Trentino plus 10 Foresight Workshop 14-15 July 2003 (Trento) Financing and organising applied research in Germany - the model of Fraunhofer Society PD

Fraunhofer

ISI

InstituteSystems andInnovation Research

Trentino plus 10 Foresight Workshop 14-15 July 2003 (Trento)

Financing and organising

applied research in Germany - the model of Fraunhofer Society

PD Dr. Knut Koschatzky

Fraunhofer Institute for Systems and Innovation Research

Fraunhofer

ISI



Fraunhofer Society at a glance

• Fraunhofer Society was founded in 1949 in Munich as non-profit organisation

• FhG is the leading organisation for institutes of applied research in Germany and Europe

• At present, there are about 80 research establishments of 57 institutes at 40 locations throughout Germany

• Staff size is about 13.000, the majority of whom are qualified scientists and engineers

• Annual research volume is over 1 billion euro

• Contract research is financed by a share of 37 % basic funding, 33 % contract financing (industry) and 30 % public financing acquired in competition (Germany, EU, other countries)

Fraunhofer

ISI



Development of Fraunhofer Society

Institutes

Budget

Number of institutes

Fraunhofer

ISI



Profile of Fraunhofer Society in 2002

Fraunhofer

ISI



Research fields

Fraunhofer

ISI



Corporate governance at Fraunhofer Society

Fraunhofer

ISI



The German research landscape 2001

Fraunhofer

ISI



Market for industrial research and development in Germany

Fraunhofer

ISI



Financing of Fraunhofer Society

Basic funding

Public financing (German, EU, others)

Contract financing (industry)

63 %

Fraunhofer

ISI



Basic funding of Fraunhofer Society

• Share of 90:10 between federal government and federal states with seats of Fraunhofer institutes

• Success-basedAnnual negotiations between Fraunhofer Society (board of directors) and sponsors (Fraunhofer commission)

• Basic funding is obtained by Fraunhofer Society, i.e. the board of directors. Distribution among institutes is in the autonomy of the Society. No external control (= success-based self control)

• Public principles have to be followed

Fraunhofer

ISI



Distribution of allocations to the institutes (model)

58 % standard basic fundingcomposed ofG1 = 10 % fixed amountG2 = 24 % 10% of institute’s budgetG3 = 23 % depending on share of industrial financingG4 = 1 % depending on EU contributions

14 % special allocation due to GMD integration

15 % internal programmes

13 % specific measures (e.g. strategic investments)

But: Not all institutes profit to the same amount from the internal distribution model

Fraunhofer

ISI



Budget of Fraunhofer ISI

135 permanent staff (103 posts) of whom 80 are scientists and 15 preparing PhD. thesis

Personnel costs (ISI) 6,6 Mill. €

Personnel costs (others) 1,5 Mill. €

Material costs 2,9 Mill. €

of which are external R&D 1,2 Mill. €

Contribution (central services) 0,7 Mill. €

Total operating expenses 11,7 Mill. €

Own proceeds 9,7 Mill. €

Basic funding 2,5 Mill. €

Total proceeds 11,7 Mill. €

Building funds 0,2 Mill. €

regular investments 0,5 Mill. €

61 % federal ministries

17 % enterprises and trade associations

11 % EU

11 % research promotion organisations

Average share of basic funding for 1998-2001: 22,5 %

Average for all Fraunhofer institutes: 28,1 %

Fraunhofer

ISI



Some important basics

• All institutes are legally dependent bodies

• Fraunhofer headquarter in Munich is a service center for all institutes. The institutes have to pay for these services (by an annual contribution)

• Institutes are free in organising their internal organisation (departments, cost centres, distribution of basic funding); there is a large variety of organisation models

• Funding of the institutes is success related: the higher the absolute contract volume, the higher is the absolute sum of basic funding

• Basic funding can be increased by high shares of industrial proceeds or EU contributions

Fraunhofer

ISI




• The price an institute charges for a working hour depends on the cost structure of the institute. Overheads thus vary according to personnel and infrastructure costs. Full cost calculation is applied

• Institutes can make losses, but only for a few years. When the financial situation does not improve, the institute will be re-organised or closed

• Positive proceeds can be carried forward to the next year; they remain in the institute’s budget

• Due to a fixed limit of personnel capacities, the flexibility of the institutes is limited (unless a Fraunhofer institute is closely associated with a university institute where a free flow of people is possible)

Fraunhofer

ISI




• Working contracts are usually temporally limited. Only 20 - 40 % of the employees have a permanent contract

• Although market oriented, Fraunhofer has to apply public laws, regulations and payment schemes. This limits the attractivity of jobs with regard to Fraunhofer’s major competitor on the labour market: industry

Documents

Trentino plus 10 Foresight Workshop 14-15 July 2003 (Trento) Financing and organising applied research in Germany - the model of Fraunhofer Society PD