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.

Fraunhofer total business volume 2021–2025

At €3.6 billion, the total business volume remained at the previous year’s level. Contract research is the Fraunhofer-Gesellschaft’s core activity, accounting for 88 percent of its total business volume, equivalent to €3.2 billion. Fraunhofer wins more than two-thirds of its contract research projects in open competition in the market while striving to maintain a balance between industrial revenue and public-sector revenue. The funding base is provided through institutional funding from the German federal and state governments. Research with long-term funding that falls outside regular institutional funding is reported under a new item, additional research funding, which amounted to €219 million in the reporting period. Spending on major infrastructure amounted to €203 million, which includes €23 million in investments in the APECS pilot line under the EU Chips Act.

2025: Total business volume by budget

The total business volume encompasses personnel and nonpersonnel expenses in accordance with generally accepted accounting principles. It also includes capital expenditure at the full amount without depreciation and amortization. Starting in 2025, amounts drawn from reserves will no longer be offset against expenses. As a result, the total business volume now corresponds to the expenses reported in the income statement and excludes changes in the financing of current assets. Personnel expenses amounted to €2,106 million in 2025. The 2 percent year-on-year increase was primarily due to the pay rise under the German Collective Bargaining Agreement for the Public Service (Tarifvertrag für den öffentlichen Dienst, TVöD), which came into effect on April 1, 2025. Non-personnel expenses were recognized at €942 million. In contrast, capital expenditure declined significantly, falling by 10 percent to €526 million. Overall, the total business volume was in line with the previous year’s forecast.

Project revenue from contract research 2021–2025

Contract research

Contract research encompasses Fraunhofer’s core activities and is financed from three revenue streams:

Industry contracts and license-fee revenue
Publicly funded research projects
Institutional funding

Institutional funding is provided by the German Federal Ministry of Research, Technology and Space (BMFTR) and the state governments in the ratio of 90:10. This forms the basis for groundbreaking pre-competitive research that will become important for the private sector and society in the years ahead.

Despite the strained economic climate, Fraunhofer’s industrial revenue exceeded expectations, rising by 11 percent to €966 million. Revenue from contracts with industry increased by 9 percent to €768 million. License-fee revenue from industry amounted to €198 million. After being adjusted to account for a special effect on the balance sheet, this is equivalent to a 12 percent increase.

At 48.0 percent, more than half of industrial revenue is attributable to customers from the manufacturing sector in line with the European Community’s system for classifying business sectors (NACE classification). Within this sector, the greatest total share of industrial revenue comes from projects with customers operating in the manufacture of computer, electronic and optical products, basic pharmaceutical products, electrical equipment and motor vehicles, or of machinery and equipment. The second largest share of industrial revenue, 27.8 percent, comes from customers engaged in professional, scientific and technical activities. These include, for example, companies in research and development, engineering firms and patent pool management companies.

2025: Revenue from publicly funded projects

At €1,254 million, the revenue from publicly funded projects generated in 2025 was lower than in the previous year. Project funding from the German federal government decreased by 11 percent to €755 million. Along with a decline in revenue from the German Federal Ministry of Research, Technology and Space (BMFTR), which fell by 8 percent to €413 million, the funding received from the German Federal Ministry for Economic Affairs and Energy (BMWE) decreased by 15 percent to €226 million, while funding received from other federal ministries fell by 14 percent to €116 million.

In contrast, the project funding received from the German state governments rose by 23 percent to €186 million following a significant decline the previous year. EU revenue also increased, rising by 9 percent to €157 million. This figure includes additional revenue from funding for the APECS pilot line. Other revenue increased by 3 percent to €156 million, including revenue from foundations, universities and other research funding institutions, and license-fee revenue of €2 million from customers outside of industry.

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 share of project funding therefore serves both as a key performance indicator and as a guide 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). At 71.1 percent, the share of externally generated revenue in 2025 was in line with the previous year. Within this figure, the share of project funding from the German federal and state governments fell to 30.1 percent, while the share of industrial revenue increased to 31.0 percent.

International revenue from industry contracts rose by 6 percent to €217 million, while other revenue increased by 10 percent to €19 million. €88 million of the total came from customers and partners within the EU and €148 million was generated by customers and partners outside the EU. The largest international markets were the U.S. with revenue of €40 million, Switzerland with €32 million and Japan with €21 million.

Additional research funding 2021–2025

Additional research funding

Additional research funding covers research activities with longterm funding outside the scope of regular institutional funding. In addition to defense-related research, this includes the National Research Center for Applied Cybersecurity ATHENE and the Fraunhofer Research Institution for Battery Cell Production FFB.

ATHENE is operated jointly by the Fraunhofer Institute for Secure Information Technology SIT and the Fraunhofer Institute for Computer Graphics Research IGD in collaboration with the Technical University of Darmstadt, the Darmstadt University of Applied Sciences and Goethe University Frankfurt. Its research focuses on the protection of critical infrastructure such as electricity and transportation systems and the security of IT systems. The center takes an interdisciplinary approach, combining IT and engineering with legal and economic issues, psychology and ethics. ATHENE is funded by the BMFTR and the federal state of Hesse at a ratio of 70:30 and had a budget of €26 million in 2025.

The development and operation of the Fraunhofer FFB incurred expenses of €31 million in 2025. The BMFTR is providing a total of up to €500 million in funding for this large-scale initiative through project finance. Another €320 million is being provided by the federal state of North Rhine-Westphalia for land acquisition and new construction. Fraunhofer FFB is to become the center for developing modern, sustainable and scalable battery cell production for Germany and Europe.

In the field of defense research, Fraunhofer has consolidated the research and development activities of seven Fraunhofer institutes that received institutional funding and ongoing project funding from the German Federal Ministry of Defence (BMVg) in 2025. The objective of these R&D activities is to provide people, infrastructure and the environment with the best possible protection against potential security threats resulting from natural disasters or military, technological, terrorist or criminal activity. Following a significant increase in the previous year, expenditure on defense research fell to €162 million. Institutional funding from the BMVg decreased by €5 million to €93 million, while project funding from the BMVg fell by €11 million to €69 million.

Major infrastructure 2021–2025

Major infrastructure

Major infrastructure covers building projects and the purchase of scientific instruments and furnishings for new facilities. Expenditure on the construction and equipping of new facilities rose to €180 million. Expenditure on building projects rose by €11 million to €159 million, most of which (€113 million) was attributable to large-scale building projects. Capital expenditure on equipping new facilities increased by €2 million to €21 million. Special funding for major building projects and the equipping of new facilities is provided by the federal and state governments in a 50:50 ratio. 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. The funding required from the German federal and state governments totaled €177 million. ERDF funds from the German state governments and other revenue accounted for €3 million of project revenue.

Beginning in 2025, investments in the Advanced Packaging and Heterogeneous Integration for Electronic Components and Systems (APECS) infrastructure project, which is being implemented under the EU Chips Act, will be reported separately under “Major infrastructure.” With total funding amounting to €730 million, APECS is being co-financed by the European partnership Chips Joint Undertaking and by national funding from eight European countries. Two-thirds of the German funding is being contributed by the German Federal Ministry of Research, Technology and Space (BMFTR), while one-third is being provided by the participating federal states (see “National and European large-scale projects”). In 2025, the APECS pilot line received €23 million in capital expenditure through project funding under “Major infrastructure.” Expenditure of €54 million on the preliminary project Quantum and Neuromorphic Computing Modules (QNC), which was completed at the end of 2025 and forms part of the APECS pilot line, was again reported under contract research.

Finances

Fraunhofer total business volume 2021–2025

2025: Total business volume by budget