Finances

The Fraunhofer-Gesellschaft’s research work is oriented toward concrete applications and results. Pure basic research, as practiced at universities, is funded to almost 100% by public grants. Industrial R&D, up to prototype level, is largely financed by private enterprise.

The Fraunhofer-Gesellschaft receives funding both from the public sector (approximately 30%) and through contract research earnings (roughly 70%). As a consequence, the Fraunhofer-Gesellschaft operates in a dynamic equilibrium between application-oriented fundamental research and innovative development projects.

 With tremendous effort from everybody involved and the support of funding agencies, the Fraunhofer-Gesellschaft once again succeeded in overcoming the effects of the pandemic in 2021. The results for 2021 show subdued growth of 3 percent, with a current total business volume of around €2.9 billion. Contract research accounted for 86 percent of this sum (around €2.5 billion) and represents the organization’s core activity. Around one third of contract research funding is provided by base funding from the federal and state governments. Research of a long-term nature that falls outside the scope of this regular base funding is allocated to a new item, additional research funding, which amounted to €163 million in the reporting period. Major infrastructure capital expenditure amounted to €234 million. These three segments will be discussed in greater detail in the following sections.

Business volume is based on the performance statement, which meets the requirements of the funding agencies. In the operating budget, personnel and non-personnel expenses are recognized according to general accounting practice along with the change in the extraordinary item “License-fee revenue reserve for statutory purposes.” As capital expenditure is recognized at the amount incurred at the time of purchase, depreciation, amortization and impairment losses are not included in the performance statement. In 2021, Fraunhofer’s capital expenditure amounted to €470 million overall, a 16 percent share of the total business volume. Personnel expenses increased to €1,642 million, which can be attributed to a 1.4 percent increase to the pay scale that took effect on April 1, 2021 and to slight growth in the number of employees. At €803 million, non-personnel expenses slightly exceeded the previous year. The reserve fund balance remained unchanged in 2021; however, it was used in the course of the year to cover liquidity requirements.  

Contract research is the mainstay of Fraunhofer’s business  activities and, in line with the Fraunhofer funding model,  consists of three core areas, each contributing equal amounts  to the organization’s finances: 

• Research directly contracted by industry 
• Publicly funded research projects 
• Pre-competitive research financed through base funding  

In 2021, the base funding requirement amounted to €780 million.  Base funding is provided by the German Federal Ministry  of Education and Research (BMBF) and the state governments  in a ratio of 90:10. An additional €93 million in federal  government funding for applied research by non-university  research institutions enabled Fraunhofer to adopt measures  for retaining expertise, particularly internal pre-competitive  research projects aimed at delivering a powerful kickstart to  the industry sector as it makes its way out of the crisis. Initial  signs of recovery could be seen in industrial revenue, which,  at €723 million, returned to pre-crisis levels in absolute terms.  Revenue from industry contracts rose to €609 million and  license-fee revenue grew to €114 million.  Revenue from publicly-funded projects once again showed  a significant increase, and continued to serve as an important  source of support during the second year of the pandemic. 

Project funding from state governments jumped sharply by  20 percent to €236 million. Project funding from the federal  government also grew by 14 percent to €554 million. At  €93 million, EU revenue was on a par with the previous year.  In the coming year, the new Horizon Europe framework program  offers considerable potential for the Fraunhofer Strategic  Research Fields in particular. Other revenue increased by 8 percent  to €132 million, and includes funding granted by foundations,  universities and other research-funding institutions.