Research Grants — Atlas of Innovation

Definition

A research grant is funding given to individuals or organizations to cover research costs, often provided upfront or as cost reimbursements for researcher time, materials, and data. Grants are typically used in areas that lack immediate commercial application but hold potential for breakthroughs. Grants may require deliverables, but because funding is only loosely tied to realized quality or scientific impact, they rely heavily on researchers’ intrinsic motivation and career concerns.

Grants can take different forms depending on their purpose. The two main forms are researcher-based grants, which fund individuals or organizations, and project-based grants, which support research on a specific research question with a defined method or goal. Research grants are the default tool for funding innovation through academic and non-profit organizations.

Why might research grants be the right funding approach?

Research grants are most useful in situations where exploration is essential to solving broad, complex, or uncertain challenges. Funders shoulder the risk of failure when using grants which can encourage researchers to pursue ideas that might not attract near-term market interest. Research grants often prioritize transparency, encouraging open sharing of findings to advance broader fields of knowledge.

Research grants are best suited for funding innovation that:

Advances fundamental knowledge: Grants can fund exploratory research that advances whole fields rather than producing near-term commercial products. Basic science research often generates knowledge that can’t be patented, and early innovators rarely capture the value their discoveries create. Grants let funders back this work despite uncertain applications and weak private returns.
Requires long timelines: Private investment tends to favor projects with relatively short timelines and high probability of success, leaving long-term, higher-risk research underfunded. Grants can provide upfront funding to overcome these hurdles, ensuring that ambitious, high-impact research is not constrained by immediate financial pressures.
Relies on identifiable, capable teams: To administer grants, the funder needs to confidently identify or competitively surface the team best placed to pursue the innovation. This works best in fields where expertise or proposals provide strong signals of competence.

Compared to other funding approaches, research grants offer advantages in the following activities:

Encouraging research dissemination: Grants encourage researchers to generate and share useful knowledge during the research process. Findings are often openly shared through journals, advancing the field and building networks between researchers.
Leveraging technical expertise: Competitive research grants, such as requests for proposal (RFPs), crowdsource ideas from a wide community of researchers, revealing promising opportunities that funders might not identify on their own. Many grant programs also seek input from experts through peer review and, in some cases, rely on them as program officers to help guide grantmaking strategically. Active program management or specific grant structures, such as cooperative agreements, enable grant funders to have more involvement in the implementation of the grant.
Avoiding risk compensation: Unlike prizes and other innovator-agnostic approaches, grants do not force teams to shoulder the risk of failure. They reduce the need to compensate teams for risks arising from potential scientific failure and losing out to competitors. Grants can support multiple teams and can fund risky but important exploratory work.

What can go wrong?

While research grants offer flexibility, they carry risks tied to design and administration. These include:

Ill-suited selection criteria: If selection criteria do not accurately align with the actual drivers of research success, such as overemphasizing prior funding or institutional prestige, funders risk overlooking the most promising ideas. Consensus-driven review processes also tend to favor proposals with broad support over those that are contentious yet potentially more innovative.
Information gaps: A funder may misread which team or research path is truly promising. Researchers can oversell their capability, and the funder may lack the technical depth to spot weak proposals.
Administrative burden: Whether pre-award applications or post-award compliance, complex administrative processes consume time from researchers and reviewers, diverting resources from actual research activities.
Restrictive program design: Overly prescriptive grants constrain researchers’ ability to adapt as new findings emerge, stifling innovation when projects take unexpected turns.
Weak incentive for impact: Upfront funding provides little direct incentive to ensure research delivers real-world impact. External incentives, such as researchers wanting to uphold their reputations and future funding prospects, can help reduce this. However, when future grants are tied to past grant success, researchers may avoid high-risk, high-reward or exploratory projects, especially when results may not align with the prevailing orthodoxy

To help mitigate these risks, programs can use diverse and independent review panels, incorporate milestone-based grant funding, streamline administrative requirements, and allow flexibility in research plans to accommodate scientific uncertainty.

Types of research grants

Research grants fall into two main forms, each suited to different goals and contexts:

Researcher-based grants

Researcher-based grants fund people, whether individuals or organizations, rather than specific projects. They give researchers freedom to pursue ideas over a long time horizon.

They work best when funders can identify strong researchers and trust them to choose promising problems. They are most useful when the researcher’s judgment is itself a key asset and the path to breakthrough discoveries is hard to specify in advance.

Researcher-based grants offer flexibility, lighter administrative burden, and longer-term stability. Researchers can redirect funds as new ideas emerge, supporting more high-risk, high-reward research that may not fit into narrow project frameworks.

Project-based grants

Project-based grants fund specific proposals with defined goals, methods, and expected outcomes. Proposals provide funders with a clear understanding of the work that researchers will undertake, enabling them to direct effort toward defined research priorities. Project-based grants are more common than researcher-based grants.

They work best when funders have a clear set of criteria to evaluate proposals and want to shape which questions or approaches are pursued. A focus on projects can allow a funder to diversify across many approaches, particularly when multiple projects related to a research priority could be valuable. Without defined research priorities, researcher-based grants may be a more effective tool at supporting curiosity-driven research.

Project-based grants give funders clarity and control over the work they fund, but can leave little flexibility for researchers after an award is made. This structure enables review panels to compare projects side by side and allows funders to hold teams accountable for completing their projects.

Selecting grant winners

Funders must decide how to choose the grant recipient. Some common selection processes include:

Standard grant application/Requests for Proposals (RFPs): A formal solicitation where the funder issues a detailed scope of work and researchers respond with written technical and cost proposals. RFPs provide a structured way to compare proposals across multiple criteria, such as technical merit, past performance, and cost.

Open calls: A low-barrier call for ideas, such as Broad Agency Announcements (BAAs), pitch rounds, or staged down-select tournaments, where companies propose approaches without a rigid scope of work. By making it easier for researchers to engage with funders, open calls can broaden the supplier base and surface non-traditional research ideas that a funder might overlook while crafting an RFP or auction requirements.

Proactive grantmaking: Funders can hire experts to scan the field, spot promising researchers, and invite targeted proposals. This lets the funder shape research agendas proactively and act quickly, which is especially useful in areas where expert judgment beats waiting for researchers to come forward with proposals.

Examples

Agencies and foundations worldwide use different grant models to support scientific research. Three US examples show the range of models available to funders:

National Science Foundation (NSF): The NSF is a federal agency that funds thousands of independent research projects in non-medical fields each year. It primarily funds research through project-based grants to researchers at universities. For example, in 1994, the NSF’s Digital Libraries Initiative grant at Stanford supported early research by Larry Page and Sergey Brin on their key insight, PageRank, which became the foundation for Google. Initially, this was an academic effort to explore new ways of organizing and retrieving information online, but it later evolved into a commercially viable product.
Howard Hughes Medical Institute (HHMI): HHMI runs an investigator program that hires researchers on renewable seven-year contracts, typically providing around $11 million in funding per researcher over a seven-year term. This model of person-based grants emphasizes long-term scientific impact and encourages high-risk, high-reward experimentation. Recipients of HHMI funding demonstrate a greater likelihood of producing seminal discoveries than peers funded through project-based models.
Fast Grants: Fast Grants launched during the COVID-19 pandemic to quickly provide funding to researchers working on COVID-19-related projects. When speed mattered most, it delivered funding decisions within 48 hours and awarded over $50 million across 260 grants. Projects it funded included studies on repurposing generic drugs as treatments and tracking COVID-19 variants.

Research grants interact with other funding mechanisms to address complementary gaps:

R&D tax credits: Like R&D tax credits, research grants can pay for basic research when conducted by companies or organizations with tax liabilities. However, the government awards R&D tax credits to private companies with tax liabilities without specification, whereas research grants are typically given to non-profits based on specific proposals.
R&D contracts: Like contracts for R&D, research grants pay for R&D activities, regardless of success. However, research grants are typically paid to non-profits, whereas contracts for R&D are typically paid to for-profits. Contracts for R&D are also more likely to involve a “proof of concept” with an agreed-upon timeline.
Intramural science: Like intramural science, funders can identify the researchers best positioned to carry out specific work. However, research grants are typically used when these researchers are based in academia or non-profits, whereas intramural science is used when the work requires government researchers, often due to security needs or specialized facilities.

Definition

Why might research grants be the right funding approach?

What can go wrong?

Examples

Related funding approaches

Further reading