Is Canada's Research Funding System Leaving Talent on the Table?
A parliamentary report reveals a deep imbalance in how billions of dollars in federal research funds are distributed, with consequences for students, local economies, and Canadian innovation.
Each year, the Government of Canada invests around $4.5 billion to support research at post-secondary institutions across the country. This money funds everything from student scholarships to grants for researchers and new lab equipment. It is a critical investment in our country's future. You might assume this funding is spread widely to capture the best ideas wherever they appear. A recent report from the House of Commons Standing Committee on Science and Research, however, shows a different story. The committee studied the distribution of this funding and found that the vast majority flows to a small group of large universities, creating challenges and missed opportunities for the rest of the country.
The findings raise important questions about whether the current system makes the most of our national research potential. The concentration of funds affects the ability of smaller institutions to conduct research, the opportunity for students to study in their home regions, and the growth of local innovation. Here are the most impactful takeaways from the committee's report.
The System Overwhelmingly Favours a Few Large Universities
The most significant finding is the intense concentration of federal research dollars. Nearly 80 percent of all federal funding goes to just 15 of Canada's universities. These institutions, known as the U15, represent 52 percent of Canadian researchers and 59 percent of graduate students, yet they receive a disproportionately large share of the funds.
The imbalance is especially noticeable in specific fields. For example, the U15 universities receive:
Over 91 percent of the funding from the Canadian Institutes of Health Research.
Nearly 69 percent of funding from the Natural Sciences and Engineering Research Council.
Over 62 percent of funding from the Social Sciences and Humanities Research Council.
This concentration happens partly because many of Canada’s accredited medical schools and their affiliated research hospitals, which receive a large portion of health research funding, are associated with U15 universities. While this has helped create globally recognized centres of excellence, it leaves the majority of Canada’s universities competing for a much smaller piece of the funding pie.
Funding Is a Vicious Circle Where the Rich Get Richer
The way many federal programs allocate money creates a cycle that is difficult for smaller institutions to break into. Several major programs, including the Canada Research Chairs and the Research Support Fund, calculate an institution's funding based on the amount of grant money its researchers have received in previous years.
This approach creates what witnesses called a "Matthew effect," a phenomenon where success breeds more success. Institutions that have historically been well-funded continue to receive more, while those with less funding struggle to catch up. This cycle makes it hard for small and medium-sized universities to build their research capacity, attract top talent, and secure the large grants that would increase their future allocations.
"Our challenge has been that if we can't get on that hamster wheel it's impossible to become part of that cycle. Once you're in that cycle, it's easier. It's not easy, but it's easier to stay on that funding cycle. It's really hard to break in."
- Dena McMartin, Vice-President, Research, University of Lethbridge
This structure risks overlooking promising research at emerging institutions, which lack the track record required to access significant funding, regardless of the quality of their ideas.
More Concentrated Funding Does Not Always Mean Better Results
A counter-intuitive finding presented to the committee suggests that concentrating research funding might not be the most efficient way to advance knowledge. Evidence suggests that this approach can lead to diminishing returns. The more funding a single researcher or organization receives, the higher the cost tends to be for each research output, such as a scientific paper.
This research indicates that allocating more funds to already well-funded researchers does not necessarily produce higher quality work to justify the higher cost. Spreading support more broadly among more researchers could lead to greater overall productivity and a better return on investment for the Canadian taxpayer. As one witness explained, a grant of $100,000 is a drop in the bucket for a large university, but for a smaller one, that same amount can make a huge difference.
Colleges Are an Underfunded Powerhouse for Local Innovation
While universities focus on both basic and applied research, Canada's colleges, institutes, and polytechnics are experts in applied research that directly benefits local economies. They partner with small businesses and non-profits to solve practical challenges, developing new products, prototypes, and process improvements. In this model, any intellectual property generated stays with the local partner, ensuring the economic benefits remain in the community.
Despite this high-impact work, colleges receive only 2.9 percent of the total research funding from the three main federal granting agencies. This funding gap overlooks the massive potential of college-based research. Studies show an incredible return on investment.
"[F]or every dollar invested in applied research, there is a return that ranges from a low of $8.24 to a high of $18.82."
- Polytechnics Canada
Without adequate funding, the capacity for colleges to help local businesses innovate and grow is limited. This is a missed opportunity to strengthen regional economies and translate research discoveries into real-world applications.
The Funding Imbalance Forces Students to Leave Home
The distribution of research funding has direct consequences for students. Because research grants obtained by professors are a primary source of funding for most graduate students, the concentration of money in a few large universities limits opportunities at smaller institutions across the country.
This forces many students to move to major urban centres to pursue higher education, often at great financial cost to their families. The situation is especially difficult for students from rural and Indigenous communities, who may choose not to pursue post-secondary education if a local option is not available. This threatens the ability of smaller universities to retain regional talent and contributes to a "brain drain" from smaller communities to big cities. A more balanced distribution of funds could support the development of talent in every region of Canada.
The current federal research funding system has successfully built world-class research hubs. However, the committee's report makes it clear that the concentration of resources creates significant challenges. The system disadvantages smaller institutions, overlooks the economic impact of college research, and limits opportunities for students outside of major centres. As Canada moves forward, the central question is how to adjust the system to capitalize on the potential of all post-secondary institutions, ensuring that innovation can flourish in every corner of the country.
Sources:
House of Commons of Canada, Standing Committee on Science and Research. (2024, December). Distribution of Federal Funding Among Canada's Post-Secondary Institutions (44th Parliament, 1st Session, Twelfth Report). Our Commons.