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What Is Research and Development?

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What Is Research and Development (R&D)?

Investopedia / Ellen Lindner

Research and development (R&D) is the series of activities that companies undertake to innovate. R&D is often the first stage in the development process that results in market research product development, and product testing.

Key Takeaways

• Research and development represents the activities companies undertake to innovate and introduce new products and services or to improve their existing offerings.
• R&D allows a company to stay ahead of its competition by catering to new wants or needs in the market.
• Companies in different sectors and industries conduct R&D—pharmaceuticals, semiconductors, and technology companies generally spend the most.
• R&D is often a broad approach to exploratory advancement, while applied research is more geared towards researching a more narrow scope.
• The accounting for treatment for R&D costs can materially impact a company's income statement and balance sheet.

Understanding Research and Development (R&D)

The concept of research and development is widely linked to innovation both in the corporate and government sectors. R&D allows a company to stay ahead of its competition. Without an R&D program, a company may not survive on its own and may have to rely on other ways to innovate such as engaging in mergers and acquisitions (M&A) or partnerships. Through R&D, companies can design new products and improve their existing offerings.

R&D is distinct from most operational activities performed by a corporation. The research and/or development is typically not performed with the expectation of immediate profit. Instead, it is expected to contribute to the long-term profitability of a company. R&D may often allow companies to secure intellectual property, including patents , copyrights, and trademarks as discoveries are made and products created.

Companies that set up and employ departments dedicated entirely to R&D commit substantial capital to the effort. They must estimate the risk-adjusted return on their R&D expenditures, which inevitably involves risk of capital. That's because there is no immediate payoff, and the return on investment (ROI) is uncertain. As more money is invested in R&D, the level of capital risk increases. Other companies may choose to outsource their R&D for a variety of reasons including size and cost.

Companies across all sectors and industries undergo R&D activities. Corporations experience growth through these improvements and the development of new goods and services. Pharmaceuticals, semiconductors , and software/technology companies tend to spend the most on R&D. In Europe, R&D is known as research and technical or technological development.

Many small and mid-sized businesses may choose to outsource their R&D efforts because they don't have the right staff in-house to meet their needs.

Types of Research and Development (R&D)

There are several different types of R&D that exist in the corporate world and within government. The type used depends entirely on the entity undertaking it and the results can differ.

Basic Research

There are business incubators and accelerators, where corporations invest in startups and provide funding assistance and guidance to entrepreneurs in the hope that innovations will result that they can use to their benefit.

M&As and partnerships are also forms of R&D as companies join forces to take advantage of other companies' institutional knowledge and talent.

Applied Research

One R&D model is a department staffed primarily by engineers who develop new products —a task that typically involves extensive research. There is no specific goal or application in mind with this model. Instead, the research is done for the sake of research.

Development Research

This model involves a department composed of industrial scientists or researchers, all of who are tasked with applied research in technical, scientific, or industrial fields. This model facilitates the development of future products or the improvement of current products and/or operating procedures.

The largest companies may also be the ones that drive the most R&D spend. For example, Amazon has reported $1.147 billion of research and development value on its 2023 annual report.

Advantages and Disadvantages of R&D

There are several key benefits to research and development. It facilitates innovation, allowing companies to improve existing products and services or by letting them develop new ones to bring to the market.

Because R&D also is a key component of innovation, it requires a greater degree of skill from employees who take part. This allows companies to expand their talent pool, which often comes with special skill sets.

The advantages go beyond corporations. Consumers stand to benefit from R&D because it gives them better, high-quality products and services as well as a wider range of options. Corporations can, therefore, rely on consumers to remain loyal to their brands. It also helps drive productivity and economic growth.

Disadvantages

One of the major drawbacks to R&D is the cost. First, there is the financial expense as it requires a significant investment of cash upfront. This can include setting up a separate R&D department, hiring talent, and product and service testing, among others.

Innovation doesn't happen overnight so there is also a time factor to consider. This means that it takes a lot of time to bring products and services to market from conception to production to delivery.

Because it does take time to go from concept to product, companies stand the risk of being at the mercy of changing market trends . So what they thought may be a great seller at one time may reach the market too late and not fly off the shelves once it's ready.

Facilitates innovation

Improved or new products and services

Expands knowledge and talent pool

Increased consumer choice and brand loyalty

Economic driver

Financial investment

Shifting market trends

R&D Accounting

R&D may be beneficial to a company's bottom line, but it is considered an expense . After all, companies spend substantial amounts on research and trying to develop new products and services. As such, these expenses are often reported for accounting purposes on the income statement and do not carry long-term value.

There are certain situations where R&D costs are capitalized and reported on the balance sheet. Some examples include but are not limited to:

• Materials, fixed assets, or other assets have alternative future uses with an estimable value and useful life.
• Software that can be converted or applied elsewhere in the company to have a useful life beyond a specific single R&D project.
• Indirect costs or overhead expenses allocated between projects.
• R&D purchased from a third party that is accompanied by intangible value. That intangible asset may be recorded as a separate balance sheet asset.

R&D Considerations

Before taking on the task of research and development, it's important for companies and governments to consider some of the key factors associated with it. Some of the most notable considerations are:

• Objectives and Outcome: One of the most important factors to consider is the intended goals of the R&D project. Is it to innovate and fill a need for certain products that aren't being sold? Or is it to make improvements on existing ones? Whatever the reason, it's always important to note that there should be some flexibility as things can change over time.
• Timing: R&D requires a lot of time. This involves reviewing the market to see where there may be a lack of certain products and services or finding ways to improve on those that are already on the shelves.
• Cost: R&D costs a great deal of money, especially when it comes to the upfront costs. And there may be higher costs associated with the conception and production of new products rather than updating existing ones.
• Risks: As with any venture, R&D does come with risks. R&D doesn't come with any guarantees, no matter the time and money that goes into it. This means that companies and governments may sacrifice their ROI if the end product isn't successful.

Research and Development vs. Applied Research

Basic research is aimed at a fuller, more complete understanding of the fundamental aspects of a concept or phenomenon. This understanding is generally the first step in R&D. These activities provide a basis of information without directed applications toward products, policies, or operational processes .

Applied research entails the activities used to gain knowledge with a specific goal in mind. The activities may be to determine and develop new products, policies, or operational processes. While basic research is time-consuming, applied research is painstaking and more costly because of its detailed and complex nature.

R&D Tax Credits

The IRS offers a R&D tax credit to encourage innovation and significantly reduction their tax liability. The credit calls for specific types of spend such as product development, process improvement, and software creation.

Enacted under Section 41 of the Internal Revenue Code, this credit encourages innovation by providing a dollar-for-dollar reduction in tax obligations. The eligibility criteria, expanded by the Protecting Americans from Tax Hikes (PATH) Act of 2015, now encompass a broader spectrum of businesses. The credit tens to benefit small-to-midsize enterprises.

To claim R&D tax credits, businesses must document their qualifying expenses and complete IRS Form 6765 (Credit for Increasing Research Activities). The credit, typically ranging from 6% to 8% of annual qualifying expenses, offers businesses a direct offset against federal income tax liabilities. Additionally, businesses can claim up to $250,000 per year against their payroll taxes.

Example of Research and Development (R&D)

One of the more innovative companies of this millennium is Apple Inc. As part of its annual reporting, it has the following to say about its research and development spend:

In 2023, Apple reported having spent $29.915 billion. This is 8% of their annual total net sales. Note that Apple's R&D spend was reported to be higher than the company's selling, general and administrative costs (of $24.932 billion).

Note that the company doesn't go into length about what exactly the R&D spend is for. According to the notes, the company's year-over-year growth was "driven primarily by increases in headcount-related expenses". However, this does not explain the underlying basis carried from prior years (i.e. materials, patents, etc.).

Research and development refers to the systematic process of investigating, experimenting, and innovating to create new products, processes, or technologies. It encompasses activities such as scientific research, technological development, and experimentation conducted to achieve specific objectives to bring new items to market.

What Types of Activities Can Be Found in Research and Development?

Research and development activities focus on the innovation of new products or services in a company. Among the primary purposes of R&D activities is for a company to remain competitive as it produces products that advance and elevate its current product line. Since R&D typically operates on a longer-term horizon, its activities are not anticipated to generate immediate returns. However, in time, R&D projects may lead to patents, trademarks, or breakthrough discoveries with lasting benefits to the company. 

Why Is Research and Development Important?

Given the rapid rate of technological advancement, R&D is important for companies to stay competitive. Specifically, R&D allows companies to create products that are difficult for their competitors to replicate. Meanwhile, R&D efforts can lead to improved productivity that helps increase margins, further creating an edge in outpacing competitors. From a broader perspective, R&D can allow a company to stay ahead of the curve, anticipating customer demands or trends.

There are many things companies can do in order to advance in their industries and the overall market. Research and development is just one way they can set themselves apart from their competition. It opens up the potential for innovation and increasing sales. However, it does come with some drawbacks—the most obvious being the financial cost and the time it takes to innovate.

Amazon. " 2023 Annual Report ."

Internal Revenue Service. " Research Credit ."

Internal Revenue Service. " About Form 6765, Credit for Increasing Research Activities ."

Apple. " 2023 Annual Report ."

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Federal Research and Development: Funding Has Grown since 2012 and Is Concentrated within a Few Agencies

Innovation is critical to U.S. competitiveness, prosperity, and security. In the last 10 years, the federal government has increased funding for research and development (R&D)—investing $179.5 billion in FY 2021.

DOD and the Department of Health and Human Services received 77% of the FY 2021 funding. COVID-19 stimulus funding led to large R&D increases for HHS. For example, an HHS agency that helps develop vaccines saw increased spending from $736 million in FY 2019 to $16 billion in FY 2020.

Some funding supports multi-agency initiatives in complex areas of strategic national importance—such as nanotechnology and artificial intelligence.

Federal Research and Development Investments, FYs 2012-2021

What GAO Found

Federal research and development (R&D) funding has increased since 2012—most recently because of COVID-19 stimulus funding. Five agencies obligated the majority of federal R&D funding with the Departments of Defense (DOD) and Health and Human Services (HHS) accounting for nearly 80 percent in fiscal year 2021 (see figure). HHS has mainly funded research, while DOD mainly funds development. However, HHS has become a major funder of development in recent years because of COVID-19 stimulus funding. HHS averaged less than 1 percent in development funding through fiscal year 2019 but reported 37 percent of its R&D obligations were for development in fiscal year 2021. Of the estimated $179.5 billion in federal R&D obligations in fiscal year 2021, about two-thirds went to organizations outside the federal government. In fiscal year 2021, industry, universities, and colleges received the majority of these external R&D obligations—almost $90 billion.

Federal Research and Development Obligations, Fiscal Year 2021

Note: FY 2021 data are estimates provided by federal agencies to the National Science Foundation.

Federal funding also includes four multi-agency initiatives in areas identified as having long-term national importance, such as quantum information science and nanotechnology. These initiatives coordinate activities in areas that are too broad or complex to be addressed by one agency alone. For example, more than 60 agencies participate in an initiative on network and information technology, which includes investments in artificial intelligence and machine learning. Not all participating agencies contribute funding to such initiatives. Funding for these initiatives increased over the previous decade, and accounted for roughly $14 billion in fiscal year 2020, just under 9 percent of the total federal R&D budget.

Why GAO Did This Study

Scientific and technological innovation are critical to long-term U.S. economic competitiveness, prosperity, and national security. The U.S. has long been a global leader in advancing the frontiers of science and technology. Increased competition from other countries has led some experts to express concern that the U.S. may be losing its competitive edge in certain technologies. Agencies are investing in various R&D initiatives, including those that are of strategic national importance, such as network and information technology, nanotechnology, quantum information science, and global environmental changes.

This report describes (1) trends in federal R&D funding over the last 10 years and (2) the funding and organization for selected multi-agency R&D initiatives, among other objectives.

To address these objectives, GAO analyzed data published by the National Science Foundation on annual R&D expenditures and examined Office of Management and Budget (OMB) data. GAO also reviewed agency documentation and collected written responses to structured questions on federal R&D from the Chief Financial Officer or budget office from the five agencies that fund most R&D.

In addition, GAO interviewed officials from OMB and the Office of Science and Technology Policy, including the Directors of the National Coordination Offices for selected multi-agency R&D initiatives, which are coordinated under the auspices of the National Science and Technology Council.

For more information, contact Candice N. Wright at (202) 512-6888 or [email protected] .

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Can Physical Exercise or Food Deprivation Cause Release of Fat-Stored Cannabinoids?

Andreas austgulen westin, george mjønes, ola burchardt, ole martin fuskevåg, lars slørdal.

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Author for correspondence: Andreas Austgulen Westin, Department of Clinical Pharmacology, St. Olav University Hospital, Olav Kyrres gate 17, N-7006 Trondheim, Norway (fax +47 72 82 91 12, e-mail [email protected] ).

Received 2014 Jan 21; Accepted 2014 Mar 7; Issue date 2014 Nov.

This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.

The aim of this study was to evaluate whether physical exercise or food deprivation may increase cannabinoid levels in serum or urine in abstinent chronic cannabis users. The study took place in a drug detoxification ward parallel to study participants receiving treatment. Six chronic, daily cannabis users (one female, five males, average age 30.0 years; BMI 20.8) were exposed to a 45-min. moderate-intensity workout and a 24-hr period of food deprivation. Serum samples were drawn prior to and after interventions and analysed for Δ9-tetrahydrocannabinol (THC) and 11-nor-9-carboxy-Δ9-tetrahydrocannabinol (THCCOOH) by liquid chromatography–tandem mass spectrometry (LCMSMS), and all voided urine was tested for THCCOOH by LCMSMS and normalized to the creatinine levels, yielding ng/mg ratios. There were no major differences in the measured cannabinoid levels in serum or urine before and after physical exercise or food deprivation. We conclude that exercise and/or food deprivation are unlikely to cause sufficient cannabinoid concentration changes to hamper correct interpretations in drug testing programmes.

Testing for drugs of abuse is often requested in healthcare, workplace and criminal justice settings. As punishment may be more severe if multiple drug use is established, accurately distinguishing new drug use from residual excretion is necessary 1 , 2 . Due to its long retention time, cannabis is especially important in this regard 2 .

After smoking of a single cannabis cigarette, serum Δ9-tetrahydrocannabinol (THC) levels are typically below detection limits within 12 hr 3 , whereas its primary metabolite, 11-nor-9-carboxy-Δ9-tetrahydrocannabinol (THCCOOH), may be detectable in serum for about 1 week and in urine for about 2 weeks 4 . In chronic cannabis users, however, THC and THCCOOH may be detectable in blood for up to 1 month 5 – 7 , and THCCOOH in urine for up to 3 months 1 , 8 , 9 . The delayed cannabinoid excretion in chronic cannabis users is believed to be caused by accumulation and subsequent slow release of THC from fat tissue 10 , 11 .

The process of THC release from fat tissue is poorly understood and may in theory be influenced by lipolysis during diet, stress and exercise 9 . An Australian research group demonstrated that lipolysis in rats induced by adrenocorticotropic hormone and food deprivation increased plasma THC levels in rats pre-treated with cannabis 12 . Recently, they also published a study on 14 human subjects, showing that physical exercise for 35 min. caused a small but statistically significant rise in THC plasma levels in regular cannabis users 13 .

In our routine drug testing service, we frequently experience that cannabis users claim their positive test results (i.e. increased urinary cannabinoid levels) to be caused by fasting or exercise. As urinary cannabinoid concentrations during experimental lipolytic conditions have never been scientifically investigated, we often find ourselves unable to prove these statements true or false. As most drug testing is performed in urine, the clarification of this issue is of obvious importance.

The aim of this study was to elucidate whether physical exercise and food deprivation may cause increases in serum and urine cannabinoid levels in chronic cannabis users in a naturalistic setting.

Materials and Methods

Participants.

The study took place between April 2010 and April 2011. Participants were recruited consecutively among patients with predominant cannabis abuse admitted to Lade Rehabilitation Clinic Blue Cross, a drug detoxification ward in Trondheim, Norway. They were informed, interviewed and examined by a medical doctor at the time of admission, and evaluated with respect to physical and psychological suitability. All filled in a questionnaire regarding their recent use of drugs.

One at a time, the study subjects resided in a closed ward among other patients undergoing treatment for substance abuse. All had their personal belongings searched prior to unit entry. They had separate rooms and private bathrooms. The ward was under 24-hr surveillance to encourage drug abstinence. Study participation was unpaid. Participants were allowed to exit the study at their own discretion. The study was approved by the regional ethics committee, and all participants filled in an informed consent form.

Because of personnel changes, recruitment to the study had to be terminated earlier than intended.

Study design

Participants were recruited on admission to the ward (day 0), and urine specimens were collected for the following 7 days. Interventions were made on day 3 and 5 in a randomly assigned order and consisted of either 45 min. of physical exercise (EX), where subjects were instructed to run on a treadmill at 60–75% of their maximal pulse (estimated by 226 minus age for males and 220 minus age for females), or 24 hr food deprivation (FD), where only drinking of water was allowed. Blood samples were drawn immediately prior to and after interventions, and at the beginning and end of the study (day 1 and 6).

Specimen collection

Participants voided urine whenever they needed to and collected their own urine specimens whenever voided during the 7-day study period. To aid this, they were provided with plastic cups, urine vials (10 ml Sarstedt Urine Monovette ® with suction tips), vial labels, a pen and a watch. Urine vials were marked with date, time and study identity letter (Participant A-F) by the participants themselves. Every evening, the ward staff collected the samples and deposited them in a freezer at −20°C. Blood samples were centrifuged, serum-extracted and immediately stored in a freezer at −20°C.

Specimen analysis

Urine samples were treated by β-glucuronidase ( Escherichia coli K12) at 45°C for 120 min. to minimize the THCCOOH-glucuronide fraction. Hundred microlitre of pre-treated urinary samples, serum sample standards and quality controls were prepared by adding 50 μl 0.1 M phosphate buffer solution (pH 6), 50 μl internal standard (50 ng/ml, d9-THCCOOH and d3-THC) and 1 ml diethyl ether/n-hexane/ethyl acetate (1:1:1) as extractants. Samples were analysed by liquid chromatography–tandem mass spectrometry (LCMSMS) using a Waters Acquity UPLC system with an autosampler and a binary solvent delivery system (Waters, Milford, MA, USA) interfaced to Waters Micromass® Quattro Premier™ XE benchtop tandem quadrupole mass spectrometer (Waters, Manchester, UK). Chromatography was performed on a 2.1 × 50 mm Waters Acquity BEH C8 1.7 mm column. The mobile phase consisted of 68% methanol in 0.34 g/l aqueous ammonium acetate with an isocratic flow rate of 0.4 ml/min. For quantitative analysis of THCCOOH and THC, the following MRM transitions were used: m/z 343→299 (quantification ion), 345→327 (qualifier ion) and m/z 315→193 (quantification ion), 315→259 (qualifier ion), respectively. MRM transition m/z 352→308, 354→336 and m/z 318→196, 318→262 were used for the internal standards d9-THCCOOH and d3-THC, respectively. The linear dynamic range ( r 2  > 0.99) for THCCOOH and THC was 3–5000 ng/ml and 0.6–240 ng/ml, respectively. LOD for THC and THCCOOH were 0.2 ng/ml and 0.17 ng/ml, respectively. Between-day coefficients of variation (CVs) for THCCOOH calculated from quality control samples were <6% at 30 ng/ml and <4% at 3000 ng/ml. For THC, the CV was <11% at 2.5 ng/ml and <6% at 250 ng/ml.

Urine creatinine was analysed photometrically after complex formation with picric acid in an alkaline solution by a routine method (Jaffé's method) on a Cobas Integra 400 + multianalyser (Roche Diagnostics, Basel, Switzerland). The LOQ was 0.11 mg/ml, and the CV was <10%.

THCCOOH concentrations (in ng/ml) of all positive urine specimens were divided by the specimens' urine creatinine concentration (in mg/ml) to obtain the normalized THCCOOH/creatinine concentration (CC ratio, presented as ng/mg).

Seven consecutively admitted cannabis users were invited to participate in the study; six accepted. None withdrew from the study after inclusion. The participants were all Caucasian, one female, five males and aged 25–34 (mean 30.0) years. Characteristics of the participants are reported in table 1 . They were admitted primarily due to cannabis abuse, but four subjects also reported use of other illicit drugs at one or more occasions during the last 30 days prior to admission. All participants smoked cannabis on a daily basis (5–30 g of hashish or equivalent amounts of marihuana per week for more than 1 month) and had done so until the time of admission.

Participant demographics and self-reported cannabis use prior to study entry

M: male, F: female, BMI: body mass index (weight/height 2 ).

Due to phlebotic veins, only three serum samples were obtained from subject C, and due to a misunderstanding, subject E collected only one urine specimen per day for the first 4 days of the study. Otherwise, complete series of urine and serum specimens were collected for the whole period for all subjects. A total of 188 urine specimens and 34 serum specimens were collected. At the beginning of the study, THC was detected in serum of all subjects except subject C (mean 2.6, range 0–3.6 ng/ml). In three subjects, THC was still present in serum at the end of the study (day 6). At the beginning of the study, THCCOOH (mean 85.2, range 35.4–175.5 ng/ml) was measured in the serum of all participants, as was THCCOOH in their urine (mean 201.9, range 19.2–401.2 ng/ml, CC ratio mean 144.4, range 60.6–295.0 ng/mg). Serum and urine remained THCCOOH positive throughout the whole study period for all subjects.

All six participants completed both the EX and FD interventions. Generally, no major differences in serum or urine cannabinoid levels before and after exercise or food deprivation were apparent (fig. 1 , tables 3 ).

Serum concentrations of Δ9-tetrahydrocannabinol (THC)(▴) and 11-nor-9-carboxy-Δ9-tetrahydrocannabinol (THCCOOH) (•), and urine THCCOOH to creatinine ratio (▪) for all participants (A–F). The exercise intervention is shown with the vertical grey dotted lines, and the food deprivation period is shown by the shaded area.

Serum and urinary cannabinoid levels in six regular cannabis users, before and after 24 hr of food deprivation

THC: Δ9-tetrahydrocannabinol, THCCOOH: 11-nor-9-carboxy-Δ9-tetrahydrocannabinol, CC ratio: creatinine-normalized THCCOOH, FD: food deprivation, <LOD: below the 0.2 ng/ml limit of detection, <LOQ: below the 0.6 ng/ml limit of quantification.

Serum THC was below LOQ in participant D immediately after FD, but was present the following day, in the concentration shown in the table.

It has been hypothesized that conditions that may enhance lipolysis, such as food deprivation, stress, exercise or weight loss, may lead to bursts of release of stored cannabinoids from adipose tissue. An Australian research group tested this concept in rats 12 and recently also in humans 13 . The rats were pre-treated with THC and then given either adrenocorticotropic hormone (ACTH, a known stress hormone and lipolytic agent) or deprived of food for 24 hr. Both stress and fasting resulted in statistically significant increase in plasma THC and THCCOOH levels 12 . In the follow-up study in 14 regular cannabis users, the investigators found similar results: A 35-min. bicycle workout at moderate intensity resulted in slight (<40%) but statistically significant increase in plasma THC levels 13 . The exercise-induced THC rise was no longer present 2 hr post-exercise, and exercise did not significantly affect THCCOOH plasma levels, nor did overnight fasting for 12 hr affect THC or THCCOOH plasma levels.

Our study sheds further light on this subject. Firstly, we tested subjects with longer duration of exercise (45 min.) and longer duration of food deprivation (24 hr) than in the Australian study. Secondly, our study is the first to provide urine data.

In serum, we measured transient and generally minor increases in serum THC and THCCOOH levels during physical exercise and food deprivation. Compared with individual pre-challenge values, serum THC and THCCOOH levels increased by a mean of 25% and 7%, respectively, after exercise. In a single individual (B), the increments were major in the sense that serum levels increased by a factor close to 2 (table 2 ). The corresponding changes in serum levels after fasting were somewhat lower, but otherwise similar (table 3 ). Our results are in accordance with the small increase in plasma THC levels observed after exercise in the Australian study 13 . Our participants had serum THC levels in the 0–3.6 ng/ml range at the time of admission to the ward, which is similar to those described as ‘baseline’ in the Australian human study 13 and those previously reported in chronic users who have recently stopped taking cannabis 5 , 14 . No subjects had THC levels exceeding 3.6 ng/ml at any time during the study. Thus, our study supports that the rise in serum cannabinoid levels during fasting or exercise is probably modest.

Serum and urinary cannabinoid levels in six regular cannabis users, before and after 45 min. of physical exercise

THC: Δ9-tetrahydrocannabinol, THCCOOH: 11-nor-9-carboxy-Δ9-tetrahydrocannabinol, CC ratio: creatinine-normalized THCCOOH, EX: exercise, NA: not applicable, <LOQ: below the 0.6 ng/ml limit of quantification.

Due to phlebotic veins, blood sampling failed in participant C after exercise.

The baseline urine specimen from participant E was collected the day before the exercise intervention and not immediately prior to exercise.

In urine, the CC ratios declined in five of six subjects during exercise and in all six subjects during food deprivation (tables 3 ). The urinary CC ratios fluctuated during decline as they are known to do 4 , but any discernible peaks in this fluctuating pattern did not correspond to the times of exercise and food deprivation (fig. 1 ). Thus, we conclude that exercise within moderate limits (such as jogging) and short-term fasting (such as skipping meals for 1 day) are unlikely to cause interpretational difficulties for urinary drug testing.

There are some limitations to our study. Firstly, practical issues limited the number of participants to six individuals. However, even though the low number of partaking subjects precludes firm conclusions, our study still provides valuable information on a previously unexplored issue, notably urine elimination of cannabinoids during exercise and fasting. Secondly, we trusted the participants to collect urine specimen themselves. Thus, we cannot exclude specimen manipulation. However, as analysis results were anonymous and not used for sanctionary purposes, participants would have nothing to benefit from manipulation.

Thirdly, all study participants were in the lower range of BMI and hence did not have much excess body fat. Future studies should attempt to include obese cannabis users, who in theory should be more sensitive to redistribution phenomena. It may be of interest to assess effects of other types of physical exercise, such as interval training, contact sports or long-distance running. It would also be interesting to measure the effect of rapid weight loss, or decreased food intake for more than 24 hr.

To summarize, neither exercise at moderate intensity for 45 min. nor 24-hr food deprivation caused significant elevations in blood or urine cannabinoid levels in our six human subjects. Our results are in accordance with data from a similar study 13 , where only slight and transient THC plasma elevations were noted during exercise, and none during fasting. We conclude that exercise and fasting in regular cannabis users are unlikely to cause sufficient concentration changes to hamper interpretation in drug testing programmes.

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Why we need a research department

Pinelopi goldberg.

After a brief hiatus, the office of the Chief Economist of the World Bank Group was reunited last week with DEC, the well-known Research Department of the World Bank. This led me to reflect on a question often posed to policy institutions as well as the private sector: Why do we need research departments outside academia?    Before attempting to answer this question, it is worth noting that research departments are common in top firms in the private sector. By research, I do not mean simple data gathering and processing, but rather the creation of original, innovative insights.  AT&T famously had Bell Labs.  Technology leaders from IBM to Microsoft to Amazon, Facebook, and Google have all funded basic research. Google has Google X, despite being located only a few miles from Stanford.  A strong research lab is a sign of company health and power.  Conversely, the shrinking of the research department often signals the demise of the company. And, of course, the phenomenon is not confined to tech.   The fact that these highly efficient companies choose to spend millions to support research departments reinforces the puzzle: Why not focus on engineering and application of knowledge and outsource the creation of fundamental knowledge, of primary research, to academia?

Many explanations have been suggested in the literature. One is prestige. Another is that to attract top, entrepreneurial staff, one needs to give them the freedom and independence associated with basic research. A further reason is that, occasionally, great things come out of these research departments that propel companies to the knowledge stratosphere and create enormous public goods. The transistor, laser, and UNIX are just a subset of Bell Labs’ storied achievements.   Closer to home, some of the most important public goods associated with the World Bank originated in DEC. One of the main objectives of the World Bank is to eliminate extreme poverty. But we would not even know how to measure poverty without the innovative work of DEC on this topic ( online tool , latest report ). Not only did DEC provide an analytical framework for measuring poverty, it also contributed to data collected within the ICP project and used widely today to estimate purchasing power parities (PPP) for the world’s economies. The Doing Business Report , one of the most influential products of the World Bank, is part of DEC. Financial inclusion , a household term today, is intimately connected with DEC research that started more than a decade ago .  More recently, DEC developed the analytical framework underlying the Human Capital Index . In all these cases, DEC, while attempting to answer basic research questions, identified data gaps and articulated strategic priorities that led to the provision of important public goods.  And this only scratches the surface of the myriad contributions that DEC has made over the years.   Research is by its nature uncertain. The dominant cost of research is the time and effort spent on projects that have long gestation periods and may not pan out. Therefore, patience and tolerance of failure are pre-conditions for success.  But the long-term payoffs of these high-risk, high-return bets justify the expenditures.   Last but not least, sound policy-making requires sharp and structured thinking. The traits honed in basic research, creativity, independent thinking, careful hypothesis formulation and testing, when paired with experience translate to invaluable wisdom that could and should guide policy.  An in-house research department is better placed than outside academics to inform – and be informed by – the day-to-day operational work of its home institution. As Olivier Blanchard, the prominent macroeconomist and previous Chief Economic Counselor of the IMF tweeted last month: “Central Banks have large research departments. Ministries of Finance typically do not even have a research department (with the result that research on monetary policy is much more developed than research on fiscal (macro) policy. Why?”   So, which of the above reasons is the most compelling for justifying the existence of a premier research department at the World Bank? My answer: All of the above!

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Science, health, and public trust.

September 8, 2021

Explaining How Research Works

We’ve heard “follow the science” a lot during the pandemic. But it seems science has taken us on a long and winding road filled with twists and turns, even changing directions at times. That’s led some people to feel they can’t trust science. But when what we know changes, it often means science is working.

Explaining the scientific process may be one way that science communicators can help maintain public trust in science. Placing research in the bigger context of its field and where it fits into the scientific process can help people better understand and interpret new findings as they emerge. A single study usually uncovers only a piece of a larger puzzle.

Questions about how the world works are often investigated on many different levels. For example, scientists can look at the different atoms in a molecule, cells in a tissue, or how different tissues or systems affect each other. Researchers often must choose one or a finite number of ways to investigate a question. It can take many different studies using different approaches to start piecing the whole picture together.

Sometimes it might seem like research results contradict each other. But often, studies are just looking at different aspects of the same problem. Researchers can also investigate a question using different techniques or timeframes. That may lead them to arrive at different conclusions from the same data.

Using the data available at the time of their study, scientists develop different explanations, or models. New information may mean that a novel model needs to be developed to account for it. The models that prevail are those that can withstand the test of time and incorporate new information. Science is a constantly evolving and self-correcting process.

Scientists gain more confidence about a model through the scientific process. They replicate each other’s work. They present at conferences. And papers undergo peer review, in which experts in the field review the work before it can be published in scientific journals. This helps ensure that the study is up to current scientific standards and maintains a level of integrity. Peer reviewers may find problems with the experiments or think different experiments are needed to justify the conclusions. They might even offer new ways to interpret the data.

It’s important for science communicators to consider which stage a study is at in the scientific process when deciding whether to cover it. Some studies are posted on preprint servers for other scientists to start weighing in on and haven’t yet been fully vetted. Results that haven't yet been subjected to scientific scrutiny should be reported on with care and context to avoid confusion or frustration from readers.

We’ve developed a one-page guide, "How Research Works: Understanding the Process of Science" to help communicators put the process of science into perspective. We hope it can serve as a useful resource to help explain why science changes—and why it’s important to expect that change. Please take a look and share your thoughts with us by sending an email to  [email protected].

Below are some additional resources:

• Discoveries in Basic Science: A Perfectly Imperfect Process
• When Clinical Research Is in the News
• What is Basic Science and Why is it Important?
• ​ What is a Research Organism?
• What Are Clinical Trials and Studies?
• Basic Research – Digital Media Kit
• Decoding Science: How Does Science Know What It Knows? (NAS)
• Can Science Help People Make Decisions ? (NAS)

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A look at the state of affordable housing in the U.S.

Housing affordability has emerged as a key issue in this year’s U.S. presidential election. Both Democrat Kamala Harris and Republican Donald Trump have talked about what they would do to increase the supply of affordable homes and people’s ability to buy them , though their plans have little in common.

It’s an important issue for the public, too: In a recent Pew Research Center survey , 69% of Americans said they were “very concerned” about the cost of housing, up from 61% in April 2023.

But what counts as an “affordable” home, and how many Americans are struggling to afford a place to live? This analysis tries to answer those questions, using data from U.S. Census Bureau surveys and other sources.

Pew Research Center conducted this analysis to explore housing affordability in the United States. Our major source was the U.S. Census Bureau, in particular its American Community Survey, Current Population Survey/Housing Vacancy Survey and Survey of Construction.

Some of the data in those surveys refers to both metropolitan statistical areas (MSAs) and micropolitan statistical areas (micros). The Office of Management and Budget defines MSAs as having “at least one urban area of 50,000 or more population, plus adjacent territory that has a high degree of social and economic integration with the core as measured by commuting ties.” Micros are defined similarly, except that they have at least one urban area with a population of between 10,000 and 50,000.

The data on households that spend 30% or more of their income on housing is based on the American Community Survey’s 1-year estimates. These estimates include all 393 metropolitan areas plus 137 micropolitan areas with total populations of 65,000 or more.

The share of households in each state, metropolitan area or micropolitan area is calculated only among households for which data on housing costs as a share of household income was available. Cost burden was not calculated for about 3.9 million households, or 2.9% of all U.S. households, primarily because they either have no income or pay no rent. The data covers both rented and owned units (and the latter both with and without mortgages).

We also used data from a 2024 Center survey, the Federal Housing Finance Agency (FHFA), Freddie Mac, Realtor.com and Zillow. Links to these sources, including methodological information for the Center survey, are available in the text. Realtor.com’s data on listing volumes is based on aggregated data from hundreds of local multiple listing services. Zillow’s data on median sales prices is based on all recorded home sales in a given area. Housing price index data from FHFA and Consumer Price Index data from the Census Bureau is not seasonally adjusted.

What makes a home affordable?

One commonly used ( though also criticized ) benchmark for housing affordability is that no more than 30% of household income should go toward housing costs. Households that spend more than that are considered “ cost burdened ” by the U.S. Department of Housing and Urban Development.

How the U.S. Census Bureau defines ‘housing costs’ and ‘gross rent’

The bureau’s American Community Survey defines “ housing costs ” as including rent or mortgage payments, property taxes, utilities, homeowners insurance, condominium or mobile-home fees and the like.

“ Gross rent ” includes the contract rent on the property as well as utilities and fuels, if paid by the tenant.

By that standard, 31.3% of American households were cost burdened in 2023, including 27.1% of households with a mortgage and 49.7% of households that rent, according to 1-year estimates from the Census Bureau’s American Community Survey (ACS). (Many more people own than rent: In the second quarter of 2024, 65.6% of occupied housing units were owned while 34.4% were rented, according to the most recent estimates from the Census Bureau’s Current Population Survey/Housing Vacancy Survey.)

We can also look at affordability for renters, specifically, over time using a slightly different standard: the share who spent 30% or more of their income on gross rent, rather than the share who spent more than 30% on total housing costs. In 2023, about half (51.8%) of renting households paid that much in gross rent, ACS estimates show. By comparison, 53.4% of renting households paid that much in 2011. The share of renters reaching that threshold hovered around 50% for the entire 2011-2023 period.

How has the housing market changed in recent years?

The U.S. housing market, as measured by the number of active for-sale properties on local multiple listing services (MLS), shrank dramatically during the COVID-19 pandemic but has since partially rebounded.

On any given day in September 2019, according to Realtor.com , there were more than 1.2 million active MLS listings. By September 2023, that number had fallen 42.7%, to about 702,000. But as of September 2024, there were about 941,000 active listings on a given day, 34.0% more than a year earlier. (These totals exclude pending listings when that data is available.)

Similar patterns are found across the country. In September 2024, 78.9% of the 900-plus local markets Realtor.com tracks had fewer active listings than they did in September 2019, but 92.2% had more active listings than in September 2023.

Meanwhile, home prices continue to rise. The Federal Housing Finance Agency’s national House Price Index, a gauge of how selling prices for single-family homes have changed over time, was 57.8% higher in July than it was in July 2019. For comparison, the Consumer Price Index – which measures price changes for a broad range of consumer goods and services – rose 22.8% overall between September 2019 and September 2024.

Related: Prices are up in all U.S. metro areas, but some much more than others

How does housing affordability vary geographically?

Like much else involving real estate, “location, location, location” plays a key role in how housing cost burdens are distributed. That’s especially true in California, according to our analysis of 2023 ACS estimates.

The federal government identifies more than 900 metropolitan and “micropolitan” areas in the United States and Puerto Rico, based on the population of an area’s core city or town. Many of the metropolitan and micropolitan areas with the highest shares of cost-burdened households (i.e., those that spend more than 30% of their income on housing costs) are in California.

Smaller micro- and metropolitan areas, as well as largely rural states, generally tend to have lower shares of cost-burdened households. Looking at the metro- and micropolitan areas where the smallest shares of households spend more than 30% on housing, most have populations smaller than 250,000, and the majority are located in Wisconsin, Alabama or North Carolina.

Some states have especially high shares of households spending more than 30% of their income on housing. For example, 40.6% of California households meet this threshold – including more than half (54.1%) of renters. Roughly similar shares of households in Hawaii (38.2%) and Florida (37.2%) also spend this much on housing costs, according to the 2023 ACS estimates.

At the other end of the spectrum, much smaller shares of households meet the “cost burdened” threshold in West Virginia (21.0% of households), North Dakota (22.0%), South Dakota and Iowa (23.6% each).

In every state, a greater share of renting households than homeowning ones are cost burdened when it comes to their housing costs. And homeowning households that carry a mortgage are more likely to be cost burdened than those that don’t.  

At the same time, the Federal Housing Finance Agency ’s state-level house price indices have increased for every U.S. state and the District of Columbia, by anywhere from 22.6% (D.C.) to 82.3% (Maine) between the second quarters of 2019 and 2024. Among the nation’s 100 largest metro areas, Miami-Miami Beach-Kendall in Florida had the biggest five-year increase in its house price index between the second quarters of 2019 and 2024: 95.0%.

In terms of actual dollars, Edwards, Colorado (near the Vail and Beaver Creek ski areas) tops Zillow’s list of 716 local markets: The median selling price there in August 2024 was $1.56 million. But of the 604 localities for which Zillow has five years of price data, another Centennial State ski town was top of the mountain: Between August 2019 and August 2024, the median selling price in Steamboat Springs rose 155.5%, from $433,500 to $1,107,500.

What factors contribute to housing being unaffordable?

A lack of housing affordability is the product of multiple factors intersecting in sometimes unpredictable ways. Interest rates, new home construction, population growth, population shifts, rising home prices and rents, disposable incomes, and local economic conditions all affect how easy or difficult it can be to find a home you can afford in a place you want to live. Let’s take a closer look at a few of these factors.

Interest rates

Almost four-in-ten households (39.3%), or 51.6 million, carry mortgages on their homes, according to 2023 ACS estimates. Soon after the COVID-19 pandemic began, the average interest rate on a 30-year fixed mortgage fell dramatically – from 3.72% at the start of 2020 to as low as 2.65% by the start of 2021, according to data from Freddie Mac . That prompted millions of homeowners to refinance their mortgages , locking in low rates and lowering their monthly payments. (A similar refinancing wave followed the collapse of the 2000s housing bubble.)

Since then, the average 30-year rate has soared as high as 7.79% (in late October 2023) and fallen to, as of late October 2024, 6.54% – roughly tracking investor expectations on inflation and the path of Federal Reserve interest-rate policy .

Still, according to a recent analysis by Federal Housing Finance Agency economists , most homeowners with fixed-rate mortgages are sitting on interest rates well below what they’d get if they took out a new mortgage today – limiting their ability, or willingness, to put their existing homes on the market. In that working paper, the economists estimate that this “lock-in” effect led to 1.33 million fewer home sales between the second quarter of 2022 and the end of 2023.

New home construction

Another way to increase the inventory of homes for sale is to build more of them. But the homebuilding industry took a deep dive during the Great Recession – falling from 2.07 million privately owned housing unit “starts” in 2005 to 554,000 in 2009 – and still has a way to go before returning to pre-crisis levels. In September 2024, housing starts were running at a seasonally adjusted annual rate of 1.35 million, according to the Census Bureau’s Survey of Construction .

The decline has been especially pronounced in entry-level single-family homes , defined as those smaller than 1,400 square feet. The peak year this century for new homes of that size was 2004, when 186,000 were built (12.1% of all single-family homes built that year). In 2023, however, only 87,000 new single-family homes (8.7%) were under 1,400 square feet, according to the Census Bureau .

Meanwhile, 23.5% of new single-family homes in 2023 were 3,000 square feet or larger, compared with 20.3% in 2004.

Multifamily housing, such as apartment and condo buildings, may offer some relief. Coming out of the Great Recession, buildings with five or more units were completed at a steadily rising pace until rising significantly in 2023, according to the Census Bureau’s Survey of Construction . That year, 438,300 such privately owned housing buildings were completed, more than in any year since 1987. And as of September 2024, completions of buildings with five or more units were running at a seasonally adjusted annual rate of 671,000.

• Homeownership & Renting

Drew DeSilver is a senior writer at Pew Research Center .

Methodology: 2023 focus groups of Asian Americans

1 in 10: redefining the asian american dream (short film), the hardships and dreams of asian americans living in poverty, majority of americans prefer a community with big houses, even if local amenities are farther away, single women own more homes than single men in the u.s., but that edge is narrowing, most popular.

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MIT Science Policy Review

Federal R&D funding: the bedrock of national innovation

Rebecca Mandt † , Kushal Seetharam † , Chung Hon Michael Cheng *

Edited by Jack Reid and Anthony Tabet

Full Report | Aug. 20, 2020

† These authors contributed equally.

* Email: [email protected]

DOI: 10.38105/spr.n463z4t1u8

• Federal research and development (R&D) funding has significantly declined as a share of GDP for several decades.
• We argue that federal R&D funding is the bedrock of national innovation and plays an irreplaceable role in steering scientific progress towards the betterment of society.
• We propose tailored communication efforts to galvanize long-term public support for federal investment in R&D.

Article Summary

The U.S. government’s financial commitment to scientific research has significantly declined in the past few decades. Recent research has also revealed a lack of public awareness of the importance of federal research and development (R&D) funding; only one in four Americans believe that the government’s role in science is indispensable. In this paper, we argue that federal funding provides the bedrock for the U.S.’s innovation infrastructure while guiding the national research agenda to benefit society. We first examine which projects the federal government chooses to fund, concluding that federally-funded R&D focuses heavily on use-inspired basic research and supporting work which is in line with the missions of federal agencies, missions that prioritize societal needs. Next, we examine how federal science funding uniquely addresses market failures of private sector R&D while catalyzing innovation more broadly. We close by proposing specific tailored communication strategies to galvanize public excitement about science, thereby mustering sustained public support for federal R&D funding.

Introduction

We choose to go to the moon. We choose to go to the moon in this decade, not because [it is] easy, but because [it is] hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win. President John F. Kennedy, 1962

When President John F. Kennedy proclaimed these now-famous words at Rice University in Houston, Texas, in 1962, the United States was lagging behind in the Space Race [1]—the Soviet Union was first to launch a satellite into orbit and first to launch a human into space. However, unfazed in the face of adversity and the seemingly impossible, the United States doubled down on its commitment to this massive and heroic endeavor, mobilizing the nation’s top talent and succeeding in sending a human to the moon for the first time in human history by 1969, a mere seven years after Kennedy’s speech.

The Space Race, in a sense, marked the pinnacle of a golden age in American science and technology, from the technological superiority that helped the Allies win World War II to the advent of computing and the Internet that revolutionized the entire world, and in 2020, the footprint of American science pervades every corner of the globe. This golden age brought the U.S. not only unparalleled prestige but also incredible prosperity.

America’s prosperity and success have been underwritten in no small part by its technological leadership [2]. And as America loses ground in the global race in technological innovation, this position, along with the prosperity and security America has enjoyed, are at stake [3, 4]. In an increasingly competitive global environment, federal support of scientific research—research that pays dividends decades into the future—is all-the-more fundamental to the U.S.’s current and future economic success [5].

American progress in an array of key research areas—e.g. photonics, robotics, artificial intelligence, nanotechnology—areas that would generate the yet-unimagined technologies and industries of the future decades from now, threatens to lag behind that of other countries [5]. Put another way, compared to other countries, we are not investing enough in our own country’s future, threatening economic prosperity and job creation decades down the line. The federal government’s failure to aggressively invest in scientific research is already exacting a cost: research projects in universities across the country are being shut down because of funding cuts [6]. The ramifications of these present cuts will be felt for decades to come [3].

This paper diagnoses the current problem with insufficient federal research funding and lays out the unique role of the federal government in the national scientific research enterprise. In particular, we first highlight the importance of federal funding in facilitating innovation and then outline the reasons for and results of insufficient federal research funding. The federal government sets national priorities for scientific and technological progress, addresses market failures concerning high-risk, public-good research endeavors, and “crowds in” human and capital resources to R&D, both public and private, creating a virtuous, self-reinforcing cycle of greater investment in research and innovation. We conclude that U.S. federal R&D expenditures should be greatly expanded in order to sustain the economic prosperity and social well-being of America and its people. Furthermore, we recognize the necessity of galvanizing political will through policy advocacy and public engagement to safeguard future support for federal R&D.

The Faltering of Federal Research Funding

After World War II, the federal government began prioritizing funding for R&D, propelling the United States into a position of global leadership in innovation and technology [7]. In current dollars, federal R&D funding grew from \$2.8 billion in 1953 to \$127.2 billion in 2018. However, over the last decade, federal support for R&D has been relatively flat, and from 2011-2014, funding actually fell for three consecutive years [7] (Fig. 1a). The past few years have seen a bolstering of bipartisan support for the federal research budget [8] (Fig. 1a), but this recent trend cannot be taken for granted. Under the presidential budget request for FY2021, federal research funding would be cut by 9% overall [9]. Additionally, in recent years, trends in R&D funding have been largely driven by overall trends in discretionary funding, which compared to mandatory, or entitlement spending, has represented a dwindling share of the federal budget [8]. Appropriators will face tough choices in the next two fiscal years, in the face of limited room for increased spending under the discretionary spending caps. This pressure will undoubtedly be exacerbated by the ongoing global economic recession caused by COVID-19 [9, 10].

Figure 1: Trends in federally-funded research and development (R&D) funding over time. (A) Total amount of federal R&D funding in billions of dollars. (B) R&D intensity, given as the percentage of federal R&D expenditures as share of total gross domestic product (GDP). All amounts are in current U.S. dollars. Source: National Science Board, National Science Foundation, 2020, Research and Development: U.S. Trends and International Comparisons, Science and Engineering Indicators 2020, NSB-2020-3, Alexandria, VA. Available at https://ncses.nsf.gov/pubs/nsb20203/.

One important metric for assessing a country’s investment in R&D and innovative capacity is “R&D intensity,” or the percentage of R&D expenditures as a share of gross domestic product (GDP) [8]. In the United States, federal R&D intensity has had an overall downward trend since the Space Race of the 1950s and 60s [11], declining from a high of 1.86% in 1986 to 0.62% in 2017 (Fig. 1b). By this less optimistic measure, the U.S. government has actually greatly deprioritized the importance it places on research innovation in recent decades.

One frequently discussed repercussion of the recent stagnation of federal R&D funding is that America’s position as the world’s uncontested technology and innovation powerhouse has been steadily slipping. The most recent NSF Science and Engineering Indicators report showed that as of 2017, the United States still leads the world in total R&D spending (both public and private expenditures) [12]. However, the U.S.’s share of global R&D has declined from 69% during the post-WWII period to 37% in 2000 to 27.7% in 2017 [7, 13]. Globally, comparing the growth rate of total R&D expenditure from 2000-2017, the U.S. lags behind several other countries, including China, South Korea, India, and Germany [12]. The potential technological, economic, and national security implications of the loss of U.S. dominance in research and innovation has been extensively reviewed elsewhere [4, 14].

Another impact of recent trends in R&D funding is a dramatic shift in who is sponsoring research. While federal R&D has seen a period of recent stagnation, this has been offset by rapid increase in R&D by the private sector. Before the 1980s, the federal government funded the majority of R&D, whereas since the 1980s, private funding has dominated. As of 2017, around 70% of R&D expenditures were funded by businesses [8, 11] (Fig. 2). The ramifications of this trend are not immediately obvious; indeed, in a recent public opinion survey of adults in the United States, only one in four people believes that the federal government’s role in science is essential [15], indicating a belief that the private sector could replace the function of the federal government in R&D. However, in this paper, we contend that the federal government is uniquely situated to undertake cutting-edge scientific initiatives, and to guide the research agenda to address societal needs that the private sector would otherwise ignore. We also discuss how the federal government “crowds-in” funding from other sources, and invests in infrastructure and human resources upon which the rest of the scientific enterprise relies.

Figure 2: The private sector has overtaken the federal government in research development (R&D) spending. (A) Total R&D expenditures by funding source, in billions of dollars. (B) Percentage of total US R&D funding from the federal government, businesses, and other sources. All amounts are in current U.S. dollars. Source: National Science Board, National Science Foundation, 2020, Research and Development: U.S. Trends and International Comparisons, Science and Engineering Indicators 2020, NSB-2020-3, Alexandria, VA. Available at https://ncses.nsf.gov/pubs/nsb20203/.

Critical Roles of the Federal Government

The federal government is critical to both the progress of national R&D and tying this progress to societal needs. In this section, we introduce the taxonomy of R&D categories and discuss each of the roles of the federal government in detail. Specifically, the federal government funds research that serves broad public priorities, addresses market failures by funding research that the private sector does not and cannot, and generates virtuous cycles that encourage public and private sectors alike to further invest in research and innovation.

Classification of R&D

The government often classifies research into three categories: basic research, applied research, and development (see Fig. 3 for official definitions). This linear model of innovation wherein knowledge is generated from basic research, then expanded towards some practical use in applied research, and finally formalized into some technology during development only captures the first role of federal funding which is to address the lack of industry support of fundamental research. This model was enshrined in modern science policy by Vannevar Bush’s report Science, the Endless Frontier . Bush was the Dean of the MIT School of Engineering and head of the Office of Scientific Research and Development during World War II; his report is widely seen has having defined America’s post-WWII research enterprise [16]. This linear model of innovation is increasingly understood to be overly simplistic [17]. Even Bush noted in his report that there is no strict line between basic and applied research.

Figure 3: Comparing the type of research that the federal government and businesses fund. The table gives the definitions of basic, applied, and experimental development used by the National Science Foundation and National Science Board in the 2020 Science Indicators report. The pie charts show how much federal and private sector funding is devoted to each of these research categories. Source: National Science Board, National Science Foundation, 2020, Science and Engineering Indicators 2020: The State of U.S. Science and Engineering, NSB-2020-1, Alexandria, VA. Available at https://ncses.nsf.gov/pubs/nsb20201/.

The problem, however, is not just an ambiguous boundary between basic and applied work, but also the idea that the generation of fundamental knowledge of nature is strictly correlated with a purity of intent free of practical considerations. Indeed, there is a misconception that basic research corresponds to “pure” research [18]. A more realistic categorization of research uses the criteria of whether or not its intent is to generate fundamental knowledge and whether or not there was some practical motivation behind the work; such a categorization encapsulates both roles of federal research which are to support fundamental research and guide innovation toward societal needs. These criteria are not redundant, and “basic” research that generates knowledge can also be motivated by use. Donald Stokes, a renowned political scientist and previous dean of the Princeton School of Public and International Affairs, gives a more nuanced model in which research is split into four quadrants based on these two criteria of knowledge generation and use (Fig. 4) [19, 20]. Canonical examples of the quadrants would be Niels Bohr’s work on atomic structure which was motivated purely by a quest for understanding without use, Thomas Edison’s pursuit of electrical lighting which was motivated purely by use without a desire for fundamental knowledge, and Louis Pasteur’s work on germ theory which was motivated by both the desire for knowledge and practical use. The fourth quadrant of work which is motivated neither by practical use nor fundamental knowledge consists, for example, of taxonomic or classificatory research and tinkering projects [19].

Figure 4: Quadrant model of federal R&D funding. Funding sources are categorized by proximity to application and contribution to fundamental understanding.

This quadrant model also better captures the complex relationship between science and technological innovation. Knowledge generated from scientific inquiry can certainly lead to new and improved technologies, however, the invention of some piece of technology often motivates basic research to investigate the natural phenomenon underpinning the device. A modern example is the complicated web connecting high-temperature superconductivity, magnets in MRI machines, nuclear fusion reactors, and efforts to design quantum computers and simulators; these seemingly disparate fields of science and technology have intimately connected motivations that flow back and forth between fundamental science and societally relevant technologies.

Funding Public Priorities

The intent to connect the government’s R&D expenditure to societal needs has been expressed by administrations across the political spectrum [21, 22]. The role of federal funding in supporting fundamental research and in addressing societal needs can thus be accommodated by framing the U.S. government’s approach to science through the lens of use-inspired research. Such a compact meshes naturally with the missions of agencies which disperse federal funds and makes it more natural to justify public investment of science broadly, including investment in pure undirected research through its support of use-inspired research, motivated by an application, and ultimately technological progress [19]. The majority of federal R&D funding is distributed by the National Institutes of Health (NIH), National Science Foundation (NSF), Department of Defense (DoD), and Department of Energy (DOE), with over 60% of funds going to university-based academics, who are the primary contributors of fundamental research [23]. These agencies have a variety of different missions that address different societal needs. For example, the NIH’s mission is to improve human health through the scientific understanding of disease and health, the NSF’s mission includes general scientific learning and discovery, DARPA (part of the DoD) focuses on technologies related to national security, and ARPA-E (part of the DOE) focuses on energy technologies. In line with their driving purposes, these agencies fund a spectrum of research across the various quadrants in Stokes’s model (Fig. 4).

We see, however, that the overall portfolio of federal funding broadly centers around the quadrant of use-inspired basic research, with support in adjacent quadrants providing the healthy environment required for such use-inspired research to thrive; the complex interplay between science and technology means that research in one quadrant often depends on progress in others. When the “use” in the use-inspired research is contextualized towards societal needs through the missions of government agencies, the use-inspired research becomes societally relevant research. The federal government’s broad focus on societally relevant research does not hinder academic freedom at the project level; government funding agencies keep broad societally relevant use cases in mind when forming their grant portfolio, but scientists undertaking research through individual grants still have the leeway to be undirected in their intent. In this way, there is a notion of national welfare underpinning public research funding while scientists remain largely uninfluenced by this context in their pursuit of knowledge. Such a compact between science and the government gives a stronger argument for funding science than the pure notion of science as a public good. Federal R&D funding therefore plays the critical role of generating research relevant to public priorities such as healthcare and a clean environment which are at the core of the missions of federal agencies. As will be discussed in the following sections, this research not only provides the bedrock upon which industry R&D is done, but also creates a “crowd-in” effect by which other parts of the national innovation infrastructure invest in areas related to these public priorities.

Addressing Market Failures

Unlike the private sector, the federal government is uniquely suited to guide national innovation toward public priorities, such as healthcare, clean energy, and infrastructure, that market incentives ignore [24]. The government has a role in two different types of market failure. The first is a true market failure where fundamental research underlying new technologies is not funded by the private sector due to the risk-reward profile and timeline to commercial relevance. The second is that regardless of how efficient the market is, an incrementally progressing economy does not always align with pressing societal needs or generate optimal societal outcomes.

Private firms’ and industries’ goal to maximize profit from an R&D investment often results in the financing of short-term, low-risk technologies. This is especially true in areas where the foundational research is mostly complete and the bulk of the remaining work is in short-term development. It follows that U.S. industries tend to spend about 80% of their R&D investments on technological development and only 20% on foundational research, which are longer-term, riskier (although arguably cheaper) investments [8]. This trend towards “short-termism” has become increasingly predominant in industry with more and more investment going into development rather than research [25]. As less and less research is being done in the private sector, companies are increasingly relying on work done at academic institutions funded by the federal government. For example, almost 90% of high-impact research papers authored by corporations were written in collaboration with scientists at academic and government labs [26]. The amount of corporate patents that rely on work done elsewhere has also increased dramatically; almost a third of all patents filed in recent years cite federally-supported research. The patents that cite federally-supported research were also found to be of greater substance and novelty on average [27].

While the reliance of the private sector on research produced elsewhere is not problematic a priori , this model only works when federal funding is available to provide these long-term, risky investments into basic and applied research. For example, the U.S. shale gas boom relied heavily on federal funding through the scientific research performed at the Gas Research Institute and the geologic mapping technology developed at Sandia National Labs [24]. This is an example of the federal funding addressing a true market failure by derisking private sector R&D.

The market by itself, however, is often blind to environmental concerns and the long-run societal and economic impact of pressing issues like climate change. Such societal issues are the purview of the federal government, which can use federal funding and other policies to catalyze national innovation towards clean energy technologies and climate resilience. Other examples of public priorities where the government has a pivotal role include developing new antibiotics and understanding the effects of opioids [28]–[30]. Federal research funding is therefore critical both by supporting fundamental research that the private sector is not incentivized to invest in, as well as by providing leadership in targeting societally critical issues. Below, we give two case studies demonstrating these roles.

Case study 1: A canonical example of the government’s role in laying the foundation for innovative technology is the Internet. While the concept of a wireless telecommunications system was around as far back as the early 1900s when Nikola Tesla coined the term “World Wireless System,” the first working prototype of such a network was created by the Department of Defense under the Advanced Research Projects Agency (ARPA) [31]. The goal of “ARPANET,” as it was named, was to create a secure telecommunications system that could distribute information wirelessly in the case of an attack [32]. ARPANET incorporated many key innovations including the concept of “packet switching”—breaking an electronic message into smaller packages that can be transmitted to a new location and re-assembled. The initial network had host computers connected via phone lines to “interface message processors”—the predecessor to the modern-day router [32]. Over the next 20 years, ARPA-funded researchers continued to develop advanced communication protocols and to expand ARPANET into a broader “network of networks” [31, 33]. In addition to the role of ARPA, another federal agency, the National Science Foundation (NSF), was also essential in providing networking services and high-end computing power to universities across the county. These NSF-supported supercomputing centers developed many advances in web applications, including the first freely accessible web browser, which was the basis of modern browsers including Microsoft Internet Explorer and Netscape Navigator [34]. While the Internet as it is known today cannot be credited to any single organization, the role of government research in laying the foundation is undeniable. It is difficult to imagine that such an expansive project involving years of research and coordination across multiple institutes could have been undertaken without its involvement [35].

Case study 2: A good example of the mismatch of public and private objectives can be seen in the development of new antibiotics to keep ahead of rising bacterial resistance to pre-existing drugs. Antimicrobial resistance is widely recognized as one of the greatest threats of the 21st century [36]. Widespread use of antibiotics has led to the evolution of drug-resistant bacteria that no longer respond to currently used treatment methods. Thus, there is a critical need to produce new antibiotics. In spite of this, there has actually been a decrease in the number of new antibiotics being developed and approved since the 1980s, and many large pharmaceutical companies have downsized or eliminated their antibiotic discovery programs [37, 38]. This is because there are several barriers that limit the profitability of new antibiotics, often leading to a poor return on investment. Unlike drugs for chronic conditions, antibiotics are typically taken for a short period of time. New antibiotics entering the market face competition from cheaper generics, and are often reserved as drugs of last resort [39]. Even if an antibiotic is successful, there is always a danger that resistance to the new drug will emerge, so it may only be effective for a limited window of time.

Given the high risk associated with bringing any new drug to market and limited ability to recoup investments, it is understandable that this is a priority that the private sector will not address on its own. Thus, several government agencies have stepped in to fill the gap. For example, the Biomedical Advanced Research and Development Authority (BARDA) has contributed $1.1 billion since 2010, advancing nine new antibiotics to clinical development, three of which have already been approved [29]. BARDA and several other Department of Health and Human Services (HHS) agencies have also awarded grants and facilitated public-private partnerships to incentivize the development of new drug candidates [39, 40]. It is clear that without continued federal involvement, there would exist few solutions against a post-antibiotic world where millions die each year from bacterial infections that were once easily treatable [36].

Virtuous Cycles of Federal Funding

In addition to directly supporting research related to public priorities, federal investment also produces a domino effect in resource commitment, inducing investment from non-federal sources such as the private and philanthropic sectors into R&D related to broad societal objectives [41]. A multitude of studies have found that government investment in R&D increases private investment and effort (see, for example, [42]). Analysis done by Lanahan et al. in 2016 estimated that every 1% increase in federal research funding leads to a 0.468% increase in industry research investment, a 0.411% increase in nonprofit research investment, and a 0.217% increase in state and local research funding, cumulatively more than doubling the initial federal investment [41]. This positive feedback effect generally holds true across different disciplines including life sciences, physical sciences, and engineering. We therefore see that federal funding has an effect of “crowding-in” R&D investment from non-federal sources rather than crowding them out, as is sometimes erroneously assumed. As federal R&D investments are typically made in line with the missions of federal agencies which are in line with public priorities, increasing federal funding would lead the entire national R&D infrastructure to move more in step with societal needs and public benefits rather than purely market considerations. Additionally, federally-supported research is much more likely to be publicly disclosed compared to private sector R&D, and is therefore more likely to catalyze other innovations [23]. For example, as previously discussed, advances in supercomputing, and even the invention of the web browser, were built upon research done on computationally modeling black hole collisions [43]. As another example, fundamental physics research studying the movement of atoms led to the invention of molecular resonance imaging (MRI), a medical technology that helps save countless lives today [44, 45].

Federal R&D expenditure is also responsible for both the education and training of scientists and engineers who move into the broader workforce as well as the physical infrastructure that often forms the kernel for regional hubs of technological innovation [46]. A core part of the NSF’s mission, for example, is supporting science, technology, engineering, and mathematics (STEM) education and the broader development of the human capital pipeline for national R&D [23]. The agency is also tasked with maintenance of large-scale research infrastructure such as facilities for materials research and fabrication, high-performance computing facilities, and particle accelerators, out of which technologies underlying countless start-ups and private sector innovations have been born [47]. The work done by university research centers and national labs, both of which are primarily funded by the federal government, also end up attracting technology incubators, start-ups, and a larger industry presence [3]. Therefore, federal funding is often responsible for the key centers around which technology hubs form and lead to regional economic growth; examples include Silicon Valley in California; Boston, Massachusetts; the Research Triangle Park in North Carolina; the Boulder-Denver corridor in Colorado; and Madison, Wisconsin. In addition to its indirect role in forming such innovation hubs, the federal government often takes a direct role in creating infrastructure critical to future private sector R&D including advanced manufacturing, high-performance computing, and smart cities [48]. Federal funding, therefore, plays two major roles: it spurs the general pace of national innovation forward, and it guides the national innovation ecosystem towards societal priorities. Both of these tasks are accomplished by utilizing the “crowd-in” effect of federal R&D investments, the training of the STEM workforce, the tendency for technology hubs to form around academic and federal research centers, and the types of R&D infrastructure the government catalyzes.

In this paper, we have shown that federal investment in R&D is stagnant at best and, by some measures, declining. We also provide theoretical context and case studies illustrating why federal funding is uniquely important to creating innovations in research that benefit the public good. Here, we provide proposals for how to translate this message to the public in order to effect political change. We recognize that these proposals alone will not be sufficient if the goal is to bolster federal research funding; such an endeavor will certainly require a broad array of approaches, including the utilization of professional advocacy efforts and a discussion of the budgetary mechanisms that could be used to increase or reallocate federal discretionary funds. However, in this section, we focus on public advocacy as a necessary and often overlooked strategy that can safeguard grassroots political support for federal funding into the future.

This focus on public engagement is particularly salient in light of an increasingly visible “science – public divide,” a phenomenon whereby growing segments of the public are embracing views that are contrary to scientific consensus, such as the anti-vaccine movement [49]. The current COVID-19 epidemic also highlights how failures in communication can have important public health consequences [50]. Evidence to be discussed below indicates that while public support for science is still generally strong, Americans are somewhat disconnected from the world of science itself. There are dire consequences caused by rifts between “elite, ivory-tower scientists” and “everyone else.” Science is a collective national and societal endeavor, and only by keeping it so can there be sustained public support for science. The discussion that follows lays out recommendations for safeguarding the close, symbiotic relationship between the scientific community and the general public.

As we have discussed, the federal government plays an integral role in translating scientific research into technologies and solutions that impact our everyday lives. We believe that this is an important message to convey to both policymakers and the public to galvanize support for federal R&D funding. The American public must understand that America’s scientific and technological breakthroughs are not merely badges of national prestige; they have material impacts on our standard of living and our national security. While most Americans agree that the federal government should fund scientific research, less than half support increasing federal R&D funding [51]. This issue is likely compounded by the fact that the majority of Americans overestimate the amount of government spending that is devoted to scientific research relative to other priorities [52]. Additionally, in a public survey from 2011, when adults in the U.S. were asked the question “Which one of the following domestic programs would you be willing to cut government spending in order to reduce the federal deficit?”, scientific research was at the top of the list [53].

By reframing the discussion around the role of federal R&D funding, we hope to change public opinion. Recent public survey data from the organization ScienceCounts, an organization dedicated to increasing public awareness and support for scientific research, examined the type of science that Americans believe various institutions do best. According to ScienceCounts, the American public believes that the private sector is best at creating new processes and products and driving economic growth. By contrast, Americans believe that universities, which are largely federally-funded, are best at discovering how things work [54]. This survey data suggests that Americans are unaware of how many federal dollars go towards use-inspired research, and how integral federal funding is to the accomplishment of public priorities, the pursuit of innovative moonshot initiatives, and the R&D ecosystem as a whole. Even if the public is not explicitly aware of the linear model of scientific research, it seems to largely view research progress through this lens. We believe that this finding helps to explain why only one in four people believe government funding of scientific research is essential [15].

The good news is that Americans have an overall positive view of science and are optimistic about how science can be used to improve society. Almost all (92%) of the public agreed that science and technology create “more opportunities for the next generation” [51]. Importantly, one of the major findings of the ScienceCounts research is that the primary association that people have with science is hope—a powerful brand that can and should be utilized by science advocates [15].

The above review of public perceptions of science suggests an enormous opportunity. If the public can be persuaded that federal R&D funding is uniquely important to actualize those aspirational hopes that science promises, this would go a long way towards increasing public engagement and support for federally-funded science. We believe that citizen-level involvement is a powerful and under-recognized strategy for enacting political change. Here, we outline three steps necessary to achieve this public advocacy goal.

1) Identifying specific scientific outcomes the public prioritizes. It is wonderful news that people so strongly associate scientific research with hope, but what exactly is it that people are hoping for? In a pilot digital marketing-based study, ScienceCounts found that general messages of hope do not work, finding that “in the absence of a clear benefit, the promise of science becomes weak and generic, losing much of its appeal” [53]. We propose conducting research to better understand what exactly it is the public values and cares about most. What diseases do people most want to see cured? What environmental concerns do people believe are most pressing? What advances in computing and information technology are people most excited about? Are these values uniform, or are there differences among various segments of the population? Such information would empower science advocates to effectively cater their efforts, and to draw concrete connections to how science can benefit people personally and improve their daily lives.

2) Developing and supporting effective public communication efforts in the scientific community. Once science advocates identify what specific messages will resonate with the public, they need to consider how to most effectively convey them. Research suggests that piquing people’s interest and curiosity should be a key goal of science communication [55], with one study noting that people’s level of scientific interest influences how much they support public research funding [56]. There is also a growing body of literature on the power of narrative storytelling for communicating science. Contextualizing messages within a narrative helps audiences comprehend and recall information, fosters interest and emotional connection, and when done well, is a very effective way to persuade audiences [57]–[59]. Thus, we propose that science advocates work to develop compelling narrative describing examples of scientific discoveries that have had a positive impact on people’s lives. An example would be the Golden Goose Awards, which highlight scientific research that seems strange or obscure, but which has reaped unexpected societal benefits [60]. In order to convey these messages to the public, stakeholders—namely scientists and the science-interested public—need to be trained in how to communicate effectively. Survey data suggests that there is a high level of willingness and interest among scientists to engage with the public [61, 62]. There has also been an increase in graduate-level training and professional development opportunities in science communication [63]. We believe that such opportunities for training should continue to be expanded. However, several studies have reported that lack of institutional support remains a barrier to engagement efforts [63, 64]. Thus we also propose that university leaders should place higher value on science communication. Funding agencies could also facilitate this by providing incentives for scientific grant holders to participate in public communication efforts.

3) Mobilizing the public as advocates to safeguard the American research enterprise. As it stands, scientists are not very visible to the public eye. A 2019 survey by Research!America found that only 20% of Americans can name a living scientist [65].¹ By increasing the amount of engagement that scientists have with the public, scientific stakeholders can energize and excite people about the benefits of scientific research. This matters because the public are also constituents. A report from the Congressional Management Foundation found that, perhaps contrary to popular perception, interactions with constituents have considerable influence on policymakers’ decisions [66]. By pairing scientific communication with a call for increased support of federal research funding, we can thus galvanize a largely-untapped base of grassroots political support for this important issue. We certainly believe that direct advocacy by scientists and scientific societies to policymakers is important, and we expect that the above recommendations about communication will apply to policymakers as much as the general public. Concretely, there are many different forms that these efforts can take, from local grassroots outreach events to nation-wide advertising and public relations campaigns. Ultimately, we contend that we can increase the power of our advocacy by mobilizing broader segments of the general public to also speak up and be a voice for science.

¹ We recognize that the current COVID-19 pandemic has dramatically increased the visibility of science both in the United States and worldwide. Certainly, scientists like Dr. Anthony Fauci and Dr. Deborah Birx have become household names in recent months. It will certainly be interesting to see how this impacts the perception and support of science broadly over a longer time-span, although such a discussion is beyond the scope of this article.

As the world continues on a path of ever-more-rapid technological change, we believe that it is critical for the United States to remain a leader in progressing science, technology, and innovation to improve the human condition and to expand the frontiers of discovery. People have long looked to scientific and technological advances to improve their way of life, and to create solutions that address pressing societal needs. Especially in an era of increasingly prevalent public health and climate crises, it is critical that we restore the integrity of our national innovation infrastructure

Acknowledgements

The authors would like to thank Rebecca J. Chmiel for her contributions and thoughtful discussions.

Mandt, R., Seetharam, K. & Cheng, C. H. M. Federal R&D funding: the bedrock of national innovation. MIT Science Policy Review 1 , 44-54 (2020).

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Rebecca Mandt

Department of Immunology and Infectious Diseases, Harvard T.H. Chan School of Public Health, Boston, MA

Kushal Seetharam

Department of Electrical Engineering and Computer Science, Massachusetts Institute of Technology, Cambridge, MA

Chung Hon Michael Cheng

Institute for Data, Systems, and Society, Massachusetts Institute of Technology, Cambridge, MA

Geomechanics & Geophysics for Energy and the Environment

Duke’s Geomechanics and Geophysics for Energy and the Environment research group bridges the gap between geology and geophysics. It seeks to understand and address issues related to underground engineering, the exploration of oil, gas, methane hydrates, and more—as well as resource use and environmental hazards.

Hazards we address include earthquakes, sinkholes, desiccation soil cracking, material degradation, geostructure degradation, landslides and mudslides. We use geomechanics principles to assess wellbore stability, reservoir properties, nuclear waste geological disposal, landslide stability and hydraulic stimulations, including hydraulic fracking.

Research Areas

• Chemo-mechanical couplings in geomaterials
• Thermo-plasticity of soils and rocks
• Long-term multi-physics aspects of resilience of geo-structures
• Multi-physics of geological nuclear waste isolation
• Evaporation, drying and cracking of geomaterials
• Multi-physics aspects for friction laws
• Stability and bifurcation of multiphysical systems
• Computational geomechanics
• Non-invasive geophysical characterization of earth subsurface for engineering, energy and environmental applications
• Subsurface contamination and related health issues
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• Multiscale analysis of porous materials
• Stochastic modeling of heterogeneous materials
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Fred K. Boadu

CEE Director of Master’s Studies, Associate Professor of Civil & Environmental Engineering

Laura Elizabeth Dalton

Assistant Professor in the Department of Civil and Environmental Engineering

Henri P. Gavin

W.H. Gardner Jr. Chair of Civil and Environmental Engineering, Professor in the Department of CEE

Johann Guilleminot

Paul Ruffin Scarborough Associate Professor of Engineering

Tomasz Hueckel

Professor Emeritus in the Department of Civil & Environmental Engineering

Guglielmo Scovazzi

Professor in the Department of Civil and Environmental Engineering

Manolis Veveakis

Associate Professor in the Department of Civil and Environmental Engineering

Other Research Specialties

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INVESTING IN AMERICA: Biden-Harris Administration Announces More Than $4.2 Billion From the Bipartisan Infrastructure Law for Transformational, National Infrastructure Projects

Funding from USDOT’s INFRA and Mega grant programs are helping build complex, ambitious projects across the country that improve safety, mobility, and economic competitiveness 

WASHINGTON – Today, U.S. Transportation Secretary Pete Buttigieg announced more than $4.2 billion in funding from the Biden-Harris Administration’s Investing in America agenda through two major discretionary grant programs, the National Infrastructure Project Assistance (Mega) grant program and the Infrastructure for Rebuilding America (INFRA) grant program, both of which have historic levels of funding thanks to the Bipartisan Infrastructure Law.   

A total of 44 projects were selected in this round of funding, including projects that improve safety, mobility, and economic competitiveness, constructing major bridges, expanding port capacity, redesigning interchanges, and more. Three projects – in Phoenix, AZ, Chicago, IL, and Providence, RI – received awards from both programs, following through on the Department’s commitment to invest in non-traditional, multimodal projects that have been challenging to fully fund with limited resources in the past. 

"Thanks to the Bipartisan Infrastructure Law, the Biden-Harris administration is carrying out ambitious, complex transportation projects that will shape our country’s infrastructure for generations to come,” said U.S. Transportation Secretary Pete Buttigieg. “With this latest round of awards, dozens of major and much-needed projects – projects that are often difficult to fund through other means – are getting the long-awaited investments they need to move forward.” 

Since the start of the Biden-Harris Administration, nearly $12.8 billion in funding through the INFRA and Mega programs has been announced for 140 projects across 42 states, Washington D.C., and Puerto Rico, including approximately: 

35 large bridge projects 

18 large port projects 

20 rail projects 

85 highway improvement projects 

Approximately 53% of projects that have received funding to date are in rural communities, and about 42% of projects are located in disadvantaged communities, delivering on President Biden’s Justice40 commitment. 

In today’s round of selections for the Mega program, the Biden-Harris Administration is investing $1.68 billion into 11 projects that will generate national and regional economic, mobility, and safety benefits while creating U.S. jobs and lowering costs for consumers. 

Selected Mega projects this round include: 

$472.3 million to the Massachusetts Bay Transportation Authority for the North Station Renovation and Draw 1 Bridge Replacement project in Boston, Massachusetts. The project will replace Draw 1 – a 92-year-old bridge that links Amtrak’s Downeaster intercity passenger rail (IPR) service and four separate MBTA regional rail lines to North Station – as well as extend and activate a two-track platform at North Station and replace track, signals, and switches throughout the project area. Despite the poor condition of the bridge, Draw 1 functions as the primary portal for over 1,100 passenger trains each week into North Station, the fifth-largest transit station in the New England region. These trains are routinely subjected to delays attributable to project components, with 165 unique delay events between 2019 and 2021, and an average operational lag of 24.7 minutes. As regional rail ridership continues to grow, this project is critical to preserving and expanding future service in the Northeast. 

$217.2 million to the Philadelphia Regional Port Authority for the SouthPort Berth Phase 2: Capacity and Resilient Growth Optimization (CARGO) project in Philadelphia, Pennsylvania. The project will increase resiliency and expand operational capacity at the Southport terminal by providing approximately ten additional acres adjacent to the Phase 1 berth development and adding a second berth downriver. PhilaPort, recognized as the fastest-growing port on the East Coast, will achieve cost-savings efficiencies from an improved terminal layout and will be more competitive as the project will provide capacity for additional roll-on/roll-off cargo. 

$68.6 million to the Iowa Department of Transportation for the Southwest Mixmaster Interchange Reconstruction project in Des Moines, Iowa. The project will reconstruct the existing I-35/80/235 interchange, which was constructed in the 1960s and is considered one of the most dangerous in the state. The interchange was built to handle 1,000 vehicles an hour – today, it carries an estimated 1,500 vehicles per hour and is expected to grow to 2,000 per hour by 2050. The reconstruction, which includes new flyover bridges from southbound I-35/80 to eastbound I-235 and to westbound I-80, will improve the safety and reliability of travel for people and freight through the region. 

In today’s round of selections for the INFRA program, for which funding was increased more than 50% by the Bipartisan Infrastructure Law, the Biden-Harris Administration is investing $2.58 billion into 36 projects that will improve the safety, efficiency, and reliability of the movement of freight and people in and across rural and urban communities.  

Selected INFRA projects this round include: 

$196 million to the Michigan Department of Transportation for the River Raisin Bridge and Interstate 75 Revitalization project in Monroe County, Michigan. The project will replace the deteriorating River Raisin Bridge along I-75 with a new crossing to accommodate estimated future traffic, update and replace six existing structures – including two bridges over class I railroad lines – with new ones designed for a100-year lifespan, and reconstruct over two miles of roadway to improve safety and the efficiency of freight movement along this vital U.S.-Canada trade corridor. The I-75 River Raisin Bridge serves as a vital connection point between Detroit and Toledo and currently serves approximately 61,000 vehicles daily, with 25% being truck traffic. 

$86.6 million to the Mississippi Department of Transportation for the Improvements to the I-20/I-55 Freight Corridor project in Jackson, Mississippi. The project will update seven bridge structures to meet modern design standards, repair an additional 19 bridge structures, deploy Intelligent Transportation Systems (ITS) equipment, and resurface approximately 32 miles of roadway to enhance the movement of goods and people and reduce the number of fatal and injury crashes on this critical corridor. The excessively rough road surfaces in the project area cause significant travel delays for both trucks and cars, and the segment of I-55 between US Highway 49 and Pearson Road was identified in 2022 as the 6th worst freight bottleneck in the state.  

$66.5 million to the Florida Department of Transportation for the U.S. 1/SR 5 Long Key Bridge Replacement project in Monroe County, Florida. The project will replace the current Long Key Bridge built in 1982. US 1 is the only roadway linkage across the Florida Keys for 113 miles between the mainland and Key West and is a critical emergency evacuation route for the Florida Keys. Additionally, freight movement over the Long Key Bridge is a lifeline supporting the Florida Keys economy – more than 134,000 trucks carrying an estimated $2 billion in freight cross the bridge each year. This replacement project is critical to the 72,000 people and hundreds of businesses located south of the bridge. 

View the full list of  Mega awards HERE  and  INFRA awards HERE . 

Applications opened in March under a joint notice of funding opportunity (NOFO) for this year’s $5.1 billion Multimodal Discretionary Grant Program, or MPDG, which allows applicants to submit one application for consideration under the Mega, INFRA, and Rural grant programs.  

As with last year’s awards, despite these historic increases in funding, these programs were significantly oversubscribed. The Department received approximately 200 INFRA and Mega applications requesting more than $27 billion in funding, far exceeding the amount of funding available.  

Applications for the MPDG grants were evaluated based on the criteria published in the NOFO. The criteria included safety; state of good repair; economic impacts, freight movements and job creation; climate change, resilience, and the environment; equity, multimodal options and quality of life; and innovation areas such as technology, project delivery, and financing. The Department also considered cost effectiveness, project readiness, and certain statutory requirements related to funding and design in evaluating the MPDG applications received. Rural Surface Transportation grant applications are still under evaluation, and the Department anticipates announcing selections by January 2025. 

More information about the Mega, INFRA, and Rural programs can be found here . 

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Definitions of Research and Development: An Annotated Compilation of Official Sources

Introduction.

This document provides definitions of research and development from U.S. and international sources.

The first section (I) presents statistical definitions of R&D from the Organisation for Economic Co-operation and Development (OECD) Frascati Manual 2015: Guidelines for Collecting and Reporting Data on Research and Experimental Development. The next three sections are organized by sectors of the U.S. economy that perform or fund R&D—businesses (II), federal and state governments (III), and academic and nonprofit organizations (IV). Sources for definitions of R&D include the Office of Management and Budget (OMB), federal procurement, tax and accounting guidance, and surveys from the National Center for Science and Engineering Statistics (NCSES) within the National Science Foundation (NSF). The last section (V) presents R&D definitions from international statistical manuals on the System of National Accounts and globalization.

R&D definitions are provided unedited as they appear in their original sources.

I. OECD—Frascati Manual

Description.

The updated Frascati Manual (7th ed., OECD 2015) provides the definition of research and experimental development (R&D) and of its components: basic research, applied research, and experimental development. To provide guidance on what is and what is not an R&D activity, five criteria are provided requiring the activity to be novel, creative, uncertain in its outcome, systematic, and transferable and/or reproducible.

2.5 Research and experimental development (R&D) comprise creative and systematic work undertaken in order to increase the stock of knowledge—including knowledge of humankind, culture and society—and to devise new applications of available knowledge.

2.6 A set of common features identifies R&D activities, even if these are carried out by different performers. R&D activities may be aimed at achieving either specific or general objectives. R&D is always aimed at new findings, based on original concepts (and their interpretation) or hypotheses. It is largely uncertain about its final outcome (or at least about the quantity of time and resources needed to achieve it), it is planned for and budgeted (even when carried out by individuals), and it is aimed at producing results that could be either freely transferred or traded in a marketplace. For an activity to be an R&D activity, it must satisfy five core criteria.

2.7 The activity must be:

• transferable and/or reproducible.

2.8 All five criteria are to be met, at least in principle, every time an R&D activity is undertaken whether on a continuous or occasional basis. The definition of R&D just given is consistent with the definition of R&D used in the previous editions of the Frascati Manual and covers the same range of activities.

2.9 The term R&D covers three types of activity: basic research, applied research and experimental development. Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view. Applied research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific, practical aim or objective. Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.

Distribution by type of R&D

2.23 A breakdown by type of R&D is recommended for use in all four of the sectors used in this manual [Business enterprise; Higher education; Government; and Private nonprofit].

2.24 There are three types of R&D:

• basic research
• applied research
• experimental development.

Basic research

2.25 Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view.

Applied research

2.29 Applied research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific, practical aim or objective.

Experimental development

2.32 Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.

OECD, Frascati Manual , 7th ed, Chapter 2. The full Frascati Manual is available at http://oe.cd/frascati.

II. U.S. Business Enterprise R&D

A. financial accounting standards board.

Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) provides U.S. GAAP (generally accepted accounting principles) for businesses. ASC is organized by “topics” and Topic 730 is devoted to research and development (formerly covered in FASB Statement No. 2 “Accounting for Research and Development Costs”). Material formerly covered in FASB Statement No. 68 “Research and Development Arrangements” also appears under Topic 730. The FASB material below, copyrighted by the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, is used with permission.

Topic 730 Research and Development, 730-10-20 Glossary

Research is planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service (hereinafter “product”) or a new process or technique (hereinafter “process”) or in bringing about a significant improvement to an existing product or process.

Development is the translation of research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or use. It includes the conceptual formulation, design, and testing of product alternatives, construction of prototypes, and operation of pilot plants.

Topic 730 Research and Development, 730-10-55 Implementation Guidance and Illustrations Examples of Activities Typically Included in Research and Development 55-1.

The following activities typically would be considered research and development within the scope of this Topic (unless conducted for others under a contractual arrangement [see NOTES below]):

• Laboratory research aimed at discovery of new knowledge
• Searching for applications of new research findings or other knowledge
• Conceptual formulation and design of possible product or process alternatives
• Testing in search for or evaluation of product or process alternatives
• Modification of the formulation or design of a product or process
• Design, construction, and testing of preproduction prototypes and models
• Design of tools, jigs, molds, and dies involving new technology
• Design, construction, and operation of a pilot plant that is not of a scale economically feasible to the entity for commercial production
• Engineering activity required to advance the design of a product to the point that it meets specific functional and economic requirements and is ready for manufacture
• Design and development of tools used to facilitate research and development or components of a product or process that are undergoing research and development activities.

Examples of Activities Typically Excluded from Research and Development 55-2.

The following activities typically would not be considered research and development within the scope of this Topic:

• Engineering follow-through in an early phase of commercial production
• Quality control during commercial production including routine testing of products
• Trouble-shooting in connection with break-downs during commercial production
• Routine, ongoing efforts to refine, enrich, or otherwise improve upon the qualities of an existing product
• Adaptation of an existing capability to a particular requirement or customer's need as part of a continuing commercial activity
• Seasonal or other periodic design changes to existing products
• Routine design of tools, jigs, molds, and dies
• Activity, including design and construction engineering, related to the construction, relocation, rearrangement, or start-up of facilities or equipment other than the following:
• Pilot plants (see [h] in the preceding paragraph)
• Facilities or equipment whose sole use is for a particular R&D project [see NOTES below]
• Legal work in connection with patent applications or litigation, and the sale or licensing of patents.

Topic 730 covers R&D expense or R&D costs funded by the reporting entity. Accounting for the costs of R&D activities conducted for others under a contractual arrangement is part of accounting for contracts in general (see, for example, Topic 606). See also paragraphs 25-8 to 25-10 under 730-20-25.

See Subtopic 912 under 730 for guidance to government contractors related to identifying R&D activities included in government contracts and the accounting for such activities.

For guidance on R&D arrangements, see Subtopics 730-20 and 810-30. For guidance regarding design and development costs for products to be sold under long-term supply arrangements, see Subtopic 340-10. Topic 850 specifies disclosure requirements for related party transactions.

For guidance on materials, property, plant, and equipment acquired or constructed for R&D projects, see paragraph 25-2 under 730-10-25 and Topic 360. For intangibles and contract services used for R&D, see paragraph 25-2 under 730-10-25 and Topic 720.

For guidance on computer software as a cost of R&D (formerly covered in part in FASB Statement No. 86 “Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed” paragraphs 28–36), see Topic 730, Subtopic 10, especially paragraphs 25-3 and 25-4. Subtopic 350-40 covers general guidance on costs of computer software developed or obtained for internal use and Subtopic 985-20 covers computer software intended to be sold, leased or marketed. In particular, paragraph 985-20-25-1 offers guidance regarding costs incurred to establish the technological feasibility of a computer software product. For guidance related to a funded software-development arrangement, see paragraphs 985-605-25-86 through 25-87.

The accounting for recognized intangible assets acquired by an entity, other than intangibles acquired in a business combination, is specified in Topic 350 (formerly covered in FASB Statement No. 142 “Goodwill and Other Intangible Assets”). R&D assets acquired in a business combination or an acquisition by a not-for-profit entity is covered in Subtopic 805-20.

The material from FASB in this section was compiled in 2016 and is not meant to be an exhaustive summary of U.S. business R&D accounting guidance. For more information and FASB updates, see cited source.

FASB statements and other pronouncements. Available at https://asc.fasb.org and http://www.iasplus.com/en-us/standards/fasb/expenses/asc730 .

B. U.S. Code of Federal Regulations

Section 1.174-2 of the U.S. Code of Federal Regulations ( Title 26, Internal Revenue ) specifies the definition of R&D for tax filing purposes.

1.174-2 Definition of research and development expenditures.

(a) In general.

(1) The term research or experimental expenditures , as used in section 174, means expenditures incurred in connection with the taxpayer’s trade or business which represent research and development costs in the experimental or laboratory sense. The term generally includes all such costs incident to the development or improvement of a product. The term includes the costs of obtaining a patent, such as attorneys’ fees expended in making and perfecting a patent application. Expenditures represent research and development costs in the experimental or laboratory sense if they are for activities intended to discover information that would eliminate uncertainty concerning the development or improvement of a product. Uncertainty exists if the information available to the taxpayer does not establish the capability or method for developing or improving the product or the appropriate design of the product. Whether expenditures qualify as research or experimental expenditures depends on the nature of the activity to which the expenditures relate, not the nature of the product or improvement being developed or the level of technological advancement the product or improvement represents.

(2) For purposes of this section, the term product includes any pilot model, process, formula, invention, technique, patent, or similar property, and includes products to be used by the taxpayer in its trade or business as well as products to be held for sale, lease, or license.

(3) The term research or experimental expenditures does not include expenditures for:

i. The ordinary testing or inspection of materials or products for quality control (quality control testing);

ii. Efficiency surveys;

iii. Management studies;

iv. Consumer surveys;

v.  Advertising or promotions;

vi. The acquisition of another’s patent, model, production or process; or

vii. Research in connection with literary, historical, or similar projects.

26 CFR 1.174-2. Available at https://www.law.cornell.edu/cfr/text/26/1.174-2 .

C. NCSES Surveys on Business R&D

Business enterprise research and development (berd) survey.

• Annual Business Survey (R&D for Microbusiness module)

The BERD Survey is the primary source of information on R&D performed or funded by businesses within the United States and is successor to the Business R&D and Innovation Survey (BRDIS) and the Survey of Industrial Research and Development. The BERD Survey covers for-profit, nonfarm businesses with ten or more employees. The survey is conducted by the Census Bureau for NCSES. For more information and statistics, see https://www.nsf.gov/statistics/srvyberd/ .

R&D comprise creative and systematic work undertaken in order to increase the stock of knowledge and to devise new applications of available knowledge. This includes (a) activities aimed at acquiring new knowledge or understanding without specific immediate commercial applications or uses (basic research); (b) activities aimed at solving a specific problem or meeting a specific commercial objective (applied research); and (c) systematic work, drawing on research and practical experience and resulting in additional knowledge, which is directed to producing new products or processes or to improving existing products or processes (development). R&D includes both direct costs such as salaries of researchers as well as administrative and overhead costs clearly associated with the company’s R&D.

The term R&D does NOT include expenditures for the following:

• Costs for routine product testing, quality control, and technical services unless they are an integral part of an R&D project
• Market research
• Efficiency surveys or management studies
• Literary, artistic, or historical projects, such as films, music, or books and other publications
• Prospecting or exploration for natural resources

The following are examples of activities that typically would be excluded from research and development (in accordance with FASB Statement of Financial Accounting Standards No. 2 “Accounting for Research and Development Costs” https://fasb.org/page/document?pdf=aop_fas2.pdf&title=FAS%202%20(AS%20AMENDED ):

• Engineering follow-through in an early phase of commercial production.
• Quality control during commercial production including routine testing of products.
• Trouble-shooting in connection with break-downs during commercial production.
• Routine, ongoing efforts to refine, enrich, or otherwise improve upon the qualities of an existing product.
• Adaptation of an existing capability to a particular requirement or customer's need as part of a continuing commercial activity.
• Seasonal or other periodic design changes to existing products.
• Routine design of tools, jigs, molds, and dies.
• Activity, including design and construction engineering, related to the construction, relocation, rearrangement, or start-up of facilities or equipment other than (1) pilot plants and (2) facilities or equipment whose sole use is for a particular research and development project.

Does R&D include development of software and Internet applications?

Research and development activity in software and Internet applications refers only to activities with an element of uncertainty and that are intended to close knowledge gaps and meet scientific and technological needs…. regardless of the eventual user (internal or external).

R&D activity in software INCLUDES the following:

• Software development or improvement activities that expand scientific or technological knowledge
• Construction of new theories and algorithms in the field of computer science

R&D activity in software EXCLUDES the following:

• Software development that does not depend on a scientific or technological advance, such as the following:
• supporting or adapting existing systems
• adding functionality to existing application programs, and
• routine debugging of existing systems and software
• Creation of new software based on known methods and applications
• Conversion or translation of existing software and software languages
• Adaptation of a product to a specific client, unless knowledge that significantly improved the base program was added in that process

NCSES BERD survey questionnaires. Available at https://www.nsf.gov/statistics/srvyberd/ .

Annual Business Survey (R&D for Microbusinesses module)

The Annual Business Survey (ABS) is the primary source of information on R&D for nonfarm, for-profit businesses operating in the United States with one to nine employees. For businesses with one or more employees, ABS also collects data on innovation, technology, intellectual property, business owner characteristics, and additional content that changes annually. The ABS is conducted by the Census Bureau in partnership with NCSES within NSF.

ABS Microbusinesses module: For businesses with one to nine employees, the survey collects the following information:

• R&D performance
• Total and R&D employment
• Sources of R&D funding
• Type of R&D work (basic research, applied research, and development)
• Type of R&D cost (e.g., salaries and fringe benefits)

Research and development (R&D) comprise creative and systematic work undertaken in order to increase the stock of knowledge and to devise new applications of available knowledge.

R&D activity in software EXCLUDES:

Type of R&D

• Basic research–activities aimed at acquiring new knowledge or understanding without specific immediate commercial applications or uses.
• Applied research–activities aimed at solving a specific problem or meeting a specific commercial objective.
• Experimental development–systematic work, drawing on research and practical experience and resulting in additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.

NCSES ABS description and questionnaires. Available at https://www.nsf.gov/statistics/srvyabs/ .

III. Federal and State Government R&D

A. office of management and budget circular a-11.

The OMB prescribes budget regulations for federal agencies. Part II of Circular A-11 covers development of the president’s budget and provides guidance on agency submissions to OMB. Section 84 of the circular defines budget authority, outlays, and offsetting receipts for the conduct of R&D, construction and rehabilitation of R&D facilities, and R&D equipment.

Conduct of research and development (R&D): Research and experimental development activities are defined as creative and systematic work undertaken in order to increase the stock of knowledge—including knowledge of people, culture, and society—and to devise new applications using available knowledge.

• Administrative expenses for R&D, such as the operating costs of research facilities and equipment and other overhead costs.
• Investments in physical assets such as major equipment and facilities that support R&D programs. These investments should generally be reported under physical assets.
• Routine product testing, quality control, collection of general-purpose statistics, routine monitoring, and evaluation of an operational program (when that program is not R&D). Spending of this type should generally be reported as non-investment activities.
• Training of scientific and technical personnel should be reported as conduct of education and training. However, if an activity includes a mixture of R&D objectives as well as the education of graduate students, agencies should report under the lowest relevant line item.

Basic research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge of underlying foundations of phenomena and observable facts. Basic research may include activities with broad or general applications in mind, such as the study of how plant genomes change, but should exclude research directed towards a specific application or requirement include, such as the optimization of the genome of a specific crop species.

Applied research is defined as original investigation undertaken in order to acquire new knowledge. Applied research is, however, directed primarily towards a specific practical aim or objective.

Experimental development is defined as creative and systematic work, drawing on knowledge gained from research and practical experience, which is directed at producing new products or processes or improving existing products or processes. Like research, experimental development will result in gaining additional knowledge.

For reporting experimental development activities, include the following:

• The production of materials, devices, and systems or methods, including the design, construction and testing of experimental prototypes.
• Technology demonstrations, in cases where a system or component is being demonstrated at scale for the first time, and it is realistic to expect additional refinements to the design (feedback R&D) following the demonstration. However, not all activities that are identified as “technology demonstrations” are R&D.
• User demonstrations where the cost and benefit of a system are being validated for a specific use case. This includes low-rate initial production activities.
• Pre-production development, which is defined as non-experimental work on a product or system before it goes into full production, including activities such as tooling, and development of production facilities. For example, exclude activities and programs that are categorized as “Operational Systems Development” in the Department of Defense’s budget activity structure. Activities and programs of this type should generally be reported as investments in other major equipment.

Physical assets are land, structures, equipment, and intellectual property (e.g., software or applications) that have an estimated useful life of two years or more; or commodity inventories. This character class code is used to enter amounts for the purchase, construction, manufacture, rehabilitation, or major improvement of physical assets regardless of whether the assets are owned or operated by the Federal Government, States, municipalities, or private individuals. The cost of the asset includes both its purchase price and all other costs incurred to bring it to a form and location suitable for its use. Within this character class code, agencies are also required to identify spending for R&D facilities and major equipment.

For reporting construction of R&D facilities, include the following:

• Construction of facilities that are necessary for the execution of an R&D program. This may include land, major fixed equipment, and supporting infrastructure such as a sewer line, or housing at a remote location. Many laboratory buildings will include a mixture of R&D facilities and office space. The fraction of the building directly related to the conduct R&D may be calculated based on the percentage of the square footage.
• Construction of other facilities, such as office space (which should be reported in the other construction and rehabilitation category on line 1313 or 1314).
• Major movable R&D equipment.

For reporting Major equipment R&D (lines 1321 and 1322), include the following:

• Acquisition, design, or production of major movable equipment, such as mass spectrometers, research vessels, DNA sequencers, and other movable major instruments for use in R&D activities.
• Programs of $1 million or more that are devoted to the purchase or construction of R&D major equipment (see section 84.3(a)).
• Minor equipment purchases, such as personal computers, standard microscopes, and simple spectrometers.

OMB Circular A-11. Available at https://www.whitehouse.gov/omb/circulars/.

B. Federal Acquisitions Regulations

The Federal Acquisitions Regulations (FAR) were established to codify uniform policies for the acquisition of supplies and services by executive agencies. Basic research is defined in FAR Part 2–Definitions of Words and Terms, subpart 2.101 “Definitions.” Applied research and development are defined in FAR Part 35–Research and Development Contracting, subpart 35.001 “Definitions.” Full text of FAR Parts is available at https://www.acquisition.gov/?q=browsefar.

Basic research means that research directed toward increasing knowledge in science. The primary aim of basic research is a fuller knowledge or understanding of the subject under study, rather than any practical application of that knowledge.

Applied research means the effort that (a) normally follows basic research, but may not be severable from the related basic research; (b) attempts to determine and exploit the potential of scientific discoveries or improvements in technology materials, processes, methods, devices, or techniques; and (c) attempts to advance the state of the art. When being used by contractors in cost principle applications, this term does not include efforts whose principal aim is the design, development, or testing of specific items or services to be considered for sale; these efforts are within the definition of "development," given below.

Development, as used in this part, means the systematic use of scientific and technical knowledge in the design, development, testing, or evaluation of a potential new product or service (or of an improvement in an existing product or service) to meet specific performance requirements or objectives. It includes the functions of design engineering, prototyping, and engineering testing; it excludes subcontracted technical effort that is for the sole purpose of developing an additional source for an existing product.

The Federal Acquisitions Regulations (FAR). Available at https://www.acquisition.gov/?q=browsefar.

C. Department of Defense Research, Development, Test, and Evaluation Budget Activities

The Research, Development, Test, and Evaluation (RDT&E) budget activities are broad categories reflecting different types of DOD science and technology activities. These definitions guide internal budget documents and submissions of data to other government agencies. The following is drawn from DOD’s Financial Management Regulation (DOD 7000.14-R), Volume 2B, Chapter 5 (Research, Development and Evaluation Appropriations). (As a historical artifact from previous DOD budget authority terminology, funds for RDT&E budget activity categories 1 through 7 are sometimes referred to as 6.1 through 6.7.) The full text of Chapter 5 is available at http://comptroller.defense.gov/FMR/vol2b_chapters.aspx .

Budget Activity 1, Basic Research. Basic research is systematic study directed toward greater knowledge or understanding of the fundamental aspects of phenomena and of observable facts without specific applications towards processes or products in mind. It includes all scientific study and experimentation directed toward increasing fundamental knowledge and understanding in those fields of the physical, engineering, environmental, and life sciences related to long-term national security needs. It is farsighted high payoff research that provides the basis for technological progress. Basic research may lead to: (a) subsequent applied research and advanced technology developments in Defense-related technologies, and (b) new and improved military functional capabilities in areas such as communications, detection, tracking, surveillance, propulsion, mobility, guidance and control, navigation, energy conversion, materials and structures, and personnel support. Program elements in this category involve pre-Milestone A efforts.

Budget Activity 2, Applied Research. Applied research is systematic study to understand the means to meet a recognized and specific need. It is a systematic expansion and application of knowledge to develop useful materials, devices, and systems or methods. It may be oriented, ultimately, toward the design, development, and improvement of prototypes and new processes to meet general mission area requirements. Applied research may translate promising basic research into solutions for broadly defined military needs, short of system development. This type of effort may vary from systematic mission-directed research beyond that in Budget Activity 1 to sophisticated breadboard hardware, study, programming and planning efforts that establish the initial feasibility and practicality of proposed solutions to technological challenges. It includes studies, investigations, and non-system specific technology efforts. The dominant characteristic is that applied research is directed toward general military needs with a view toward developing and evaluating the feasibility and practicality of proposed solutions and determining their parameters. Applied Research precedes system specific technology investigations or development. Program control of the Applied Research program element is normally exercised by general level of effort. Program elements in this category involve pre-Milestone B efforts, also known as Concept and Technology Development phase tasks, such as concept exploration efforts and paper studies of alternative concepts for meeting a mission need.

Budget Activity 3, Advanced Technology Development (ATD). This budget activity includes development of subsystems and components and efforts to integrate subsystems and components into system prototypes for field experiments and/or tests in a simulated environment. Budget Activity 3 includes concept and technology demonstrations of components and subsystems or system models. The models may be form, fit, and function prototypes or scaled models that serve the same demonstration purpose. The results of this type of effort are proof of technological feasibility and assessment of subsystem and component operability and producibility rather than the development of hardware for service use. Projects in this category have a direct relevance to identified military needs. Advanced Technology Development demonstrates the general military utility or cost reduction potential of technology when applied to different types of military equipment or techniques. Program elements in this category involve pre-Milestone B efforts, such as system concept demonstration, joint and Service-specific experiments or Technology Demonstrations and generally have Technology Readiness Levels of 4, 5, or 6. (For further discussion on Technology Readiness Levels, see the Assistant Secretary of Defense for Research and Engineering’s Technology Readiness Assessment (TRA) Guidance.) Projects in this category do not necessarily lead to subsequent development or procurement phases, but should have the goal of moving out of Science and Technology (S&T) and into the acquisition process within the Future Years Defense Program (FYDP). Upon successful completion of projects that have military utility, the technology should be available for transition.

Budget Activity 4, Advanced Component Development and Prototypes (ACD&P). Efforts necessary to evaluate integrated technologies, representative modes or prototype systems in a high fidelity and realistic operating environment are funded in this budget activity. The ACD&P phase includes system specific efforts that help expedite technology transition from the laboratory to operational use. Emphasis is on proving component and subsystem maturity prior to integration in major and complex systems and may involve risk reduction initiatives. Program elements in this category involve efforts prior to Milestone B and are referred to as advanced component development activities and include technology demonstrations. Completion of Technology Readiness Levels 6 and 7 should be achieved for major programs. Program control is exercised at the program and project level. A logical progression of program phases and development and/or production funding must be evident in the FYDP.

Budget Activity 5, System Development and Demonstration (SDD). SDD programs have passed Milestone B approval and are conducting engineering and manufacturing development tasks aimed at meeting validated requirements prior to full-rate production. This budget activity is characterized by major line item projects and program control is exercised by review of individual programs and projects. Prototype performance is near or at planned operational system levels. Characteristics of this budget activity involve mature system development, integration and demonstration to support Milestone C decisions, and conducting live fire test and evaluation and initial operational test and evaluation of production representative articles. A logical progression of program phases and development and production funding must be evident in the FYDP consistent with the Department’s full funding policy.

Budget Activity 6, RDT&E Management Support. This budget activity includes management and support for research, development, test and evaluation efforts and funds to sustain and/or modernize the installations or operations required for general research, development, test and evaluation. Test ranges, military construction, maintenance support of laboratories, operation and maintenance of test aircraft and ships, and studies and analyses in support of the RDT&E program are funded in this budget activity. Costs of laboratory personnel, either in-house or contractor operated, would be assigned to appropriate projects or as a line item in the Basic Research, Applied Research, or ATD program areas, as appropriate. Military construction costs directly related to major development programs are included in this budget activity.

Budget Activity 7, Operational System Development. This budget activity includes development efforts to upgrade systems that have been fielded or have received approval for full rate production and anticipate production funding in the current or subsequent fiscal year. All items are major line item projects that appear as RDT&E Costs of Weapon System Elements in other programs. Program control is exercised by review of individual projects. Programs in this category involve systems that have received approval for Low Rate Initial Production (LRIP). A logical progression of program phases and development and production funding must be evident in the FYDP, consistent with the Department’s full funding policy.

DOD, Financial Management Regulation (DOD 7000.14-R), Volume 2B, Chapter 5. Available at http://comptroller.defense.gov/FMR/vol2b_chapters.aspx .

D. NCSES Surveys on Federal R&D Funding

Survey of federal funds for research and development, survey of federal science and engineering support to universities, colleges, and nonprofit institutions, ffrdc research and development survey.

The Survey of Federal Funds for Research and Development is the primary source of information about federal funding for R&D in the United States. The survey is an annual census completed by the federal agencies that conduct R&D programs. For general information about this survey, please see https://www.nsf.gov/statistics/srvyfedfunds/.

R&D: Research and experimental development (R&D) activities are defined as creative and systematic work undertaken in order to increase the stock of knowledge—including knowledge of people, culture, and society—and to devise new applications using available knowledge.

For reporting R&D activities, include the following:

• Investments in physical assets such as major equipment and facilities that support R&D programs. These investments should generally be reported under R&D Plant (see Tables 1, 1B, 2, 9, and 13 in the 2020 survey questionnaire available at https://www.nsf.gov/statistics/srvyfedfunds/#qs ).
• Routine product testing, quality control, collection of general-purpose statistics, routine monitoring, and evaluation of an operational program (when that program is not R&D).
• Training of scientific and technical personnel should be reported as conduct of education and training.

RDT&E (for DOD only): The Department of Defense’s Research, Development, Test, and Evaluation (RDT&E) can be both (1) activities for the development of a new system, or to expand the performance of fielded systems, and (2) an appropriation. The RDT&E budget activities are broad categories reflecting different types of RDT&E efforts, which include Basic Research (BA 1); Applied Research (BA 2); Advanced Technology Development (ATD) (BA 3); Major Systems Development, which includes Advanced Component Development and Prototypes (ACD&P) (BA 4), System Development and Demonstration (SDD) (BA 5), and RDT&E Management Support (BA 6); and Operational Systems Development (BA 7). The definitions of these categories are established by Department of Defense Instruction 5000.02, “Operation of the Defense Acquisition System.” For more information, see Budget Activities 1 through 7 in the DOD Financial Management Regulation (FMR), Volume 2B, Chapter 5, pages 5-4, 5-5, and 5-6 at http://comptroller.defense.gov/Portals/45/documents/fmr/Volume_02b.pdf .

R&D plant: R&D plant is defined as spending on both R&D facilities and major equipment as defined in Office of Management and Budget (OMB) Circular A-11 Section 84 (Schedule C) and includes physical assets, such as land, structures, equipment, and intellectual property (e.g., software or applications) that have an estimated useful life of two years or more. Reporting for R&D plant includes the purchase, construction, manufacture, rehabilitation, or major improvement of physical assets regardless of whether the assets are owned or operated by the Federal Government, States, municipalities, or private individuals. The cost of the asset includes both its purchase price and all other costs incurred to bring it to a form and location suitable for use.

For reporting construction of R&D facilities and major moveable R&D equipment, include the following:

• Construction of facilities that are necessary for the execution of an R&D program. This may include land, major fixed equipment, and supporting infrastructure such as a sewer line, or housing at a remote location. Many laboratory buildings will include a mixture of R&D facilities and office space. The fraction of the building that is considered to be R&D may be calculated based on the percentage of square footage that is used for R&D.
• Acquisition, design, or production of major moveable equipment, such as mass spectrometers, research vessels, DNA sequencers, and other moveable major instrumentation for use in R&D activities.
• Programs of $1 million or more that are devoted to the purchase or construction of R&D major equipment.

Exclude the following:

• Construction of other non-R&D facilities
• Minor equipment purchases, such as personal computers, standard microscopes, and simple spectrometers (report these costs under total R&D, not R&D Plant)

Obligations for foreign R&D plant are limited to federal funds for facilities that are located abroad and used in support of foreign R&D.

Type of R&D: Type of R&D has three components for non-DOD respondents: basic research, applied research, and development.

Basic research: Basic research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts. Basic research may include activities with broad or general applications in mind, such as the study of how plant genomes change, but should exclude research directed towards a specific application or requirement, such as the optimization of the genome of a specific crop species. Basic research represents Department of Defense Budget Activity 1.

Applied research: Applied research is defined as original investigation undertaken in order to acquire new knowledge. Applied research is, however, directed primarily towards a specific practical aim or objective. Applied research represents Department of Defense Budget Activity 2.

Experimental development: Experimental development is defined as creative and systematic work, drawing on knowledge gained from research and practical experience, which is directed at producing new products or processes or improving existing products or processes. Like research, experimental development will result in gaining additional knowledge.

• The production of materials, devices, and systems or methods, including the design, construction, and testing of experimental prototypes.

For DOD Agencies, development itself is divided into three categories: advanced technology development, major systems development, and operational systems development.

• Advanced technology development: This category is used for activities in DOD’s Budget Activity 3. For more information, see Budget Activity 3 on pages 5-4 and 5-5 of the DOD Financial Management Regulation (FMR), Volume 2B, Chapter 5, at http://comptroller.defense.gov/Portals/45/documents/fmr/Volume_02b.pdf.
• Major systems development: This category is used for activities in DOD’s Budget Activities 4 through 6. For more information, see Budget Activities 4 through 6 on page 5-5 of the DOD Financial Management Regulation (FMR), Volume 2B, Chapter 5 at http://comptroller.defense.gov/Portals/45/documents/fmr/Volume_02b.pdf .
• NOTE: As of the FY 2016 data collection, major systems development no longer includes Budget Activity 7.
• Operational systems development: This category is used for activities in DOD’s Budget Activity 7. For more information, see Budget Activity 7 on page 5–6 of the DOD Financial Management Regulation (FMR), Volume 2B, Chapter 5 at http://comptroller.defense.gov/Portals/45/documents/fmr/Volume_02b.pdf.

NCSES, Survey of Federal Funds for R&D forms, available at https://www.nsf.gov/statistics/srvyfedfunds/#qs .

This NCSES survey is congressionally mandated and is the only source of comprehensive data on federal science and engineering funding to individual academic and nonprofit institutions. For general information see https://www.nsf.gov/statistics/srvyfedsupport/ .

Research and development (R&D) activities are defined as creative and systematic work undertaken in order to increase the stock of knowledge—including knowledge of people, culture, and society—and to devise new applications using available knowledge.

• Investments in physical assets such as major equipment and facilities that support R&D programs. These investments should generally be reported under physical assets, discussed under R&D plant.

Advanced technology development (DOD only) is one of the two categories the Department of Defense uses for development (the “D” in R&D). The category advanced technology development is used for the activities in DOD’s Budget Activity 3, Advanced Technology Development (ATD). For more information, see Budget Activity 3 on pages 5-4 to 5-5 of the DOD Financial Management Regulation (FMR), Volume 2B, Chapter 5, at http://comptroller.defense.gov/portals/45/documents/fmr/current/02b/02b_05.pdf.

Major systems development (DOD only) is the second of the two categories the Department of Defense uses for development. The category major systems development is used for activities in DOD’s Budget Activities 4 through 6. For more information, see Budget Activities 4 through 6 (Advanced Component Development and Prototypes [ACD&P], System Development and Demonstration [SDD], and RDT&E Management Support) on page 5-5 of the DOD Financial Management Regulation (FMR), Volume 2B, Chapter 5 at http://comptroller.defense.gov/portals/45/documents/fmr/current/02b/02b_05.pdf.

NOTE: As of FY 2016 data collection, major systems development no longer includes Budget Activity 7.

R&D plant is defined as R&D facilities, intellectual property (e.g., software or applications); major fixed equipment, such as reactors, wind tunnels, and particle accelerators; and major moveable equipment, such as mass spectrometers, research vessels, DNA sequencers, and other major moveable instruments for use in R&D activities. Amounts include acquisition of, construction of, major repairs to, or alterations in structures, works, equipment, facilities, or land for use in R&D activities at federal or nonfederal installations. Excluded from the R&D plant category are costs of expendable or movable equipment (e.g., simple spectrometers, standard microscopes), personal computers, and office furniture and equipment. Also excluded are the costs of predesign studies (e.g., those undertaken before commitment to a specific facility).

These excluded costs are reported under “total conduct of research and development.”

If the R&D facilities are a larger facility devoted to other purposes as well, the funds should be distributed among the categories of support involved as appropriate. In general, another category that would be involved is facilities and equipment for instruction in S&E.

NCSES, Survey of Federal Science and Engineering Support to Universities, Colleges, and Nonprofit Institutions, available at https://www.nsf.gov/statistics/srvyfedsupport/#qs .

The FFRDC Research and Development Survey is the primary source of information on separately budgeted R&D expenditures at federally funded research and development centers (FFRDCs) in the United States. Conducted annually for university-administered FFRDCs since FY 1953 and all FFRDCs since FY 2001, the survey collects information on R&D expenditures by source of funds and types of research and expenses. The survey is an annual census of the full population of eligible FFRDCs. See https://www.nsf.gov/statistics/srvyffrdc/ for more on this survey https://www.nsf.gov/statistics/ffrdclist/ for the Master List of FFRDCs maintained by NCSES.

Research and Development (R&D)

R&D is creative and systematic work undertaken in order to increase the stock of knowledge— including knowledge of humankind, culture, and society—and to devise new applications of available knowledge. R&D covers three activities defined below—basic research, applied research, and experimental development.

• Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view.
• Applied research is original investigation undertaken in order to acquire new knowledge. It is directed primarily towards a specific, practical aim or objective.
• Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.

NCSES, FFRDC R&D Survey forms, available at https://www.nsf.gov/statistics/srvyffrdc/ .

E. State Government R&D

Survey of state government r&d.

This NCSES survey is the only source for comprehensive, uniform statistics regarding the extent of R&D activity performed and funded by departments and agencies in each of the nation’s 50 state governments, the government of the District of Columbia, and the government of Puerto Rico. For general information, see https://www.nsf.gov/statistics/srvystaterd/.

R&D comprise creative and systematic work undertaken in order to increase the stock of knowledge—including knowledge of humankind, culture, and society—and to devise new applications of available knowledge.

• R&D is aimed at new findings (novel)
• It has not been done before
• It may produce findings that could be published in academic journals
• It includes ideas that could be patented
• R&D focuses on original concepts or ideas (creative)
• Increases our knowledge of the subject
• Helps create new products or applications
• R&D outcomes are uncertain (because it’s never been done before)
• Solutions are not always obvious or expected
• Uncertain about, cost, time, or ability to achieve results
• R&D is planned and budgeted (systematic)
• Projects processes and outcomes are documented
• Projects are planned and managed
• R&D results in solutions that others may find useful (transferable)
• Findings can be generalized to other situations and locations
• Findings are reproducible

What is NOT R&D?

• Construction and acquisition of land and facilities used primarily for R&D (reported separately in this survey)
• Fixed equipment used primarily for R&D (reported separately in this survey)
• Program planning and evaluation
• Business development services for new companies
• Commercialization (includes promoting/producing the products/services from R&D projects)
• Economic/policy/feasibility studies
• General patient services
• Information systems
• Management studies
• Marketing of products/services
• Market research or analysis
• Routine data collection/dissemination
• Routine monitoring/testing
• Strategic planning
• Technology transfer

NCSES, Survey of State Government R&D forms. Available at https://www.nsf.gov/statistics/srvystaterd/#qs .

IV. U.S. Higher Education R&D and R&D by Nonprofit Organizations

A. guidance from the office of management and budget.

OMB issued the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Title 2 Part 200 of the Code of Federal Regulations (CFR) in December 2013. This guidance supersedes and streamlines requirements from the following OMB Circulars: A-21, A-50, A-87, A-89, A-102, A-110, A-122, and A-133. The full text of 2 CFR Part 200 is available at http://www.ecfr.gov/cgi-bin/text-idx?ID=68fca03721b9c921be5236306ae7a5fa&tpl=/ecfrbrowse/Title02/2chapterII.tpl .

Previous definitions for R&D reporting relevant to educational institutions, hospitals and nonprofit organizations, state and local governments, and nonprofit organizations were addressed in OMB Circulars A-21, A-110, and A-133. Although these circulars are still available ( https://obamawhitehouse.archives.gov/omb/circulars_default ) they are, with limited exceptions, no longer applied to assistance awards issued after the implementation date of 26 December 2014.

Research and Development (R&D) means all research activities, both basic and applied, and all development activities that are performed by non-federal entities. The term research also includes activities involving the training of individuals in research techniques where such activities utilize the same facilities as other research and development activities and where such activities are not included in the instruction function.

“Research” is defined as a systematic study directed toward fuller scientific knowledge or understanding of the subject studied. “Development” is the systematic use of knowledge and understanding gained from research directed toward the production of useful materials, devices, systems, or methods, including design and development of prototypes and processes.

2 CFR 200.87. Available at http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title02/2cfr200_main_02.tpl .

B. Higher Education R&D

Higher education research and development (herd) survey.

This NCSES survey is the primary source of information on R&D expenditures at U.S. colleges and universities and is the successor to the Survey of Research and Development Expenditures at Universities and Colleges. The HERD Survey collects information on R&D expenditures by field of research and source of funds and also gathers information on types of research and expenses and headcounts of R&D personnel. The survey is an annual census of institutions that expended at least $150,000 in separately budgeted R&D in the fiscal year. For general information about this survey, please see https://www.nsf.gov/statistics/srvyherd/.

R&D is creative and systematic work undertaken in order to increase the stock of knowledge—including knowledge of humankind, culture, and society—and to devise new applications of available knowledge. R&D covers three activities defined below—basic research, applied research, and experimental development.

NCSES, Higher Education Research and Development Survey forms. Available at https://www.nsf.gov/statistics/srvyherd/.

C. R&D by Nonprofit Organizations

Nonprofit research activities survey.

The Nonprofit Research Activities (NPRA) Survey measures research and experimental development (R&D) performance and funding at U.S. 501(c) nonprofit organizations. It is currently collected as a separate module of the ABS data collection.

• Type of R&D work (basic research, applied research, and experimental development)
• R&D field

For the purposes of this survey, research includes research and experimental development. Research and experimental development comprise creative and systematic work to

• Increase the stock of knowledge, including knowledge of humankind, culture, and society OR
• Devise new applications of available knowledge, including materials, products, devices, processes, systems, or services

Research activities must be

• Novel: projects that advance current knowledge or create new knowledge
• Creative: projects focused on original concepts and hypotheses
• Uncertain: project outcomes are unable to be completely determined at the outset
• Systematic: projects are planned and budgeted
• Transferable/Reproducible: project methodology and results are transferable/reproducible to other situations and locations

May meet the criteria for research

• Laboratory or animal studies
• Clinical trials
• Prototype development
• Outcomes research
• Development/measurement of new methods to deliver/measure social service outcomes
• Policy research
• Humanities research
• Research traineeships
• Other experimental studies

Most likely do not meet the criteria for research

• Internal program monitoring or evaluation
• Public service grants or outreach programs
• Education or training programs
• Quality control testing
• Management studies/efficiency surveys
• Feasibility studies, unless included as part of an overall research project

Type of R&D Work

• Basic research: Experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view.
• Applied research: Original investigation undertaken in order to acquire new knowledge. It is directed primarily towards a specific, practical aim or objective.
• Experimental development: Systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.

NCSES ABS Nonprofit Module questionnaire. Available at https://www.nsf.gov/statistics/srvynpra/ .

V. R&D in National Accounts and Globalization Manuals

A. r&d in the system of national accounts (sna).

The System of National Accounts, 2008 (2008 SNA) is a statistical framework that provides a comprehensive set of macroeconomic accounts for policy and research purposes. The 2008 SNA recognized R&D as investment or produced asset in an economy (SNA 6.230, 10.98). R&D is defined in paragraph 10.103 (Chapter 10: The capital account, Section B: Gross capital formation).

10.103 Intellectual property products include the results of research and development (R&D). Research and [experimental] development consists of the value of expenditures on creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and use of this stock of knowledge to devise new applications.

United Nations (UN) Statistical Division—2008 System of National Accounts.

B. Measuring R&D in global economic activities

Guidance for official statistics on trade, investment, and international production—called global value chains (GVCs) in recent economics and policy research literature—explicitly cover R&D and related intangible assets under the heading of “intellectual property products” (IPP). (In addition to R&D, IPPs include software and databases, entertainment, literary or artistic originals, and the results from mineral exploration.) The information below briefly covers selected international statistical manuals.

• OECD Handbook on Deriving Capital Measures of Intellectual Property Products, 2010

This handbook uses the SNA 2008 R&D definition (10.103) and describes domestic R&D output for purposes of national and international economic accounts in terms of three components consistent with both the SNA and Frascati: own account R&D (R&D conducted and used internally regardless of funding source); custom R&D (R&D conducted for, and funded by, another unit); and speculative or non-customized R&D.

• Balance of Payments and International Investment Position Manual, 6th ed., 2009 (BPM6)

The manual covers accounting and statistical standards to compile the balance of payments (BOP), a statement that summarizes economic transactions—including R&D and other IPP— between residents and nonresidents (BPM6 2.2(b)). BPM6 incorporated R&D as an intellectual property product within the balance of payments (see BPM6 Table 10.4 and related text).

• OECD Benchmark Definition of Foreign Direct Investment (FDI), 4th ed., 2008

This guidance describes definitions and measurement procedures for FDI flows and stocks consistent with the Balance of Payments and International Investment Position Manual. It also covers definitions of activities of multinational enterprises (MNEs) (AMNE for short) including sales, value added, employment, R&D, and international trade. For related definitions, see Statistics on the Activities of Multinational Enterprises, Chapter 12 in U.S. International Economic Accounts: Concepts & Methods, U.S. Bureau of Economic Analysis, 2014.

• Manual on Statistics of International Trade in Services (MSITS), 2010

This manual covers statistics on international supply of services, including R&D services as defined in MSITS paragraph 3.234.

3.234. Research and development services covers those services that are associated with basic research, applied research and experimental development of new products and processes and covers activities in the physical sciences, the social sciences and the humanities.

• Guide to Measuring Global Production, 2015

This manual further elaborates on measurement issues from GVCs and related global manufacturing arrangements and transactions, including exchanges of R&D and other intangibles or intellectual property products. See especially chapter 4 (Ownership of intellectual property products inside global production).

OCED, Frascati Manual , 7th ed, “Measurement of R&D Globalisation,” chapter 11. Available at http://oe.cd/frascati .

International Monetary Fund (IMF). 2009. Balance of Payments and International Investment Position Manual , 6th ed. (BPM6). Washington, D.C. Available at https://www.imf.org/external/pubs/ft/bop/2007/pdf/BPM6.pdf.

Organisation for Economic Cooperation and Development (OECD). 2015. Frascati Manual 2015: Guidelines for Collecting and Reporting Data on Research and Experimental Development , 7th ed. Paris, France. Available at http://oe.cd/frascati and https://www.oecd.org/publications/frascati-manual-2015-9789264239012-en.htm .

Organisation for Economic Cooperation and Development (OECD). 2010. Handbook on Deriving Capital Measures of Intellectual Property Products (IPP Handbook). Paris, France. Available at http://www.oecd.org/std/na/44312350.pdf .

Organisation for Economic Cooperation and Development (OECD). 2008. OECD Benchmark Definition of Foreign Direct Investment, 4th ed. Paris, France. Available at https://www.oecd.org/daf/inv/investmentstatisticsandanalysis/40193734.pdf.

United Nations Economic Commission for Europe, Organisation for Economic Cooperation and Development (UNECE/OECD). 2015. Guide to Measuring Global Production . Geneva, Switzerland. Available at http://www.unece.org/info/media/news/statistics/2016/unece-provides-practical-guidance-on- measuring-global-production/doc.html .

European Commission, International Monetary Fund, Organisation for Economic Co-operation and Development, United Nations, and World Bank. 2009. System of National Accounts 2008 (SNA). New York, NY. Available at http://unstats.un.org/unsd/nationalaccount/sna2008.asp .

United Nations, Eurostat, International Monetary Fund, Organisation for Economic Co-operation and Development, United Nations Conference on Trade and Development, World Tourism Organization, World Trade Organization 2011. Manual on Statistics of International Trade in Services 2010 (MSITS). Geneva, Switzerland. Available at http://unstats.un.org/unsd/tradeserv/TFSITS/manual.htm .

Report Authors

Francisco Moris Senior Analyst Research and Development Statistics Program, NCSES Tel: (703) 292-4678 E-mail: [email protected]

Christopher Pece Survey Manager Research and Development Statistics Program, NCSES Tel: (703) 292-7788 E-mail: [email protected]

National Center for Science and Engineering Statistics Directorate for Social, Behavioral and Economic Sciences National Science Foundation 2415 Eisenhower Avenue, Suite W14200 Alexandria, VA 22314 Tel: (703) 292-8780 FIRS: (800) 877-8339 TDD: (800) 281-8749 E-mail: [email protected]

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U.S. Army Research Biologist Sentenced To 51 Months Imprisonment For Engaging In A Bribery Scheme And Ordered To Forfeit The Funds

Baltimore , Maryland – Jason Edmonds, age 45 of North East, Maryland was sentenced yesterday to 51 months   in federal prison and 3 years of supervised release for conspiring to commit bribery at the Aberdeen Proving Ground. In addition, the Court ordered Edmonds to forfeit $111,794.83, which is equal to the value of the bribes he received.

The sentence was announced by Erek L. Barron U.S. Attorney for the District of Maryland, Special Agent in Charge William J. DelBagno of the Federal Bureau of Investigation, Baltimore Field Office, Special Agent in Charge Christopher Dillard of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service, Mid-Atlantic Field Office, and Special Agent in Charge L. Scott Moreland of the Army Criminal Investigation Division.  “Edmonds’ actions as a public official harmed government integrity.  Bribery spawns distrust of government and the work we do on behalf of the taxpayers, “said U.S. Attorney Barron.  “The sentence imposed today sends a clear message of intolerance to any public official who would abuse their position of trust for personal financial gain”.   "Fair and free competition is essential to ensure taxpayer money is not wasted and to maintain the trust in our government contracts and programs," says FBI Baltimore Special Agent in Charge William J. DelBagno. "The FBI and our partners stand ready to root out fraudsters seeking to corrupt and falsely influence the process for their personal gain."

“Our government officials are entrusted to protect and ensure a fair procurement process. Edmond’s actions violated that trust.” said DCIS Special Agent in Charge Christopher Dillard. “DCIS is committed to working with our law enforcement partners to protect our tax dollars from fraud and corruption."

According to the guilty plea, Edmonds was employed by the United States Army as a Research Biologist at the U.S. Army Combat Capabilities Development Command (“CCDC”) Chemical Biological Center (“CB Center”) located at the Aberdeen Proving Ground (“APG”).  The CCDC CB Center was the nation’s principal research and development center for non-medical chemical and biological weapons defense.  The CB Center developed technology in the areas of detection, protection, and decontamination.   From 2012 to 2019, Edmonds accepted cash and other financial benefits from John Conigliaro, the owner and CEO of EISCO, Inc. in exchange for favorable action on CB Center contracts.  For example, in July 2013, Edmonds directed a $300,000 CB Center project to EISCO.  Three months later, in October 2013, Conigliaro gave Edmonds $40,000 in cash so that Edmonds could purchase two rental real estate properties.  Once Edmonds purchased the rental properties, Conigliaro paid for thousands of dollars of renovations to the rental properties.

Relative to the cash exchange, Edmonds and Conigliaro executed a “Promissory Note,” which was subsequently amended by Edmonds on June 14, 2014.  In the amended “Promissory Note,” Edmonds credited himself $18,100 against the $40,000 in cash for past projects that Edmonds had directed to EISCO at the CB Center.  Edmonds also wrote that Conigliaro would provide him an additional $25,000 in exchange for future projects that Edmonds would direct to EISCO.

Between December 2016 and August 2017, Edmonds directed a series of government projects to EISCO in exchange for a stream of benefits from Conigliaro, including a kitchen remodel at Edmonds’s personal residence, the purchase of a granite countertop, a kitchen sink, and new siding to his home.

In June 2020, after federal agents attempted to interview Edmonds and Conigliaro, the co-conspirators met approximately three times to discuss the investigation.  During those meetings, Edmonds proposed that he and Conigliaro inform federal investigators that Edmonds had repaid Conigliaro with gold and baseball cards, knowing that it was false. At sentencing, the Court found that this behavior constituted obstruction of justice under U.S.S.G. § 3C1.1 and imposed a two-level enhancement.

U.S. Attorney Barron commended the FBI, the DCIS , and the Army Criminal Investigation Division for their work in the investigation.  Mr. Barron thanked Assistant U.S. Attorney Bijon A. Mostoufi, who is prosecuting the federal case, and Paralegal Specialist Joanna Huber.

For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit  www.justice.gov/usao-md and  https://www.justice.gov/usao-md/community-outreach .

Angelina Thompson [email protected] ​​​​​​​(301) 344-4338

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Measuring Research and Development Expenditures in the U.S. Nonprofit Sector: Conceptual and Design Issues: Summary of a Workshop (2015)

Chapter: 3 understanding r&d within the nonprofit sector.

3 Understanding R&D within the Nonprofit Sector

This chapter brings together voices from the nonprofit sector to add insight and specifics to the more general portrait of the sector presented in Chapter 2 . The great diversity within the sector, and its unique way of thinking about and performing research and development (R&D), became clearer at the workshop through these presentations. The presentations and subsequent discussion among workshop participants identified five key challenges that many participants said the National Science Foundation (NSF) will need to face as it designs the nonprofit R&D survey. These challenges are discussed in detail later in the chapter.

DEFINITION OF RESEARCH AND DEVELOPMENT USED BY NCSES

The National Center for Science and Engineering Statistics (NCSES) of NSF uses a specific definition of research and development in its surveys that produce data for the National Patterns of R&D Resources :

R&D is planned creative work aimed at discovering new knowledge or developing new and significantly improved goods and services. This includes a) activities aimed at acquiring new knowledge or understanding without specific immediate commercial applications or uses (basic research); b) activities aimed at solving a specific problem or meeting a specific commercial objective (applied research); and c) systematic use of research and practical experience to produce new or significantly improved goods, services, or processes (development).

The definition of R&D used by NSF 1 is consistent with the definition provided by the Frascati Manual 2002 , an internationally recognized methodology for collecting and using R&D statistics.

The steering committee did not give this definition of R&D to the representatives of organizations from the nonprofit sector and then ask whether their activities fit under the definition. Instead the committee approach was less prescriptive, asking the representatives to describe their organizations, the activities that they were engaged in that might be considered R&D, and the language they used to describe these activities.

VOICES FROM THE NONPROFIT SECTOR

Leaders from six different nonprofits—the American Cancer Society (ACS), Lutheran Social Service of Minnesota, LeadingAge, Hillside Family of Agencies, Prince William Regional Beekeepers Association, and Mote Marine Laboratory—presented views of R&D at their organizations. These six exemplars covered the range of organizational sizes, focuses, and structures seen among the diverse nonprofit sector. Susan Raymond began by describing the session’s purpose to explore the kinds of activities that constitute R&D in the nonprofit sector and the language used within the sector to describe these activities. The presenters described the types of R&D activities within their organizations, and how these activities are organized, funded, and accounted for. The presenters also described how their organizations think about research, what language they use to describe it, and whether they would be able to answer questions about the resources and staff time allocated to that research. Finally, the presenters offered suggestions for ways to word and improve the survey.

American Cancer Society

ACS is a large nonprofit organization, headquartered in Atlanta, Georgia. Regional and local offices support 11 different divisions. Daniel Heist, volunteer and board member of ACS, along with Catherine Mickle, chief financial officer, presented information about ACS. Heist began his presentation with the ACS mission statement:

As a nationwide, voluntary community health organization, the American Cancer Society is dedicated to eliminating cancer as a major public

______________

1 The definitional text provided to respondents on the 1996–1997 NSF Nonprofit R&D Survey is discussed in more detail in Chapter 5 and provided in Box 5-1.

health problem by preventing cancer, saving lives, and diminishing suffering from cancer through research, education, advocacy, and service. 2

In Heist’s view, the mission statement is particularly important from a fiduciary perspective because it guides their work. By focusing on this mission, the board and staff of ACS have worked together to identify and approve seven priority areas: lung cancer and tobacco control; nutrition and physical activity; colorectal cancer; breast cancer; cancer treatment and patient care; access to care–public policy; and global health. ACS ensures research dollars are directly tied to these priority areas in order to drive the greatest impact.

ACS conducts both an intramural and extramural research program, but research itself is not a priority area; rather, it is a functional area. Catherine Mickle described it as “a tool to drive us to the desired outcomes in these particular areas.” However, she also shared that the topic of whether research should be a focus area rather than a means to an end has been debated many times over the years by the ACS board. Its extramural research program (greater than $100 million) funds research housed at universities, hospitals, and other similar facilities. Mickle said ACS additionally engages in activities that could be categorized as research in its “cancer control efforts.” The main focus of this presentation, ACS’ intramural research program, fits well within the NSF definition of research, she stated.

The ACS intramural research program itself is guided by a set of articulated priorities linked to the overall mission of the organization (stated by Heist above). The research efforts are targeted toward areas where they believe they will have the greatest impact, such as contributing to the science about common cancers and known and emerging risk factors. Some research targets policy, community, and behavioral interventions, where known causes of cancer, such as smoking, exist. ACS conducts research on access to care and quality of care, as well as the psychosocial and support needs of patients and caregivers. Global tobacco control and the international cancer burden are growing areas of research. Finally, ACS also devotes research efforts toward evaluating the effectiveness of its own policies and programs.

These research priorities are housed within five different intramural research program areas or departments: surveillance and health services; economic and health policy; statistics and evaluation; behavioral; and epidemiology. A management team coordinates these departments. Altogether, ACS spent more than $21 million in 2013 on the intramural

2 The American Cancer Society mission statement: http://www.cancer.org/aboutus/whoweare/acsmissionstatements [December 2014].

research program, including management costs. Approximately $3 million was directed toward surveillance and health services; $1.5 million each toward economic and health policy, statistics and evaluation, and behavioral research; and $6 million on epidemiology research. One-third, or $7 million, of the total amount was spent on an ACS cancer prevention study project. Overall, 86 highly trained staff work to manage and conduct this intramural research program.

Mickle provided two examples of products that have resulted from ACS intramural research. The first, produced by the ACS surveillance and health services research department, has developed current incidence and mortality rates from various forms of cancer by gender. The accompanying publication, Cancer Facts and Figures (American Cancer Society, 2014), is widely used across the health care community, according to Mickle. In addition, the surveillance team reports on actual incidence by state and develops projections of future incidence and mortality.

A second example shows cancer deaths averted through known interventions by gender, as shown in Figure 3-1 . The graph shows a compari-

FIGURE 3-1 Total number of cancer deaths averted by declines in cancer death rates from 1991 to 2010 in men and from 1992 to 2010 in women. SOURCE: Mickle and Heist (2014).

son between actual deaths from cancer and projections of the number of deaths that would have occurred if the cancer community had not intervened with proven ways to prevent cancer. The graph, prepared jointly by the epidemiology and surveillance teams, is “an important example to show how we’re using our intramural research efforts to coordinate and drive change, and perhaps in some circumstances our way of delivering our products and service in support of our mission,” she said, adding ACS seeks to increase “most lives saved” in the shortest period of time.

Other examples of ACS’ intramural research include work on tobacco tax policy, which includes analysis of trade policies, and tobacco control, as well as nutrition and physical activity and their direct linkages with cancer. The statistics and evaluation department serves as the internal analysis group. They assist with planning, as well as study and survey design. The behavioral research group addresses issues around survivor-ship, quality of life, health equity, and tobacco cessation.

Half of all of ACS’ intramural research staff works in the epidemiology department and focuses on cancer prevention. Heist described four significant areas where ACS research has had an impact. The first of these was the Hammond Horn study, which led to the 1964 Surgeon General report on the impact of tobacco. Next were the longitudinal Cancer Prevention Studies (CPS) 1 and 2, in which volunteers were interviewed about a range of factors and behaviors, and followed over time. CPS 1 was conducted from 1959 to 1972 and helped in showing the harmful effects of secondhand smoke and the ineffectiveness of low-tar nicotine cigarettes. CPS 2, initiated in 1982 and still ongoing, has been useful thus far in identifying a link between obesity and cancer, as well as other nutritional and physical activity factors. Finally, the fourth area is CPS 3, which began in 2006. This study, involving more than 300,000 participants, extends beyond interviews to involve the collection of blood samples. Heist estimates that approximately $37 million has been spent on CPS 3 to date, in part because of the costs of adequately controlling collected specimens, and stated that it could cost $125 million or more over the life of the project. Despite these costs, however, Heist stated that ACS feels that this investment is worthwhile for its potential impact. In Heist’s words, “saving lives is what drives our program and what we’re doing.”

Lutheran Social Service of Minnesota

Lutheran Social Service of Minnesota (LSSM) is a nonprofit organization with more than 2,300 employees who provide a broad array of community services across their state. Jodi Harpstead, chief executive officer of LSSM, described their work and how they approach and use research. According to Harpstead, LSSM is one of the oldest and largest

social service providers in the state of Minnesota. Serving 1 of every 65 Minnesotans, LSSM operates 23 different lines of service in every county. The mission statement for LSSM is

Lutheran Social Service of Minnesota expresses the love of Christ for all people through service that inspires hope, changes lives, and builds community. 3

The organization is also part of a parent organization, Lutheran Services in America (LSA), which is comprised of more than 300 organizations across all 50 states and the Caribbean. Altogether, LSA accounts for $21 billion in human services across the country and serves 1 in every 50 Americans. State-level organizations within the LSA umbrella vary in size, primary funding source, and breadth of services offered. However, most of the services that LSA offers target older adults and people with disabilities who will need support in their communities for the rest of their lives. Such services address ongoing needs and generally not problems that can be “definitely solved,” and thus are often of less interest to, and attract less funding from, social philanthropists, she said.

LSSM receives 84 percent of its revenue from government sources; philanthropy accounts for 9 percent, with the remainder coming from client fees. LSSM takes pride in being a careful steward of its resources, and, according to a study conducted 10 years ago, has a reputation for being trustworthy, Harpstead said. Despite this reputation, Harpstead stated that she is experiencing pressures to demonstrate through research the results of her organization’s activities. One barrier to conducting this research, however, is the need for resources to implement it. As CEO, she must consider how to allocate resources in ways that will help both with fulfilling their mission and attracting more resources. For LSSM, reputation and the “politics of social policy” have had a much greater effect on revenue than have the results from research regarding program effectiveness.

Harpstead also shared that measuring the impact of the organization has inherent challenges. In her words, “How do you measure racism? How do we account for the shift of the global economy and factory jobs from Minnesota to China while trying to prove the value of our efforts to provide employment and housing services? How do you measure the effectiveness of our financial counselors when there is a multi-billion dollar for-profit industry devoting itself to convincing people to take out easy payday loans to support their families?” Nevertheless, LSSM con-

3 The Lutheran Social Service of Minnesota’s mission statement: http://www.lssmn.org/About-Us/ [December 2014].

ducts quarterly research to measure client outcomes and key performance indicators.

In addition to the internal research used in evaluating the services provided, LSSM makes use of other research sources, such as research conducted by the University of Minnesota and a local foundation that conducts social services research. In addition, LSA convenes its member organizations annually to network and discuss best practices. Furthermore, LSSM is a member of other national groups and associations that also share important information and research results. The accreditation process involved in maintaining membership in one or more of these groups also serves as a way that LSSM studies and documents its own work. LSSM also makes use of national-level data from organizations, such as the Corporation for National and Community Service, Lutheran Immigration and Refugee Services, and National Adoption Association. Harpstead stated, “I hope this does not leave the impression that because we are not funding millions of dollars of research inside and outside our organization that our work is not informed by research. There is a lot of third-party work . . . and other ways for us to get a hold of good research information that informs our work design and program implementation.”

LSSM recently contracted an outside firm to conduct literature reviews, interviews, and analyze state-level data to document how “life is currently” for people with disabilities and then to design how it ought to be. This work was represented in a graphic used by the state to plan for people with disabilities. Similar work has focused on older adults, as well as homeless youth. LSSM also works as part of a coalition to help transform how people with disabilities live in Minnesota. For example, they are working to help people move from group homes into their own apartments, and out of sheltered workshops and into paid employment with good wages and benefits. Harpstead commented, “I emphasize this piece a lot because it may not be what you in the room might have thought of as research or even think of now as research, but it has prompted an amazing social change across the State of Minnesota that is really affecting the lives of how people live and work in the state. It was started with a whole lot of research and now we are transforming our services as a result.”

Harpstead shared other ways that research occurs at and for LSSM. LSSM participates in a number of pilot studies, such as helping caregiving spouses use iPads to document isolation and depression. An individual doing a fellowship with LSSM completed a study of accountable care organizations (ACOs) across six states. LSSM plans to measure health care metrics as they create an ACO in Minnesota with multiple disability service providers. Other research activities include data mining of information collected through call centers, peer quality assessments of group

homes, and certain mental health counseling activities. These data are primarily used for program evaluation.

Although LSSM gathers, conducts, and uses research in a variety of ways, Harpstead stated the nonprofit does not have a research department or any line in the general ledger for R&D. Instead, senior directors at LSSM are expected to carry out and/or find the research results they need from other sources in order to ensure continued best practices. Harpstead noted revenue directed toward R&D could be modeled or estimated, and she said LSSM likely devotes 0.5 percent of its revenue to research.

The language that LSSM would use to describe its research efforts includes data-driven design, data mining, and program evaluation. As she said, “We have never called it R&D until we were invited to this conference.” Overall, Harpstead stated that her organization is considering how it could do more and “make a difference in our ability to fulfill our mission and improve services for people in Minnesota.”

Robyn Stone, senior vice president for research at LeadingAge and executive director of the LeadingAge Center for Applied Research (CFAR), presented her views on R&D at LeadingAge. LeadingAge, formerly called the American Association of Homes and Services for the Aging, changed its name several years ago to reflect its expanded mission: The mission of LeadingAge is to expand the world of possibilities for aging. 4

According to Stone, the organization represents an array of services among 6,000 members, including nursing homes, assisted living, adult day home, community-based services, and many low-income senior housing providers. CFAR “brings a breadth of knowledge and experience to a wide variety of research areas. The center has earned a national reputation for its ability to translate research findings into real-world policies and practices that improve the lives of older Americans and their caregivers.” (LeadingAge, n.d.)

Stone noted the emphasis on applied research as evident in the mission statement was something she enacted in her role as executive director of CFAR when she came to LeadingAge 15 years ago. The prior LeadingAge executive president valued the personal stories of their members and did not share an interest in data and research, but Stone stated that “evidence-based data is what helps us to move forward in terms of development and best practice . . . CFAR is really about bridging the worlds of policy, practice and research.” She added her experience as a trained researcher

4 The mission statement for LeadingAge: http://www.leadingage.org/About_LeadingAge.aspx [December 2014].

involved in governmental intramural research and research in the private sector informed her commitment to seeing and initiating the opportunity for LeadingAge to serve as a natural laboratory.

Research is conducted at LeadingAge in CFAR, but clinical, applied, and internal research also happen at the provider-level among many members. Some member providers also partner with academic health centers, she noted, which raises the possibility for double-counting these activities through NSF’s survey of R&D in higher education.

LeadingAge has 7 to 15 staff members and a $5 million budget. The budget also includes an additional internal source of funds of $500,000. LeadingAge pays salaries for the positions of the executive director, administrative staff, and a portion of some researchers’ time. Members have also contributed approximately $500,000 toward an innovation fund. Most of LeadingAge’s funding comes from federal contracts and grants with multiple agencies and various private foundations, sources that change over time.

Stone highlighted one project to illustrate what R&D looks like at LeadingAge. Over the past 10 years, LeadingAge has worked to develop a new model of housing and services for low-income seniors. The origin of the project came from a desire among members to measure the impact of whether an enriched service portfolio was making a difference in terms of resident outcomes. They also wanted to know whether they were saving Medicaid and Medicare dollars, and/or whether they were stopping evictions to better maintain properties. The research began with case studies and a literature review. Later, working with the U.S. Department of Health and Human Services (DHHS), they convened expert panels and workshops around the country to identify key issues. Ultimately, LeadingAge partnered with a research-contracting firm to create a database of information regarding low-income seniors, matching administrative data from the DHHS with Medicare and Medicaid claims from DHHS’ Centers for Medicare & Medicaid Services (CMS) for 12 jurisdictions around the country. These data enable LeadingAge to report and compare this population to others living in the community.

The data have indicated that this subpopulation—living in low-income, publicly subsidized senior housing—is sicker and has higher needs than many other segments of the population, including peers living in the surrounding communities. This knowledge has led to the focus on housing services, keeping people in their communities as long as possible, preventing evictions, avoiding movement into nursing homes, and avoiding costly hospital admissions—ultimately producing Medicare and Medicaid savings. LeadingAge used the research findings to develop a model of housing that centers on a service coordinator along with a wellness nurse.

This model is being tested in 80 housing properties across Vermont as part of a statewide Medicare coordinated care payment demonstration project. Each housing provider receives a per-person-per-month Medicare payment for service coordination, representing the first time that Medicare has paid for services in housing. LeadingAge and RTI International have partnered to conduct an evaluation of this service coordinator model. Initial results after 1 year of the program show reductions in the rate of growth in Medicare costs when compared with a control group with similar demographic characteristics.

Stone indicated that they also have ongoing development projects, including a learning collaborative of 12 housing providers around the United States, that partner with health care and social services of various sizes and types. Over the past 18 months, this group has engaged in data sharing, problem sharing and solving, and development of resident assessment tools for housing providers to use. In addition, LeadingAge helped this collaborative implement three new evidence-based practices focused on reducing depression, managing chronic disease self-care, and preventing falls.

Another initiative, recently funded by AARP, involves the creation of a toolkit to help housing providers partner with health care providers in their local communities to jointly achieve better health care outcomes and cost savings to the Medicare and Medicaid programs. LeadingAge’s Center for Housing Services conducts both qualitative and quantitative research. It publishes its work but also ensures that findings are accessible through trade publications, its website, and conference presentations. Other initiatives focus on CQI (continuous quality improvement) in nursing homes, the future of the geriatric workforce, and the exploration of a model of social investment bonds to support housing and services. For the latter project, LeadingAge is also working to initiate a research evaluation component to determine return on investment and any cost savings to Medicare and Medicaid.

According to Stone, “One of the things that nonprofits can do is to help solve some of these problems. While our association and our members are concerned about the bottom line, we are not as constrained by the profit motive as, for example, are our peers at the American Health Care Association, which represents primarily for-profit nursing homes. We are actually able to stretch out a little bit more and look at more of the innovation out there. I think that is what nonprofits can bring.” However, she noted that nonprofits often lack the research expertise, as well as adequate funding to conduct rigorous research, which can be quite costly to do. Adding to this problem is diminishing federal funds for this work, she said, and a desire by foundations to fund programs rather than research.

Stone ended by noting this lack of appetite for research funding means that research work is often couched in program development work.

Prince William Regional Beekeepers Association

Karla Eisen discussed the nature of R&D for the Prince William Regional Beekeepers Association (PWRBA), and how its R&D activities changed their culture and practices. PWRBA has 125 volunteer members and is a member of a state beekeeping association, composed of regional associations. The association strives to

• provide a forum for the exchange of ideas and views of mutual interest to beekeepers;
• provide education on the practical aspects of beekeeping and encourage the use of better and more productive methods in the apiary;
• foster cooperation between members of the association;
• promote understanding and cooperation between the association and the community with regard to beekeeping; and
• promote the use of hive and honey products. 5

PWRBA operates with a budget of less than $5,000, with the exception of two grants. The grants funded research and the subsequent implementation of beekeeping practices that had become, said Eisen, “a lost art.” According to Eisen, over the past 25 years, beekeeping has become dependent on a commercial and agricultural model that produces boxes of packaged bees with which to start new colonies. These bees, including a queen bee, are packaged in the southern United States and shipped north, where the weather may be excessively cold, snowy, or rainy. The ability to develop new colonies has always been integral to the beekeeping process, but has become even more important in recent years with the spread of Colony Collapse Disorder. Eisen described how PWRBA has worked to change the existing model of starting new colonies to something that is more sustainable. The members learned to develop nucleus colonies—miniature hives that they made themselves. The organization also learned how to raise queen bees to distribute to its members. It did research to determine whether this approach was more effective than importing packaged bees from warmer climates.

This project originated at a state regional meeting when concerns were raised about bees dying in large numbers, coupled with the risks

5 Prince William Regional Beekeepers Association’s website: http://pwrbeekeepers.com/ [December 2014].

associated with importing Africanized bees. Research showed that large proportions of the bees coming to the Northern Virginia area were from Africanized bee areas. According to Eisen, “We had a vision. We wanted to develop a locally available and sustainable source of bees. We wanted to learn to make our own bees. We wanted to do education, training, and mentoring. We wanted to promote what is called Integrated Pest Management. We wanted to do outreach and education to the community. And most importantly, we wanted to just change the way we conducted business. We wanted to reduce our dependence on importing these packaged bees.”

In 2009, PWRBA applied successfully for a $15,000 Sustainable Agricultural Research and Education (SARE) grant 6 from the U.S. Department of Agriculture (USDA) to conduct research on developing nucleus colonies. The SARE Grant Program targets farmers and producers, and requires that grant recipients conduct research, followed by outreach and education to the community. The research involves developing a hypothesis, and collecting, analyzing, and presenting the data. SARE itself also supports dissemination and outreach through its online database of projects.

In 2012, PWRBA applied for a second grant, this one through the USDA Specialty Crop Block Grant Program. This program is designed to enhance the competitiveness of specialty crops. PWRBA was awarded a grant to study and learn queen bee rearing. In Eisen’s view, “Those are development funds. They ask you for performance measures. You have to speak that language. It is not research, but clearly provides funds for development activities. These grants do not go to individual farmers, but only to associations.”

These projects targeted production of a product, locally raised nucleus hives or “nucs,” to be distributed to the students that PWRBA teaches each year as well as existing beekeepers in the region. In doing so, Eisen and her colleagues focused their efforts toward meeting the distribution and training goal, with the secondary goal of finding out if their methods would produce stronger bees. PWRBA proceeded in several steps:

• Beginning with a year-long pilot project to plan and educate, prior to implementation.
• Conducting an experiment comparing colonies started from packaged bees to those started from nucs.

6 The Sustainable Agricultural Research and Education (SARE) Program within the U.S. Department of Agriculture awards grants with the mission “to advance—to the whole of American agriculture—innovations that improve profitability, stewardship and quality of life by investing in groundbreaking research and education.”

• Raising queens and tracking their performance to identify the best breeders.
• Conducting education and outreach programs.

“Experiment” was the word chosen to communicate about the research to the individuals who would be raising and tracking their colonies. Organizing the experiment into three different groups further facilitated comparing different sources of queen bees.

Data collection involved capturing information about the weather, flower-bloom, indicators of hive health and productivity, and interventions by the beekeepers. The beekeepers reported their data monthly over a year via Survey Monkey. The individual beekeepers also gave summaries and recommendations based on their data and experiences. At the same time, PWRBA conducted numerous trainings and educational programs.

Eisen offered her perspective on the nature of this work in the following manner: “I was always very clear to call it citizen science, and I still call it citizen science. But even in our little baby research project, we did collect data. We did have descriptive statistics. This grant was $15,000. That was like a million dollars to our little beekeeping association. It was a lot of money to spend. I do think that is an issue for small nonprofits.” She added she was aware that the research lacked full scientific rigor, and involved many variables and experience levels. For example, weather and location varied among the colonies. Despite these limitations, however, their results are being replicated by other beekeeping organizations doing similar work in many areas of the country.

Results from their work indicated that the colonies started from nucs had a much better survival rate, and following these colonies for an additional year revealed an even larger difference favoring nucs over packaged bees (see Table 3-1 ). This work also led to increased knowledge and an ability to increase the production of colonies. In 1 year, PWRBA was able to quadruple the number of nucs it produced. Within 3 years they were able to produce enough nucs to support the entire student class and many existing beekeepers as well as to produce queen bees.

This project “has completely changed the way that we operate,” stated Eisen. PWRBA has eliminated the use of packaged bees completely and provide locally produced mini-hives to beekeepers instead. It has helped others learn to produce their own queens. It has continued their efforts in education and outreach, seeking additional funding for those efforts. The Southern SARE mobile display now highlights beekeeping with nucleus colonies as part of sustainable agriculture. Eisen herself shared her knowledge of raising queens with the White House beekeeper.

Eisen concluded her remarks by sharing her views on whether the

TABLE 3-1 One- and Two-Year Hive Survival, by Source of Starter Hive

SOURCE: Eisen (2014).

term “research and development” would resonate with her organization. “I would have to give a resounding no to that, “she said. As someone who is involved with and works with others in agriculture, they identify with the terms “testing” or “experimenting” much more than with the word “research.” Eisen believes that her organization did development work; however, she observed, even in the crop specialty block grant program, the words “development” and “research” are not used. After polling 30 members of her organization on what words they would use to describe this work, only two individuals, the team leaders, responded. They offered that they collected data, had a hypothesis, had results, published a report, created new knowledge, and enabled product delivery. Eisen concluded that there are many other organizations like her own within the agriculture community.

Hillside Family of Agencies

Maria Cristalli, chief strategy and quality officer for Hillside Family of Agencies (HFA), offered her perspective on R&D. She began with HFA’s mission statement:

Hillside Family of Agencies provides individualized health, education, and human services in partnership with children, youth, adults, and their families through an integrated system of care. 7

7 The mission statement for Hillside Family of Agencies: http://www.hillside.com/Generic.aspx?id=142 [December 2014].

HFA is known for providing services to children and families over a 177-year history, but Cristalli said significant changes, such as the Affordable Care Act, affect how the organization now operates. Medicaid dollars from New York State constitute approximately 40 percent of the current budget, and by January 2016, HFA and other traditional providers of children’s behavioral health services will be embracing epic change as New York State Department of Health intends to have all children’s Medicaid services under managed care. These shifts led HFA’s executive team to extend the organization’s services to adults through an integrated system of care.

HFA operates primarily in central and western New York and Prince George’s County, Maryland, offering a wide array of services. Of HFA’s total budget of $140 million, Cristalli estimated that approximately 1 percent is spent on “what you would characterize as research activities.” HFA has approximately 2,300 staff across various service locations.

HFA’s strategic intent statement, adopted in 2007, states: “Hillside Family of Agencies, in partnership with youth, families, and communities, will be the leader in translating research into effective practice solutions that create value (outcomes/cost.)” When this strategic intent was first launched, staff initially expressed concern that HFA would shift from being service-oriented to being research-oriented, moving away from a focus on helping people. This was not the case, however, according to Cristalli. Instead, she said HFA “wants to be specific and intentional about the services we are providing. The application of the most effective treatments and the measurement of outcomes to inform practice is our organizational goal. It is important that we understand outcomes relative to cost.” The outcomes of interest to HFA focused on enduring changes in the lives of the people it serves.

Cristalli then described the process that HFA developed to achieve the strategic intent. The process begins with deriving value from the data collected, while targeting very clearly defined outcomes. It identified benchmarking as an important process, using data combined with anecdotal stories to determine “best in class” service provision. Next, for certain programs, it planned to use a higher level of data gathered through research, program evaluation, and predictive analytics.

A key step in enacting this vision was bringing research expertise and leadership into the organization. Hiring a research director proved challenging, and HFA learned that few similar nonprofit organizations had internal research departments. Further, they were unsuccessful in identifying someone who could understand and communicate effectively with researchers and practitioners. Ultimately, Cristalli explained, HFA formalized a contract in 2009 with a department within the School of Social Work at the University of Buffalo to “combine their two strengths—

core competencies of practice at Hillside and research at this academic research institution—to create a strategically focused research function at Hillside.”

Since the inception of the partnership, HFA has invested $800,000 in that partnership and continues to renew the arrangement. The model for this research partnership involves staff, parents, and young people, who help to determine projects and research questions. This model of research—the Hillside-UB (HUB) model—was documented, including a journal article published in 2012 in Research on Social Work Practice (Dulmus and Cristalli, 2012).

Through the HUB model, researchers examined HFA’s organization and management to determine readiness for change and research. This helped HFA determine a baseline of organizational climate and readiness to implement evidence-based practices across 120 different services. Other capacity-building steps included developing a field unit that included interns as research assistants to doctoral students conducting research, and developing an internal, federally registered Institutional Review Board (IRB) to review projects. The HFA IRB complements the IRB at the University of Buffalo and focuses on benefits and risks for the young people served by HFA. Cristalli shared that as HFA has expanded research partnerships with other institutions, they have come to see themselves as “in a transition from being only a service provider to also being a knowledge purveyor. We are now sharing and disseminating what we learn in the literature through invited book chapters and peer-reviewed publications.”

Cristalli illustrated HFA’s mix of service provision and research by describing the Hillside Work-Scholarship Connection (HW-SC) in Prince George’s County, Maryland, and upstate New York. The program, funded by a variety of foundations and public-private partnerships, targets young people in school districts that are at risk of not graduating from high school. The services provided to these young people include academic support, job-readiness training, family engagement, year-round enrichment activities, postsecondary support, and youth advocate mentoring. Research has indicated that participation in the program, along with part-time employment, improves the graduation rate from 50 percent (the rate of comparable students in the school district) to 90 percent for HW-SC students employed by an employment partner. According to Cristalli, this equates to an $11 return to the community and investors for every $1 invested. This program has also brought acclaim to HFA. HFA was recently named to the S&I 100 8 list of organizations by the Social

8 The S&I 100 is an index of top nonprofits creating social impact, created by the Social Impact Exchange ( http://www.socialimpactexchange.org/exchange/si-100 [December 2014]).

Impact Exchange for use of rigorous evaluation and research, and ability to replicate results.

A key element of the HW-SC is the use of predictive analytics to identify the target population. They used factors identified through previous research (such as low socioeconomic status, low standardized tests scores, failing core courses, suspensions from school, poor attendance, and being over age for their grade) to identify students at risk of not graduating from high school. Research first addressed whether these particular risk factors were in fact meaningful in the districts in which the program would be implemented, and then determined whether they could be used effectively to identify students who would most benefit from the HW-SC service. “We are now looking at full population data to make better decisions about selection of the young people in partnership with the school districts where we are serving. There is just so much of a need and we want to be sure that we target the need appropriately,” Cristalli stated.

Some of the research at HFA has included quasi-experimental design. To ensure best practices, HFA has hired outside evaluators to evaluate the HW-SC several times over the past 10 years. However, the data analytics work to identify the target population of the program has been done internally by HFA’s business intelligence staff, who continue to partner with a researcher at the University of Buffalo. HFA employs five business intelligence staffers and a full-time PhD-level research coordinator. Prior to using this data-driven process to target participants, she said, HFA merely recruited interested young people and checked their qualifications against the list of risk factors. Now, HFA uses district-level data to select participants.

Data indicate that the identified risk factors do in fact predict the likelihood of graduating from high school. Using these data, HFA has been able to develop a model of probability of graduating with 75 percent accuracy, Cristalli explained. The model showed that the HW-SC Program would be most effective for students with between a 15 and 79 percent likelihood of graduating, according to Cristalli. Students above that threshold were predicted not to need the program, and students below that threshold were predicted to need more intensive services than what the program would offer. This data-driven process has changed the practices of HW-SC, Cristalli shared. It uses full population data and works in partnership with schools to recruit students to increase the impact of its program.

Cristalli closed by reflecting on how HFA would respond to questions about R&D. “When you say research and development . . . we think more about program development. It is more about product or service development. We do not use those terms [research and development] together,”

she said. Cristalli added that across the organization, staff are increasing their comfort with and the use of data to make decisions.

Mote Marine Laboratory

Michael Crosby, president and CEO of Mote Marine Laboratory in Florida, presented his perspective on R&D in the nonprofit sector. He began by sharing the history of the organization. According to Crosby, Dr. Genie Clark founded Mote 60 years ago because of her passion for shark research. Partnerships were developed with local shark fishermen. Philanthropy came first from the Vanderbilt Family and later from William Mote.

Mote Marine Laboratory’s main campus is located in Sarasota, Florida, with seven campuses around Florida and the Florida Keys. It is a diverse organization but is “first and foremost a research institution, a comprehensive research institution,” said Crosby. He added that Mote also conducts significant amounts of public education and outreach. Half of the 200 staff is focused on science, approximately 33 of whom hold doctorates. A cadre of volunteers also support the research efforts. The research began with shark research, but now extends to 24 different research programs, such as coral reef ecology and microbiology, ocean acidification, sea turtle conservation and research, and phytoplankton ecology. The work extends around the world in six continents.

Mote is guided by a strategic plan and a vision statement. The vision statement is as follows:

Mote Marine Laboratory will expand our leadership in nationally and internationally respected research programs that are relevant to conservation and sustainable use of marine biodiversity, healthy habitats and natural resources. Mote research programs will positively impact a diversity of public policy challenges through strong linkages to public outreach and education. 9

In addition to this vision for 2020, Mote’s strategic plan focuses on four main priorities centered around world-class research, translation and transfer of research and technology, and public service. Mote scientists have produced about 3,500 peer-reviewed publications. In addition to this focus on disseminating scientific findings to the research community, Mote also maintains a commitment to translating and transferring research knowledge through an aquarium, which serves as an informal science education center. More than 350,000 people visit the center each

9 The strategic vision for Mote Marine Laboratory: http://mote.org/about-us/mission-vision [December 2014].

year, including 29,000 precollegiate students who visit through structured programs.

Crosby emphasized that Mote is a private nonprofit organization that does not operate as a part of any governmental agency or university, although it has many partnerships with such entities. Through these partnerships, it also offers connections for undergraduate and graduate students to be engaged in research with Mote scientists. In the past 5 years, more than 100 graduate students have conducted research for theses or dissertations at Mote, with Mote scientists serving as mentors. Recently, the Florida State Legislature appropriated funds to Mote to provide such research experiences to students from local universities. Furthermore, Mote has developed a postdoctoral program aimed at “recruiting the next generation of scientists,” which is funded entirely through philanthropic donations. By 2020, Mote plans to have up to seven of these 2-year fellowships.

Mote has a $20 million annual operating budget, half of which comes from competitive research grants from entities such as the National Institutes of Health, the National Science Foundation, and the U.S. Department of Defense, explained Crosby. The remainder comes from a combination of philanthropy, which includes membership fees, and net positive revenues from the aquarium. Overall, Mote is funded entirely by “soft money,” and staff do not have contracts or tenured positions. According to Crosby, that way of operating “makes us very entrepreneurial. Because we are independent, we have research freedom as well, but it comes at a price. The price is we basically eat what we kill if you will. We have to bring the money in or we cannot provide positions there. Philanthropy is a huge piece of what enables Mote to do what it does.” Mote maintains very little bureaucracy and prides itself on remaining responsive and nimble. For example, when the BP Deepwater Horizon oil spill occurred in 2010, Mote was one of the first environmental responders, because the president of Mote immediately authorized it.

Crosby noted that Mote’s individual proportion of the total R&D budget for “Other nonprofits” in NSF’s 2014 Science and Engineering Indicators report, is approximately one-tenth of 1 percent; however, collectively with other large marine research institutions such as the Monterrey Bay Aquarium Research Institute and Woods Hole, these institutions can perform a significant amount of R&D with philanthropy playing an increasing role.

The presentations from representatives of the six different nonprofit organizations and the discussions that followed shed light on a number

BOX 3-1 Key Challenges for the Design of the NSF Nonprofit R&D Survey, as Identified Through Workshop Discussions

• Understanding the diverse and unique nature of R&D in the nonprofit sector.
• Using the correct language for communication about R&D.
• Accounting for the interconnections among nonprofits.
• Identifying the correct respondents.
• Understanding the financial and labor resources within nonprofits.

of complexities within the nonprofit sector that pose challenges for the design of the NSF Nonprofit R&D Survey, according to Lester Salamon and other participants. They identified five challenge areas, shown in Box 3-1 . The remainder of this chapter addresses these challenges in more detail. Chapters 4 and 5 further the discussion by identifying ways, suggested by participants, that NSF could address these challenges in the design of its survey.

Understanding the Diverse and Unique Nature of R&D in the Nonprofit Sector

One of the primary reasons the workshop steering committee set up presentations by individuals from nonprofit organizations was to learn about the types of activities that might constitute R&D in this sector. As their representatives reported, the organizations vary in the extent to which research is a distinct activity versus being embedded within their programmatic activities. Raymond described the important “functional role of research” at many of these organizations, regardless of whether a research department, division, or budget line item exists.

Paul David commented on nonprofit R&D within a broader context. He stated that many economists view R&D “primarily as an indicator of investment in inventive activity, which is in turn an input into a larger stream of processes, which come under the heading of innovation.” These innovative processes are key sources of economic growth, and ultimately potential sources for the improvement of human welfare and well-being. David observed that the nonprofit sector is emblematic of the new service sector, an emerging sector of the economy and one that is highly information intensive. As such, its products are not physical, but rather new information services designed to have an impact. Innovations in this sector are placed in a residual category of other products, rather than the

technological, physical, and process innovations that lend themselves to patenting. These issues are growing in importance in an economy increasingly centered around digital products and processes, he noted. In David’s view, the present undertaking to produce new baseline measures of R&D in the broader nonprofit sector should be recognized as an important opportunity with valuable long-term “spill-over” benefits of two kinds. It can illuminate the diverse functional roles played by R&D and the modes in which these activities are performed by information-intensive service organizations. Additionally, it can be used to explore and test novel quantitative indicators of aggregate volume, distribution and durability of R&D investments in the growing “new services” sector. The measurement task that NSF is to carry out should be approached with its potential for yielding broader “pilot project” payoffs in mind, said David.

Irwin Feller, professor emeritus of economics at Pennsylvania State University and member of the workshop steering committee, suggested that much of the activities described by the presenters may be included or excluded in the R&D survey depending upon the extent to which NSF is interested in measuring activities around evaluation, applied research, program testing, and data collection. He suggested that data collection in the absence of a hypothesis being tested is not research. Feller stated, “The challenge for NSF, I think, in designing this survey is how tightly they adhere to the existing definition of R&D, or how flexible or accommodating they are in encompassing the multitude of activities that these organizations do.” Ron Fecso, a consultant and member of the workshop steering committee, noted that this poses a difficult issue for NSF to consider, but added that in industry, quality control activities are not considered research. Therefore, he argued, to the extent that program evaluation is for the purpose of ensuring the quality of services and conducting market research, it is not necessarily research. He stated that “really clear definitions as to where that line gets drawn may be very important.” Stone added excluding program evaluation would result in excluding most nonprofits. Feller indicated his belief that program evaluation should be included because, particularly in social science research, program evaluation constitutes a way to gather data that can be used to test theories.

Stone summarized another issue regarding the nature of R&D, commenting, “I think one of the questions is what you do about translational research. I do not call implementing an evidence-based practice as research, but I do call evaluating the implementation of evidence-based research with good science around it to see whether it worked or did not work as research.” Translational research is critical to nonprofits that tend to frame their activities this way, taking what they learn and using it to change practice or policy, she argued. Stone also raised the question about whether using data in feedback loops or conducting market research

would be the type of activities pertinent to the NSF survey of R&D. Finally, she suggested that, from her perspective, the terms “research and development” together constitute a certain type of activity. As she stated, “I think R&D is a specific thing and not research. Development is again something else. R&D is research and development.” Several other participants said all research activities should be counted, even those that lacked quality or rigor.

Salamon summarized his views on this topic by stating, “First of all, I was blown away by these presentations because what I think they demonstrated pretty powerfully is that there is something very important happening in the nonprofit world in conducting systematic data-gathering and research. Whether we come up with the right words for it or not, this trend is moving the sector in the direction of evidence-based decision making. And how fully that counts as ‘research’ in the terms that have been used to define R&D in NSF surveys is worth debating.” But Salmon and several others noted the nonprofits are doing important work worth capturing; he urged the group to find new ways to capture these activities. One participant suggested that nonprofits are qualitatively different from many other sectors, and that these qualitative aspects of their activities should be captured and not just quantified. He added that these differences should inform the survey design, noting that in some cases nonprofit institutions spin off technology into for-profit ventures.

Using the Correct Language for Communication about R&D

A second key challenge raised by many participants was identifying the correct terminology to use to ask nonprofit organizations about their R&D activities. They said the discussions at this workshop make clear that the traditional terminology of R&D does not work in many nonprofit organizations, and the way the nonprofits themselves think about their activities and the words they use for those activities can affect how they respond to survey questions. Among the alternative terms that participants suggested were applied research, evidence-based decision making, translational research, data mining, testing, capturing information, or experimenting.

Harpstead and others suggested a clear definition at the beginning of the survey of what is meant by “research” would be necessary for organizations such as hers to answer questions about these activities. She added that some of her colleagues at other organizations might consider documenting their annual outcomes as research, whereas, she observed that the planned survey seems to be targeting research that tests hypotheses. In Harpstead’s words, “perhaps you have to start your survey with a clear definition of what you call research and then ask how many of us do

that. You get a very different answer than if you say, ‘Do you do research in your nonprofit?’”

Mickle argued that the definition needs to be put in “plain English” for respondents. She added that the breadth of the question and types of activities included could affect how easily she could identify the staff, volunteers, and other resources who do those activities, because they may cut across many areas of her organization. This would require making estimates of what percentage of time various staff members spend on activities that constitute R&D.

One potential way of incorporating language to help communicate the distinctions about the nature of R&D in the nonprofit sector would be to ask respondents a series of questions, suggested Michael Larsen, professor of statistics at George Washington University and member of the workshop steering committee. For example, he noted, the Current Population Survey asks multiple questions, rather than a single question, to determine whether someone is active in the labor force, and if so, unemployed. Similarly, a series of questions may help to tease apart the subtle distinctions between research done for evaluation and research done for other purposes, he stated. Responses to these questions can be used to determine whether particular activities would be counted for the purposes of the survey. According to Larsen, “you might not end up with a single estimate. You might end up with ‘This is the estimate if we are strict. This is the estimate if we include a little bit more.’”

Salamon endorsed and expanded upon Larsen’s suggestion of using a series of questions. He suggested beginning with a lead question, and then following up with a series of prompts that include terms such as those listed above. Several participants suggested conducting a pilot study to test these terms. Feller reflected this view by noting, “It is such an important but fluid kind of issue that has such important impact, that it might be worthwhile just to test it.”

Donald Dillman, Regents Professor of Sociology at Washington State University and member of the workshop steering committee, observed that the way that an organization sees its purpose has an important effect on how it will respond to a question. For example, some organizations are highly rewarded for doing R&D and thus may work to include as many of their activities as possible in the survey; the opposite may be true for another organization whose board focuses on service delivery and does not support such activities. Cristalli agreed with Dillman, stating that this phenomenon occurs both among board members and staff members. Furthermore, she added, many traditional funders of nonprofits, including county and state governments, do not pay for research and want to be assured that such activities are not among those for which they provide funds.

Accounting for the Interconnections Among Nonprofits

A third challenge identified by many participants in surveying nonprofits is that many of these organizations are interconnected. This makes it difficult to identify which of them should be made eligible for sampling and leads to potential double-counting of reported R&D. Raymond drew attention to the range of partnerships that exist between organizations. They include partnerships between two or more nonprofits, or they may exist between a nonprofit and a corporation or an academic institution. Stone agreed and noted that nonprofits are more likely to engage in these types of partnerships than are for-profit entities. Nonprofits are more likely to need to be collaborative to pool resources, she said, whereas for-profit organizations are often more protective of their systems. Stone suggested that the survey might need to be able to detect some of these structural relationships.

As illustration, a number of nonprofit organizations are joined together as umbrella groups, consisting of a “lead” organization and many smaller member organizations. R&D activities may take place within some or all of the individual organizations (e.g., the Lutheran Social Service of Minnesota as a part of Lutheran Social Service of America), and the “lead” organization may or may not be aware of that research activity. Alternatively, the R&D is sometimes directed by the “lead” organization itself (LeadingAge), and the individual member organizations may or may not be participants. Harpstead cautioned that surveying individual organizations that are part of an umbrella group could result in counting a collaborative effort occurring within the umbrella group multiple times.

Salamon agreed with Harpstead and suggested that thinking of individual organizations as potential sampling units may not work for this NSF survey. Rather, he said, “maybe there is a way to short circuit it and to use a kind of wholesale approach. That would be, for example, going out to some of these umbrella groups and essentially subcontracting the surveying to them.” In essence, Salamon suggested that the “lead” organization in the umbrella group could survey its members about their research activities and what resources are devoted to them, while adding any research activities carried out by the “lead” organization itself. He argued that this could reduce potential double-counting of research efforts, and data about research efforts could be aggregated across an entire organizational structure (umbrella group).

The interconnections are even broader, several people pointed out. Some nonprofit organizations conduct research in-house through their intramural research programs. Others may provide extramural research funds to other organizations that will conduct the research. Some nonprofits, such as the American Cancer Society, have both types of research

within their portfolio. According to Mickle, this issue could be significant for a number of nonprofit organizations.

Stone elaborated on Mickle’s observations, saying that because many nonprofit organizations are funded through grants, donations, and other “soft money,” the amount of and ways in which they are engaging in research will be variable, particularly among individual member organizations that are part of umbrella groups. Some of these organizations have their own research institutes, while others do not. She added that some of this research would be through partnerships with academic institutions.

Several workshop participants expressed serious concerns that the interconnected networks and ways of conducting research within the nonprofit sector could exacerbate the likelihood of double-counting research efforts in the NSF survey. Collaborations, partnerships, and networks increase the risk of double-counting, suggested Salamon. One way that this can occur is when the nonprofit is a research funder, but counts funded research as part of its R&D at the same time that the funded entity also reports this same activity. Different members of an umbrella group may report the same research and the same resources applied to that research. The ways in which government agencies and academic institutions report their R&D activities may result in double-counting, as well. According to Stone, this may be an issue for foundations that fund a great deal of research. As she stated, “their output is our input.” Salamon reminded the group that the survey was intended to focus on the performers of research, rather than the funders. Dillman said careful wording of the survey was needed to avoid confusion on that point.

Salamon indicated that addressing the challenge of the interconnections among the nonprofit sector begins with recognizing that some research is going on and “throwing the net broadly.” Even with this inclusive strategy, he said, a careful sampling plan with weighting is needed. “I do not think the argument that some are doing it intensely and some not so intensely at a particular moment in time is a reason not to go after this broader approach, but rather a reason to be pretty careful about the sampling and data collection strategies,” said Salamon.

Identifying the Correct Respondents

Identifying the correct respondent is a fourth key challenge for the survey, according to many participants. Mickle agreed and said that even within a single organization, responses to questions about R&D will vary depending upon who completes the survey. She explained that while the ACS scientific research staff would answer in one way, her market research staff would answer another way because each thinks of research in different ways. Eisen echoed this notion in her presentation; while her

leadership team suggested that the beekeeping organization conducts ongoing research, Eisen disagreed because her standards for research differ from that of her colleagues. Stone expressed similar views.

Raymond emphasized identifying the correct respondent was a critical issue and the correct respondent might vary across organizations. In other words, she said, a person’s title may not be the ideal basis by which to select a respondent. Salamon added that a series of questions might be the best approach for this issue as well. As a possible solution, he suggested asking, “‘Who in your organization will know most about the following types of activities?’ as opposed to pre-selecting the individual that we ask to be a respondent. Let the organization determine within its own situation who the person or persons are that know about the things that we are asking about.”

Jeffry Berry, professor of political science at Tufts University, said the challenge of finding the right respondent is both challenging and costly, and would likely involve hiring staff to contact potential respondents on the telephone. He suggested one possibility for implementing the survey would be “drawing the sample randomly and then arranging for specific people to participate. This would involve seeking an agreement with those respondents and providing them with a person they could come back to and ask questions if they run into trouble filling out the survey. The measurement problems are really very difficult here. This is a preferred alternative to just the random sample and throwing the surveys out in the mail.”

Further discussion of this topic is included in Chapter 5 .

Understanding the Financial and Labor Resources within Nonprofits

Several participants pointed out volunteers are a significant portion of the labor resources used by nonprofit organizations. Although participants did not discuss this topic at great length, determining how to count volunteer hours is a challenge for this survey whose intent is to measure resources spent on R&D within the nonprofit sector. Salamon identified this issue in his summary remarks, stating, “If we leave out the role of volunteers, we are going to significantly undercount the economic value and implicit cost.” He added that this is an issue across sectors in terms of measuring labor, with a trend within the statistical community toward including “unpaid work . . . putting a value on it and bringing it into economic accounting.” He cited the examples of staff comprised entirely of volunteers, such as the Prince William Regional Beekeepers Association. Similarly, the American Cancer Society uses a large number of volunteers in recruiting participants for a large research study. Mickle said that ACS uses volunteers in many research-related roles, so whether to include this

volunteer labor would affect her estimates of labor devoted to research significantly. She added that the donated services of volunteers are critical to ACS’ operations, and it would be important to quantify the value that these volunteers provide.

Counting paid versus unpaid staff is only one of the complexities that relate to how financial and labor resources devoted to R&D are counted in the nonprofit sector. Several participants raised other issues related to funding that may be pertinent to the NSF survey, such as the timing of funding and whether there were internal funds available for research. In cases where the research funding is dependent upon grants, research activities could vary from year to year, noted Raymond. She also noted philanthropists who donate funds often have a shorter timeframe by which they expect to see results than is the case with many research studies.

Crosby offered a different perspective on the role of philanthropy for nonprofits. In his view, philanthropy offers a greater flexibility and risk-taking, often not valued or available through other sources. In addition, philanthropy is increasing and offers valuable resources at a time when government funding for scientific activities has been decreasing. Although some have voiced concern that this type of partnership between philanthropy and research may be a shift away from national priorities, in Crosby’s opinion, there is value in challenging existing paradigms and doing innovative research. Nonprofit research institutions are uniquely positioned for “being nimble, being entrepreneurial, for taking risks,” stated Crosby. Finally, he indicated he hoped a revamped survey of R&D in the nonprofit sector would allow for greater visibility for philanthropy and for the nonprofit sector.

CHAPTER SUMMARY

Presenters shared their experiences and perspectives on R&D at their nonprofit organizations. Many workshop participants voiced their opinions that nonprofit organizations are conducting research worthy of being captured in the NSF survey. However, as this chapter illustrates, the complexity of this sector presents a number of conceptual and methodological challenges to address in developing the NSF Nonprofit R&D Survey. Chapters 4 and 5 provide some guidelines suggested by presenters for meeting these challenges and designing the survey.

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National Center for Science and Engineering Statistics (NCSES) of the National Science Foundation is responsible for national reporting of the research and development (R&D) activities that occur in all sectors of the United States economy. For most sectors, including the business and higher education sectors, NCSES collects data on these activities on a regular basis. However, data on R&D within the nonprofit sector have not been collected in 18 years, a time period which has seen dynamic and rapid growth of the sector. NCSES decided to design and implement a new survey of nonprofits, and commissioned this workshop to provide a forum to discuss conceptual and design issues and methods.

Measuring Research and Development Expenditures in the U.S. Nonprofit Sector: Conceptual and Design Issues summarizes the presentations and discussion of the workshop. This report identifies concepts and issues for the design of a survey of R&D expenditures made by nonprofit organizations, considering the goals, content, statistical methodology, data quality, and data products associated with this data collection. The report also considers the broader usefulness of the data for understanding the nature of the nonprofit sector and their R&D activities. Measuring Research and Development Expenditures in the U. S. Nonprofit Sector will help readers understand the role of nonprofit sector given its enormous size and scope as well as its contribution to identifying new forms of R&D beyond production processes and new technology.

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