By Kritika Agarwal
A new report from the Institute for Research on Innovation & Science (IRIS) at the University of Michigan shows that university research spending in the United States funnels billions of dollars to businesses of all sizes across the nation. But with universities facing steep cuts in federal research funding, that economic impact is likely to diminish.
Universities buy significant quantities of lab equipment and materials from outside vendors. These may include specialized instruments such as centrifuges, microscopes, incubators, freezers and refrigerators; general supplies such as test tubes and petri dishes; chemical and biological reagents; safety equipment; and more. Universities generally source these from external vendors and, in the process, help sustain businesses nationwide.
IRIS examined data from 27 research universities and found that they “invested $2.67 billion in research-related goods and services through transactions with more than 33,200 vendors and subcontractors in fiscal year 2024.” These vendors and subcontractors included 6,200 small businesses that received “$308.9 million in research spending.”
IRIS found that 30% of all vendors receiving research-related business were located in the same state as the university making the purchase. “These findings highlight how research investments reach beyond campuses to support businesses and industries that anchor communities and drive regional economies,” IRIS noted in a press release.
But cuts to federal funding – including efforts to slash indirect cost reimbursements that support the purchase of university lab equipment – threaten to diminish university research spending and negatively affect the thousands of American businesses that rely on universities as steady customers.
IRIS Executive Director Jason Owen-Smith said that the new report highlights the “intangible but overlooked ways that research universities make life better for all of us, not just through critical scientific advances but also by helping to drive everyday economic and social investments in every county in the country.”
The Chronicle of Higher Education reported recently that research-related businesses are already “bracing for the blow: revising revenue estimates downward, limiting expenditures, and seeking new markets for their products outside academe and outside the United States.” It added that some businesses have even laid off workers.
It gave the example of Xenopus 1, a small business in Michigan that supplies frogs and frog eggs to research labs (including at the University of Michigan). The company told The Chronicle that, while it hadn’t yet lost any customers, the number of frogs it supplied per order had shrunk “as researchers, worried about future grants, conserve their current funds.”
The company’s owner, Robert Weymouth, told The Chronicle that his business would be unlikely to survive a major downturn in university research spending. “If the cuts to research dollars are going to be significant and longlasting, he said, ‘then I should just sell the business tomorrow,’” The Chronicle reported.
An interactive version of IRIS’s report is available here.
Kritika Agarwal is assistant vice president for communications at AAU.