Fraunhofer-Gesellschaft
Fraunhofer-Gesellschaft

Finances

The consistent market orientation of Fraunhofer’s research contributes decisively to its impact. This is rooted in its mission, is embodied in the Fraunhofer model, and is key to the ongoing success of Fraunhofer's innovations on the market. The Fraunhofer model is unique in the highly specialized German science landscape: No more than one-third of Fraunhofer's budget comes from institutional funding (base funding from the German federal and state governments) while at least two thirds of its funding stems from competitive private- and public-sector contracts. The aim is to strike a balance between private- and public-sector revenue. The resulting pressure to acquire contracts — compared to organizations whose budget largely stems from institutional funding — fosters entrepreneurial thinking and activities. This ensures that the Fraunhofer-Gesellschaft continuously develops solutions for the economic and social needs of today and tomorrow.

Fraunhofer’s financing is thus based on three pillars: base funding, funding from industry contracts and competitively acquired public-sector project funding. As a non-profit organization, we do not pursue financial gain. Any surpluses are used to promote research in line with our statutes. The base funding that Fraunhofer receives as institutional funding from the German federal and state governments is used in accordance with our mission for pre-competitive research for the benefit of industry and society.

The Fraunhofer-Gesellschaft operates numerous institutes and research units in Germany. Around 70 percent of Fraunhofer’s contract research revenue is derived from industry contracts and publicly financed research projects. The remaining 30 percent come from the German federal and state governments in the form of base funding. This enables the institutes to work on solutions that will become relevant for industry and society within the next five to ten years. 

The Fraunhofer-Gesellschaft’s total business volume 2019–2023

Total business volume 2019-2023

In business terms, 2023 was a successful year for Fraunhofer. The total business volume amounted to €3.4 billion, having increased by a substantial 12 percent compared with the previous year. Contract research accounted for 88 percent of this sum (€3.0 billion) and represents the organization’s core activity. Around one-third of contract research funding is provided by base funding from the German federal and state governments. Research with long-term funding that falls outside the scope of this regular base funding is allocated to a new item, additional research funding, which amounted to €249 million
in the reporting period. Major infrastructure capital expenditure amounted to €164 million.

2023: Total business volume by budget in € million

Total business volume 2019-2023

Business volume is based on the performance statement, which meets the requirements of the grant authorities. 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 2023, Fraunhofer’s capital expenditure amounted to €581 million overall, a 17 percent
share of the total business volume.

Personnel expenses increased by 9 percent to €1,920 million. This is due primarily to a 5 percent increase in permanent staff and to one-time payments to compensate for inflation as part of the collective agreement reached in 2023. At €921 million, non-personnel expenses were 13 percent higher than in the previous year, owing to factors including higher energy and material prices and an increase in externally financed project volume. The reserve was used during 2023 to cover liquidity requirements. €18 million net was released to provide funds to establish high-performance centers, to equip Fraunhofer institutes with solar photovoltaic systems and to fund strategically important formats aimed to promote the acquisition of shareholdings.

Revenue from contract research 2019–2023

Revenue from contract research in € million 2019-2023

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 2023, the base funding requirement increased by 16 percent to €824 million. Base funding is provided by the German Federal Ministry of Education and Research (BMBF) and the state governments at a ratio of 90:10. Industrial revenue rose by 6 percent to a new high of €836 million. While revenue from contracts with industry increased by 8 percent to €679 million, license-fee revenue from industry stood at €157 million, slightly below the high level seen in the previous year.

2023: Revenue from publicly-funded projects in € million

2023: Revenue from publicly-funded projects in € million

Revenue from publicly funded projects increased significantly again in 2023. Project funding from the German federal government, in particular, jumped by 21 percent to €802 million. Within this, the revenue of the BMBF increased by 18 percent to €406 million, the funding of the Federal Ministry for Economic Affairs and Climate Action (BMWK) by 15 percent to €267 million and the revenue of the other
federal ministries by 54 percent to €129 million.

Project funding provided by the German state governments decreased by 5 percent to €232 million after a sharp increase in preceding years. There was a significant rise in EU revenue, which was up 28 percent to stand at €114 million. Other revenue increased by 46 percent to €183 million and includes funding granted by foundations, universities and other research-funding institutions.

In 2023, this figure also includes €19 million in reimbursements under the German Energy Price Brake Act (Energiepreisbremsengesetze) and an extraordinary insurance claim payment of €13 million for the Fraunhofer Institute for Technological Trend Analysis INT based on the flooding in 2021.

Funding share 2019–2023

Funding share in %

In addition to being one of the Fraunhofer institutes’ criteria for success, the high share of funding coming from external project revenue is a unique selling point for the Fraunhofer-Gesellschaft. The project funding share therefore serves both as a key performance indicator and as a barometer for establishing an optimal funding mix in contract research. It is calculated as the share of project revenue in the operating budget, including imputed depreciation of capital assets (excluding project groups and special effects on the balance sheet regarding reserves and provisions).

Due to the significant increase in revenue from publicly funded projects, the project funding share rose again to 76.4 percent in 2023. The share of funding provided by the German federal and state governments increased to 36.3 percent. At 29.7 percent, the share of industrial revenue was at the same level year over year.

Additional research funding 2019–2023

Additional research funding in € million

Additional research funding covers research activities with long-term funding outside the scope of regular base funding. In addition to defense-related research, the National Research Center for Applied Cybersecurity ATHENE and the Fraunhofer Research Institution for Battery Cell Production FFB fall under additional research funding.

ATHENE is operated jointly by the Fraunhofer Institutes for Secure Information Technology SIT and Computer Graphics Research IGD in collaboration with Technical University of Darmstadt and Darmstadt University of Applied Sciences. Its research focuses on the protection of critical infrastructures such as power and transportation and the safeguarding of IT systems. The center applies an interdisciplinary approach, combining IT and engineering with legal and economic issues, psychology and ethics. ATHENE is funded by the BMBF and the federal state of Hesse in a ratio of 70:30 and recorded a budget of €24 million in 2023.

With expenses of €84 million, the development of the FFB continued to gain momentum in 2023. The BMBF is providing a total of €500 million in funding for this large-scale initiative through project finance. The state of North Rhine-Westphalia is providing an additional €200 million for the construction of a building to house the new facility in Münster. The FFB is to become the center for developing modern and scalable battery cell production for Germany and Europe.

In the field of defense research, Fraunhofer has pooled the research and development (R&D) activities of seven institutes that receive base funding and ongoing project funding from the German Federal Ministry of Defence (BMVg). The objective of these R&D activities is to provide people, infrastructures and the environment with the best possible protection against potential security threats resulting from natural disasters or military, technological, terrorist or criminal activity. Defense research expenses remained at the previous year’s level of €141 million in 2023. A small increase of €4 million in the base funding provided by the BMVg brought the total to €87 million, while project funding from the same ministry decreased by €5 million to €54 million.

Major infrastructure capital expenditure 2019–2023

Additional research funding covers research activities with long-term funding outside the scope of regular base funding. In addition to defense-related research, the National Research Center for Applied Cybersecurity ATHENE and the Fraunhofer Research Institution for Battery Cell Production FFB fall under additional research funding. ATHENE is operated jointly by the Fraunhofer Institutes for Secure Information Technology SIT and Computer Graphics Research IGD in collaboration with Technical University of Darmstadt and Darmstadt University of Applied Sciences. Its research focuses on the protection of critical infrastructures such as power and transportation and the safeguarding of IT systems. The center applies an interdisciplinary approach, combining IT and engineering with legal and economic issues, psychology and ethics. ATHENE is funded by the BMBF and the federal state of Hesse in a ratio of 70:30 and recorded a budget of €24 million in 2023. With expenses of €84 million, the development of the FFB continued to gain momentum in 2023. The BMBF is providing a total of €500 million in funding for this large-scale initiative through project finance. The state of North Rhine-Westphalia is providing an additional €200 million for the construction of a building to house the new facility in Münster. The FFB is to become the center for developing modern and scalable battery cell production for Germany and Europe. In the field of defense research, Fraunhofer has pooled the research and development (R&D) activities of seven institutes that receive base funding and ongoing project funding from the German Federal Ministry of Defence (BMVg). The objective of these R&D activities is to provide people, infrastructures and the environment with the best possible protection against potential security threats resulting from natural disasters or military, technological, terrorist or criminal activity. Defense research expenses remained at the previous year’s level of €141 million in 2023. A small increase of €4 million in the base funding provided by the BMVg brought the total to €87 million, while project funding from the same ministry decreased by €5 million to €54 million.

Major infrastructure capital expenditure comprises building projects and the purchase of scientific instruments and furniture to equip new facilities. At €164 million, investments in construction and equipping of new facilities were 13 percent lower than in the previous year, as external influences continued to have a delaying effect on the outflow of spending for construction activities. This includes, in particular, fixed periods from the European Regional Development Fund (ERDF) and increased requirements for funded construction. The amount spent on building projects decreased by €19 million to €133 million, of which €98 million related to major and €35 million to minor building projects. Investments in equipping of new facilities decreased by €6 million to €31 million.

Special funding for major building projects and the equipping of new facilities is provided by the federal and state governments in a ratio of 50:50. The state governments often provide additional funding from the European Regional Development Fund (ERDF), which reduces the funding required from federal and state governments by an equivalent amount. Minor building projects are financed from joint base funding in a ratio of 90:10. The funding required from the German federal and state governments totaled €143 million. ERDF funds from the German state governments and other revenue accounted for €21 million of project revenue.