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.

The Fraunhofer-Gesellschaft’s total business volume 2018–2022

Despite difficult global economic conditions, Fraunhofer can reflect on an economically successful 2022 following two years of crisis caused by COVID-19. In 2022, total business volume grew by 5 percent to around €3.0 billion, reaching the €3 billion threshold for the first time. Contract research accounted for 86 percent of this sum (around €2.6 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 of a longterm nature that falls outside the scope of this regular base funding is allocated to a new item, additional research funding, which amounted to €245 million in the reporting period. Major infrastructure capital expenditure amounted to €189 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 2022, Fraunhofer’s capital expenditure amounted to €482 million overall, a 16 percent share of the total business volume. Personnel expenses increased by 7 percent to €1,760 million. This is primarily due to a 1.8 percent increase to the pay scale that took effect on April 1, 2022, an increase in permanent staff of 3.7 percent, and an increase in personnel provisions of €34 million. At €818 million, non-personnel expenses were 2 percent higher than in the previous year. The reserve was used during 2022 to cover liquidity requirements and €11 million net was released to provide funds to establish performance centers and equip Fraunhofer institutes with photovoltaic systems.   

Contract research 2018–2022

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 2022, the base funding requirement decreased by 9 percent to €708 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 recorded growth of 9 percent to €787 million, exceeding the previous high achieved just before the COVID-19 pandemic in 2019. License-fee revenue from industry increased particularly significantly by 40 percent to €160 million due to the purchase of a larger patent portfolio. Revenue from contracts with industry increased by 3 percent to €627 million.

Revenue from publicly-funded projects increased significantly again in 2022. Project funding from the German federal government, in particular, jumped by 19 percent to €661 million. Within this, the revenue of the German Federal Ministry of Education and Research (BMBF) increased by 33 percent to €344 million, the funding of the Federal Ministry for Economic Affairs and Climate Action (BMWK) by 4 percent to €233 million and the revenue of the other federal ministries by 18 percent to €84 million. Project funding of the German state governments rose by 4 percent to €245 million. At €89 million, EU revenue was slightly below the previous year’s level. Other revenue decreased by 5 percent to €125 million and includes revenue from foundations, universities, other research funding institutions, and license-fee revenue of €1 million from other customers outside 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 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 initial funding for newly established research institutions and excluding changes in reserves). After a slump in 2020 caused by COVID-19, the project funding share increased again to 73.3 percent in 2022. Due to the sharp increase in project funding from the German federal government, the funding share from the German federal government and German state governments rose significantly to 34.8 percent. The share of industrial revenue also increased to 30.4 percent.