The document, authored by the Council on Governmental Relations (COGR), provides a thorough analysis of the financial structures underpinning U.S. research universities as of 2008, emphasizing their intertwined missions of instruction, research, public service, and increasingly, economic development. The report systematically compares revenue streams and expenditure patterns between public and private research-intensive universities, relying on data from major sources such as IPEDS and the National Science Foundation. Key findings indicate that, for both public and private institutions, government grants and contracts constitute the largest share of revenue, with public universities still relying significantly on diminishing state appropriations and privates drawing more from tuition and private gifts. Auxiliary enterprises and endowment distributions also offer notable, though more variable, contributions.
The analysis underscores pronounced similarities in the expenditure of funds, with instruction and research collectively accounting for the majority of institutional spending. Despite robust, multi-source funding, universities increasingly face financial strain from inadequate cost reimbursement for federally sponsored research, especially regarding indirect facilities and administrative (F&A) costs, which are often capped below actual institutional expenditures. As a result, universities provide substantial cross-subsidies to research, a contribution that has grown over time and now accounts for a significant and increasing share of the total research investment. The report warns that persistent under-recovery from external sources, declining state support, volatile endowment returns, and rising compliance and operational costs could undermine the ability of research universities to maintain their core missions and support the national research agenda. The paper concludes by stressing the need for greater awareness by policymakers of these fiscal challenges, cautioning that failure to address growing imbalances could erode the quality and sustainability of the U.S. research enterprise.
