Who Funds Science: NIH, NSF, NASA, and the National Labs
Key takeaways
- Federal agencies spend close to 200 billion dollars a year on research and development, most of it at the Defense Department and the National Institutes of Health.
- NIH, at about 47.5 billion dollars in fiscal 2026, is the largest funder of biomedical research in the world.
- NSF funds basic science and engineering, NASA funds space and earth science, and the Energy Department runs 17 national laboratories.
- Most grants are awarded through peer review by outside scientists, and universities rely on them for about half their research spending.
- In 2025 agencies canceled thousands of grants and tried to cap overhead payments at 15 percent, a cap courts blocked.
- Congress largely rejected proposed cuts of 40 percent or more for fiscal 2026, but the fight resumed in the fiscal 2027 budget.
Since World War II, the federal government has been the main funder of basic research in the United States, the kind of science that may not pay off commercially for decades. That money built the internet, GPS, the Human Genome Project, and many medicines, and it trains most new scientists.
This guide explains who funds research, how the money is awarded, and the current debates over its size and direction.
Researchers compete for grants by submitting proposals that panels of outside experts score in peer review, and agencies fund the top proposals their budgets allow. Grants pay direct costs such as salaries and equipment, plus indirect costs for shared facilities and administration at negotiated rates. In 2025 NIH tried to cap indirect costs at 15 percent, but courts blocked it and Congress kept a rider barring the change.
The federal government spends close to 200 billion dollars a year on research and development. The Defense Department accounts for the largest share, mostly for developing weapons and technology, and NIH for most of the rest, followed by the Energy Department, NASA, and the National Science Foundation. Federal money pays for roughly 40 percent of basic research nationwide, while private companies fund most applied research and development. The White House Office of Science and Technology Policy coordinates priorities.
The National Institutes of Health, with 27 institutes and centers, received about 47.5 billion dollars in fiscal 2026. More than 80 percent goes out as grants to some 300,000 researchers at more than 2,500 universities, hospitals, and institutes, and the rest funds NIH's own labs in Bethesda, Maryland. NIH research contributed to nearly every new drug approved in the last decade.
The National Science Foundation, about 8.8 billion dollars in fiscal 2026, funds basic research in all non-medical fields and supports graduate students. NASA, about 24.4 billion dollars, funds space science, earth observation, and aeronautics as well as human spaceflight. The Energy Department's Office of Science runs 17 national laboratories, and DARPA funds high-risk defense projects that produced the internet and GPS.
In 2025 agencies terminated thousands of grants on topics including diversity, gender, and vaccine hesitancy, froze funds to some universities in disputes over campus policies, cut staff, and proposed cutting NIH by about 40 percent and NSF by more than half. The Supreme Court in August 2025 let NIH terminations proceed, saying money claims belong in the Court of Federal Claims. Congress funded NIH, NSF, and NASA at close to prior levels for fiscal 2026, and the fiscal 2027 request again proposed deep cuts.
Supporters of the changes say federal science had become politicized, that overhead payments subsidize university bureaucracy, and that spending must be cut. Scientists, universities, and many lawmakers of both parties say steady research funding is a source of American economic and military strength, that cuts will push researchers to other countries, and that disruptions waste years of work. Debates also continue over how much to fund basic versus applied research and how to compete with China.
See the agencies in the fifteen cabinet departments, public health agencies in public health explained, or the budget in how the federal budget works.