In Germany, it is the responsibility of the federal and state governments to fund state-administered universities and research institutions. While the states are primarily responsible for universities, the federal government is primarily responsible for funding research institutions, such as institutes of the Max Planck Society, the Helmholtz Association, the Leibniz Association and the Fraunhofer Society.  Universities and research institutions are also permitted to acquire financial support from third parties. This is referred to as third-party funding.

The foremost task of state funding is to cover the basic needs of a university; it is far from sufficient to conduct ambitious research. Today, complex academic questions are dealt with by large research teams, often involving dozens, sometimes even several hundred researchers. This applies to numerous projects from cancer to climate research as well as - for example - large-scale excavations in archaeology or long-term edition projects in music and in literary studies. In such cases, basic state funding almost always has to be supplemented by third-party funding. Third-party funds are often awarded in competitive procedures. This also ensures that they go precisely where particularly ambitious research is being conducted. Incidentally, a large part of the third-party funding is used to finance doctoral theses and thus directly benefits young researchers. Another advantage is that the doctoral projects thus funded have to pass an academic review procedure beforehand.

Just a few figures make it clear that third-party funding is an essential factor for universities today. According to the Federal Statistical Office, German universities received a total of 7.97 billion euros in third-party funding in 2020. That funding made up about a quarter of the total revenue of 31.88 billion euros. Much of the research at universities would not be possible without this form of funding. 

Third-party funding is often equated with industrial research funding. In fact, however, only a fraction of third-party funding comes from industry. Of the 7.97 billion euros that universities received from third parties in 2020, only 1.3 billion euros came from industry. The most important third-party funder for universities is the purely state-funded German Research Foundation (DFG). From the DFG alone, universities received 2.7 billion euros in 2020. Other important research sponsors are the federal government (2.3 billion euros) and the EU (773 million euros). Roughly 72 percent of third-party funding is thus taxpayer-funded. Industry funding, on the other hand, accounts for less than 17 percent of all third-party funding nationwide.

The University of Tübingen (incl. Faculty of Medicine) recorded revenues totaling 684.9 million euros in 2020. Of this, third-party funding accounted for 245.9 million euros. The share of third-party funding in total funding thus amounted to 35.9 percent. 28.2 million euros were raised from businesses. This corresponded to 11.5 per cent of third-party funding or 4.12 per cent of total revenue. Put briefly: Third-party funding is the most important financial pillar of the University of Tübingen's research. In contrast, the significance of funding from industry is relatively small at our university.

Industrial third-party funding typically flows into research projects from which the sponsoring companies expect a concrete benefit. Large companies in the technology or life sciences sectors in particular have their own research departments. But sometimes these departments lack the necessary capacity or even the know-how to be able to answer certain questions. In these cases, the companies often turn to a university with a specific assignment. Then it is contractually stipulated what the university is to research and how much money the company has to pay for it. This is called contract research.

Foundations play a very significant role in financing research in Germany. In 2020, for example, a total of around 510 million euros in foundation funding flowed into universities’ coffers. The University of Tübingen received around 45.6 million euros in third-party funding from foundations in 2020. That was 18.5 per cent of all third-party funding or 6.7 per cent of total revenue. In Tübingen, these funds are often used to finance new professorships. Thus, third-party funding from foundations not only strengthens research, but also academic teaching to a very considerable extent.

In public debates, funding that universities raise from foundations is often lumped together with industrial funding. This is wrong in almost all cases, because foundations are usually non-profit institutions with a clearly defined purpose. Moreover, many foundations have been established by Germany’s federal and state governments, including many foundations that are particularly active in promoting research, such as the Alexander von Humboldt Foundation and the Volkswagen Foundation. In contrast to contract research, research funded by foundations through third-party funding is also fundamentally independent. Although foundations generally fund disciplines or projects that correspond to their purpose, they have no further influence on the work carried out.