elite of American scientists, most of them in universities, at the service of governmental needs. Third, the passage of the Morrill Act and the creation of the U.S. Department of Agriculture, both of which occurred in 1862, established the land-grant college system, heavily focused on agriculture and the mechanical arts, and developed government bureaus related to agricultural research, in a symbiotic relationship that, by the end of the nineteenth century, approached the Jeffersonian vision of a century earlier.

Meanwhile, in the late nineteenth and early twentieth centuries, the forerunner of the National Institutes of Health was established and undertook programs of research aimed at public-health problems, although much of this work took place in government rather than in university laboratories. Additional initiatives putting governmental resources in the service of S&T-based activities in the areas of conservation, industry, and (to a limited extent) aviation took place in the first two decades of the twentieth century. These did not yet involve significant amounts of university-based R&D, but their importance was that, with the curious exception of military applications, the essential infrastructure of federal government involvement in S&T was firmly in place by the 1920s, and, according to A. Hunter Dupree, "a government without science was already unthinkable" (p. 288). Belief in the importance of research had become infused throughout much of the U.S. economy, and industrially based R&D was becoming established in certain industries.

Science, like nearly all other programs, was significantly affected by government cutbacks during the Great Depression. But it was World War II (1939–1945) that was to provide the major turning point in the relationship between the federal government and S&T in the twentieth century. With the establishment by executive order of the National Defense Research Committee in June 1940 and its expansion into the Office of Scientific Research and Development (OSRD) in July 1941–both prior to the attack on Pearl Harbor and the formal entry of the United States into the war–the groundwork was laid for a historically incomparable system for mobilizing science for a war effort. The OSRD, headed by Vannevar Bush, was responsible for developing "a wide range of militarily decisive marvels" (Wells, p.23), such as radar, medical drugs, and, of course, atomic weapons. This performance demonstrated beyond any doubt the power and effectiveness of federal support for R&D on a large scale, a lesson that carried over into the postwar era and that continued into the twenty-first century. Much of this research took place in university settings, and the massive expansion of federal R&D in the period following World War II included large increases in the amount of federal funds flowing to academically based R&D (see Figure 1).

Vannevar Bush's report, Science–the Endless Frontier: A Report to the President on a Program for Postwar Scientific Research, produced at the close of World War II, set the framework for the "social contract" between science and government that would last for decades, whereby government would provide funds for science but, wherever feasible, leave to scientists the decisions about what projects would be supported and how the research would be conducted. This, it was argued, was the surest path not only to breakthroughs in basic science but also indirectly to the development of products for more direct societal benefit. Bush, in writing it, had clearly in mind the idea that much of that research would be conducted in colleges and universities. In the period immediately following the war, a number of major new S&T agencies were created in the federal government, including the National Science Foundation (NSF), the Atomic Energy Commission, and the Office of Naval Research (ONR); in addition, the National Institutes of Health (NIH) was reformulated and significantly expanded. These agencies–particularly ONR, NIH, and NSF–were soon to become mainstays of federal support for academically based R&D.

Much of the rapid growth in federal R&D in the decades following World War II was driven by cold war concerns and was militarily oriented. The launch of the Sputnik satellite by the Soviet Union in 1957 shook U.S. assumptions of technical superiority and fueled an even greater increase in defenseand space-related R&D. In the 1950s and 1960s the federal government was clearly the dominant source for national R&D, although by the early 1970s industrial R&D had caught up and was to move clearly ahead in total investments in R&D over the next three decades (see Figure 2).

Figure 3 illustrates the remarkable growth of R&D support received by colleges and universities over the latter half of the twentieth century. (The figures have been adjusted for inflation, using fiscal year 2002 as the standard, and so represent actual growth in "purchasing power" of those R&D dollars.) The figure dramatically shows not only the overall growth in academic R&D support from all sources but also that this growth was fueled primarily by the growth in federal support. The federal government has been the primary source of support for

FIGURE 2

R&D in colleges and universities since the post–World War II days, and it continues to be so.

The 1980s saw an important step in federal government–university relations, with the passage (in 1980) and subsequent amendment (in 1984) of the Bayh-Dole Act. This act revised federal patent policy to give recipients of federal funds who invented or developed a product or process with that funding the opportunity to hold title to the item and to realize gains from transferring it into commercial channels. Previously, the federal government had reserved for itself the title to products developed with federal funds, but that policy was seen as bottling up potentially useful and commercializable inventions. Opinions differ about the act's full impact, but it clearly facilitated the growth of activities within universities for retaining intellectual property in items developed under university-based research and for trying to realize income from outside commercial use of those items.

The last two decades of the twentieth century saw the clear movement of research universities into a prominent place in the "knowledge-based economy." Research support from all sources, not simply federal agencies, became much more aggressively sought, and university R&D portfolios were much more carefully managed with revenue and even commercial goals in mind. It became common knowledge that one of the key elements to commercial development of a region through technology-driven change was the presence of an active, high-quality research university. Consequently, more than ever before, a university's neighbors feel that they have an important stake in that institution's success in securing research funds. Furthermore, according to Teich, "policymakers regard universities as catalysts for high-tech economic development both through entrepreneurial activity that spins off from their research and through the concentrations of highly trained human resources they attract and generate" (p. 5).

Table 1 helps to place federal funding for academic R&D in an overall national context at the beginning of the twenty-first century. Federal R&D funding accounted for $69.6 billion (roughly 26%) of the national total of $264.6 billion for R&D in 2000. Colleges and universities received $30.2 billion

FIGURE 3

from all sources in 2000, which accounted for just over 11 percent of the national totals. The intersection of these two patterns–the federal level of support for R&D in colleges and universities–was $17.5 billion, a figure that represented 58 percent of all academic R&D support. (It also represented just over 25 percent of total federal R&D support to all R&D performers.) The next section provides further detail about particular agencies and their levels of academic R&D support.

Key Federal Agencies

Federal support for R&D in colleges and universities in the United States is concentrated in six agencies, which together accounted for 95 percent of the totals in 1999. These six are summarized briefly below, in decreasing order of support. The first three agencies listed–NIH, NSF, and the Department of Defense–alone accounted for 83 percent of college and university R&D from federal sources in 1999. (See Figure 4 for historical trends in support from these agencies.)

The National Institutes of Health, within the Department of Health and Human Services, is by far the largest source of federal support for academic R&D, providing $8.2 billion to colleges and universities in 1999–58 percent of federal support to these institutions. The NIH's mission is to advance knowledge promoting improvements in human health, and it does this by supporting biomedical and other fundamental research related to health and disease. The major fields supported by NIH are overwhelmingly in the life sciences (89% of its academic support in 1997), principally microbiology and medical sciences. Other fields that receive NIH support are psychology (4%), the physical sciences (1.5%), and the social sciences (1%). NIH's domination of academic R&D support has shifted the balance among the disciplines in universities' R&D portfolios, with engineering and the physical sciences accounting for smaller shares than in previous years.

The National Science Foundation ranks second in R&D support to colleges and universities, furnishing $2.2 billion in 1999, or 15 percent of federal totals. NSF is unique among federal agencies, being the only one whose mission is fundamental research and education in all major scientific and engineering fields. Thus, NSF's support is more evenly balanced among the disciplines than most of the mission agencies. The distribution in 1997 was: physical sciences,

TABLE 1

22 percent of NSF academic support; engineering, 21 percent; environmental sciences, 17 percent; life sciences, 16 percent; computer sciences and mathematics, 15 percent; and the social and behavioral sciences, 4 percent.

The Department of Defense (DoD) is the third-largest federal agency in terms of support for academic R&D, providing $1.4 billion in 1999, or 10 percent of federal totals to colleges and universities. DoD is the mission agency par excellence, being responsible for providing the military forces needed to deter or win wars and to protect the security of the country. DoD is by far the largest supporter of R&D among the federal agencies. Most of its R&D, however, is devoted to the development, testing, and evaluation of weapons systems, and only about 12 percent of its R&D has gone for actual research (both basic and applied) in recent years. The major fields supported by DoD academic R&D funds are engineering (40% of DoD academic support in 1997), computer sciences (23%), physical sciences (11%), and life sciences and environmental sciences (at about 10% each).

After the above three, the levels of support by other agencies drop off noticeably. The National Aeronautics and Space Administration (NASA) provided $719 million in support to colleges and universities in 1999, which was about 5 percent of federal totals to these institutions. NASA's mission is to undertake aeronautic and space research and activities for the benefit of all humankind. The major fields receiving NASA academic R&D support were physical sciences (37%–principally astronomy), environmental sciences (29%–mostly atmospheric science), engineering (15%), and life sciences (9%).

The Department of Energy contributed $598 million toward R&D in colleges and universities in 1999, about 4 percent of federal support for them. The Energy Department's mission is much broader than simply energy, and even its R&D programs have several components, including energy research, support for fundamental physical science research, and research involving nuclear security in support of the nation's defense function. The physical sciences (dominated by physics) received 59 percent of Department of Energy support to academic institutions, followed by life sciences, engineering, and environmental sciences, each with about 13 percent.

The U.S. Department of Agriculture (USDA) supported R&D in colleges and universities with $400 million in 1999, nearly 3 percent of federal totals to such institutions. The USDA's mission is also broad but centers on its responsibility for the adequacy

FIGURE 4

and safety of the nation's food supply and for developing and expanding markets, both domestically and abroad, for agricultural products. Its academic R&D support, not surprisingly, went overwhelmingly (77%) to the life sciences, comprised largely of agricultural sciences (39%), nonenvironmental biology (21%), and environmental biology (15%). The next highest supported fields were the social sciences (12%), primarily economics.

All other federal agencies combined accounted for $739 million of support to academic institutions in 1999, or about 5 percent of the federal totals. This is not to diminish their importance, however. The Departments of Commerce, Transportation, Interior, and Education and such agencies as the Environmental Protection Agency support appreciable amounts of research in colleges and universities, and they rely upon those institutions to provide important research and expertise relevant to their respective missions.

Advantages and Disadvantages of Federal Research Support

Not surprisingly, research support from federal sources has both advantages and disadvantages. The chief advantage is the sheer scale of support–for most fields, there is simply more money potentially available from federal agencies than from any other source. The decentralized nature of federal R&D support sometimes makes it possible for principal investigators (those submitting proposals) to have more than one potential sponsor to which to submit their ideas. Another advantage is that the researcher usually has greater autonomy with federal support in comparison with support from industry. For most grants (as opposed to private contracts), federal agencies have a relatively hands-off stance regarding the researchers and their work.

Because both the scale of support and the relative autonomy afforded researchers attract large numbers of proposals from researchers, most agencies are quite selective in what they support and pride themselves on supporting only the highest quality work. To ensure this level of excellence, many agencies rely upon "peer review" or "merit review" (review of proposals by those most knowledgeable in the relevant areas of research). In addition, the managers of particular research programs within the agencies are often highly accomplished and knowledgeable researchers in their own right. Thus, there is a certain prestige attached to researchers whose work is supported by certain federal agencies, particularly NSF and NIH. This prestige can carry over not only to the researchers' own careers generally but also to their home institutions.

On the other hand, federal support has disadvantages as well. The forces that make winning support from the "better" agencies more prestigious–because of the sheer number of applicants relative to the available resources–also make it less likely. Success rates for proposals to NSF and NIH since 1990 and perhaps earlier have been in the 20 and 30 percent range. Eventual success often comes only through resubmitting proposals after revising them based on feedback from the first round of reviews. The high number of applicants also means that grants, even if obtained, may be inadequately funded to complete the proposed research.

In addition to these daunting considerations, the paperwork requirements for submitting proposals to federal agencies are formidable. Researchers spend inordinate amounts of time and effort writing proposals, often with unfavorable chances of success. (As some agencies have shifted to electronic submission of proposals, "paperwork" may no longer be the operative word, but the burden of documentation in proposals remains very high.) Apart from the paperwork burden, the task of dealing, over the several months required for decisions on proposals, with inherently cautious, often ponderous federal bureaucracies can be draining for researchers. Finally there is often a lack of stability in funding levels for some areas of research, resulting from the vagaries of the annual budget process and from changes in policymakers' enthusiasm for particular areas.

The cumulative effect of these difficulties can extend to the point of discouraging some students from pursuing scientific careers. For many, if they could simply do their science, they would be happy. But when they see that they will also have to expend so much effort in trying to obtain funding, with so little chance of success, some may turn to other career options.

There is no question that both the nature and the scale of federal funding for R&D has transformed colleges and universities over the past century, especially in the last several decades. The relationship has always been, and continues to be, a dynamic one, filled with both rewards and tensions. A central question for the future is whether that relationship can continue to be a productive one, in which each partner can grow and adapt while also retaining the core of its purpose and identity, in ways that clearly benefit the public.