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. 

Fraunhofer total business volume 2020–2024

Total business volume 2019-2023

Following strong growth in the preceding years, Fraunhofer entered a phase of consolidation in 2024. The total business volume rose by 5 percent from the previous year to €3.6 billion. Contract research accounted for 88 percent of this sum (€3.1 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 €260 million in the reporting period. Funding for major infrastructure amounted to €167 million. These three segments will be discussed in greater detail in the following sections.

2024: Total business volume by budget

Total business volume 2019-2023

Business volume is based on the performance statement, which meets the requirements of the grant authorities. The operating budget includes personnel and non-personnel expenses in accordance with generally accepted accounting principles. As capital expenditure, on the other hand, is recognized at the amount incurred at the time of purchase, depreciation, amortization and impairment losses are not included in the performance statement. In 2024, Fraunhofer’s capital expenditure amounted to €585 million overall, a 16-percent share of the total business volume. The rise in personnel expenses to €2,055 million was the result of a 3.8-percent increase in the number of permanent staff members at the reporting date and the pay rise under the German Collective Bargaining Agreement for the Public Service (Tarifvertrag für den öffentlichen Dienst, TVöD), which took effect on March 1, 2024. At €923 million, non-personnel expenses slightly exceeded the previous year.

Project revenue from contract research 2020–2024

Revenue from contract research in € million 2019-2023

Contract research is the mainstay of Fraunhofer’s business activities and, in line with the Fraunhofer model, consists of three core funding areas:

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

Base funding is provided by the German Federal Ministry of Education and Research (BMBF) and the state governments at a 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. Industrial revenue rose by 4 percent to a new high of €867 million. This increase was driven by a 4-percent rise in revenue from industry contracts, to €705 million, and a 3-percent rise in license-fee revenue from industry, to €162 million. At 51.5 percent, more than half of industrial revenue is attributable to customers from the manufacturing sector in accordance 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, pharmaceutical

 

 

2024: Revenue from publicly funded projects

2023: Revenue from publicly-funded projects in € million

Revenue from publicly funded projects fell by 3 percent in 2024 to €1,295 million, having risen continuously in the preceding years. Project funding from the German federal government rose by 6 percent to €848 million.

Revenue from the German Federal Ministry of Education and Research (BMBF) rose by 10 percent to €447 million, and funding from other federal ministries by 5 percent to €135 million. Funding from the German Federal Ministry for Economic Affairs and Climate Action (BMWK) remained at the previous year’s level of €266 million.

From the high starting point of the preceding years, project funding from the German state governments fell by 35 percent to €151 million in 2024. There was a rise in EU revenue, which was up 26 percent to stand at €144 million.

As a result of one-off effects in the previous year, other revenue decreased by 17 percent to €152 million, including revenue from foundations, universities and other research funding institutions, and license-fee revenue of €2 million from customers outside of industry.

Funding share 2020–2024

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). After peaking in the previous year, the share from external project revenue decreased to 71.3 percent. This decrease is largely due to the fall in the project funding ratio from German federal and state governments to 32.8 percent. The share stemming from industrial revenue was slightly reduced to 28.8 percent because of the disproportionately high rise in the operating budget.

Additional research funding 2020–2024

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 Institute for Secure Information Technology SIT and the Fraunhofer Institute for Computer Graphics Research IGD in collaboration with the Technical University of Darmstadt and the 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 at a ratio of 70:30 and recorded a budget of €30 million in 2024.

The development and operation of the Fraunhofer Research Fab Battery Cells FFB gave rise to expenses of €52 million in 2024. The BMBF is providing a total of €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 and the construction of new buildings. Fraunhofer 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 activities of seven Fraunhofer 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 rose significantly compared to the previous year and stood at €178 million. In particular, project funding from the BMVg increased by €26 million to €80 million.

Major infrastructure 2020–2024

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 comprises building projects and the purchase of scientific instruments and furniture to equip new facilities. Expenditure for construction and equipping of new facilities was €167 million, slightly higher than the previous year. The amount spent on construction projects increased by €15 million to €148 million, of which €100 million related to major construction projects and €48 million to minor construction projects.

Investments in the equipping of new facilities, on the other hand, decreased by €12 million to €19 million. External factors continue to delay progress in major construction projects. These include longer testing times on the part of public administrative bodies as well as stricter requirements for subsidized construction, such as mandatory certification under the Assessment System for Sustainable Building (BNB certification) and environmental impact testing for projects funded by the European Regional Development Fund (ERDF).

Special funding for major building projects and the equipping of new facilities is provided by the federal and state governments at a ratio of 50:50. The state governments often provide additional funding from the ERDF, which reduces the funding required from federal and state governments by an equivalent amount. Minor building projects are financed from joint base funding at a ratio of 90:10.

The funding required from the German federal and state governments totaled €160 million. Project revenue from ERDF funds from state governments and other revenue fell significantly to €7 million following the completion of construction work from the previous ERDF funding period.