Government funding

Federal and state government financial support for research essentially consists of:

• Institutional funding: In the case of institutional funding, the government directly finances over 1,000 non-university research institutes and approx. 270 public higher education institutions as well as the DFG research funding organisation. Over 40 per cent of Germany’s federal R&D budget – 7.3 billion euros in 2020 – is spent on this kind of financial support. The country’s federal states provide an additional 2.7 million euros in institutional funding.
  
   Project funding: Direct project funding is allocated to concrete areas of research and is implemented through programmes. This funding does not only benefit higher education institutions and research facilities, but also companies. However, unlike direct institutional funding, project funding is short- to medium-term in nature. Indirect project funding primarily supports the research work of smaller and medium-sized research institutes and enterprises.
  
   Departmental research: Ministries play a special role in the funding of science and research. They channel the federal share of funds and define their own key areas through specific programmes and more than 40 federal institutions with R&D responsibilities. German states and municipalities also act as research funding bodies and operate roughly 140 state-level research institutions that support state research activities. These institutes cover a broad range of research areas. In addition to the research carried out by federal and state research institutions themselves, research contracts are also awarded to third parties.
   
• R&D tax incentives: R&D tax incentives are another instrument for direct project funding. Companies of any size can apply for a tax incentive for R&D projects; this is based on expenditure for R&D personnel and for commissioned research.
   
• Innovation agencies: the German government has created a flexible new funding instrument, the innovation agencies, that are intended to drive forward disruptive innovations. The newly founded Federal Agency for Disruptive Innovation – SPRIN-D aims to support outstanding actors, among other things in further developing ideas with disruptive innovation potential through concrete projects. Likewise new, the Agentur für Innovation in der Cybersicherheit (Agency for Innovation in Cybersecurity) (only in German) is aimed at developing innovative technologies in the area of cybersecurity.

Fundamentally, Germany’s approx. 270 public higher education institutions are funded by the Länder, whose autonomy in cultural and educational matters is anchored in the Basic Law. However, the Federal Government and the states also cooperate when it comes to support for science, research and teaching. Projects of supraregional importance, such as the Excellence Strategy and the Pact for Research and Innovation, are funded jointly.

In addition, the Federal Government finances large-scale scientific research projects (for example, in the fields of aviation, space, marine or nuclear research). Researchers from German universities participate in research projects involving internationally leading large research infrastructures, such as the Large Hadron Collider (LHC) at CERN in Switzerland or the new European XFEL X-ray laser facility near Hamburg.

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