UMass Donahue Institute

Research funding in Massachusetts supports a total of 81,300 jobs, $7.8 billion in income and more than $16 billion in total economic activity, according to a report published today by the University of Massachusetts Amherst Donahue Institute. The report found that for every dollar invested, the state sees an economic benefit of nearly double that amount.

If proposed changes to federal funding and support for research and development are enacted, the economic future of the commonwealth faces significant uncertainty, according to the report, “Economic Contributions of R&D Funding in Massachusetts.” It examined the direct economic contributions and multiplier effects (“spin offs”) associated with federal research funding awarded to Massachusetts’ universities, hospitals, and other institutions and their impact on the state.

Key findings include:

• Every dollar of research funding in the state creates nearly double the amount of economic activity, before accounting for any of the future benefits of product commercialization and new knowledge gained.
• The commonwealth is regularly among the top three states for National Institutes of Health (NIH) and National Science Foundation (NSF) funding and typically the top recipient in the country in per capita terms.
• Massachusetts is home to 1 in every 10 R&D job in the U.S., compared to 1 in 40 for all jobs throughout the nation’s economy.
• Over 700 different Massachusetts organizations received R&D awards in recent years, with the top three funders being the NIH, the Air Force and the NSF. R&D funding supports 46,600 jobs at recipient institutions.
• R&D funding creates and supports jobs beyond those in research occupations and research organizations, with 34,600 more blue-collar and service jobs in sectors that support the industry and its workers, including construction, food services, healthcare, retail and administrative support.
• Two of every 5 jobs created by research funding are created outside of sectors that directly receive the funding itself. For example, this activity supports 4,200 jobs in real estate and construction, nearly 3,000 jobs in retail, and almost 1,600 jobs in transportation and warehousing.

“Federal funding for high-risk research keeps the U.S. at the cutting edge of innovation and provides the life blood of the state’s knowledge and innovation economy,” says Mark Melnik, director of the Economic & Public Policy Research group at UMass Amherst Donahue Institute. “Our well-educated workforce and elite institutions in ‘Eds and Meds’ have provided an important magnet for funding, high skill workers, and entrepreneurship in the state. The economic activity associated with these investments are essential to both the research happening in ‘Ed and Meds,’ as well as the broader economy of the state.”

“Massachusetts has built an economic cluster around innovation,” says Rod Motamedi, Donahue Institute assistant director of Economic and Public Policy Research. “Many of the early ideas that led to today’s companies were originally seeded with federal R&D funding. As a result, much of the growth in population, jobs, buildings and infrastructure seen over the past decades can be traced back in part to the types of funding measured in this report, underscoring the importance of these investments to the commonwealth’s future.”

Adverse Impact of Federal Funding Cuts

• Reductions in reimbursement for indirect costs through NIH and NSF grants, needed to support the ongoing maintenance and readiness of facilities and other research infrastructure and equipment, could reduce funding anywhere from $137 million to $558 million.
• Assuming the midpoint of that range, direct losses to jobs, income and gross state product (or value added) are 1,890, $194.8 million, and $235.7 million, respectively.
• Direct tax losses are $4.8 million for state and local governments.
• The direct employment impacts from a 9% reduction in average NIH and NSF indirect rates yields job losses that exceed the employment of most of the commonwealth’s manufacturing sectors.
• When indirect and induced effects are added, losses increase to 3,300 jobs, $316.4 million of income, and $661.4 million of business revenues (or output), of which $437.3 million accrues to gross state product. State and local tax losses increase to $19.7 million. Federal tax losses reduce any savings to the government by approximately $50 million.

This analysis was based on data available through USAspending, the federal government’s official source for spending data, and IMPLAN, an input-output model used to estimate the economic contributions of recent R&D spending. A future report will examine the R&D ecosystem in Massachusetts to better understand the contributions of knowledge generation and innovation to the commonwealth’s economy and workforce.

(click on the report links above and go here to reivew as two-page report brief)

July 30, 2025