INSTITUTION PROFILE / FUNCTIONAL MATERIALS
Fraunhofer-Gesellschaft
A German network of applied-research institutes that research materials on commission from companies
The Fraunhofer-Gesellschaft is a German applied-research organisation. Unlike most public research bodies, it earns most of its budget by winning contract research from companies and competitive public projects, and in materials it works on problems that companies bring to it. It is neither a regulator or standard-setter nor a body that hands out research funding. This profile looks at one question only: how much influence Fraunhofer really has over functional materials.

- Fraunhofer in 30 seconds
- What kind of body it is: the four types of influence
- What it does for functional materials
- How far its influence reaches (powers and geography)
- Organisations connected to Fraunhofer’s work
- Outlook
- Glossary, references and claim-to-source audit
1. Fraunhofer in 30 seconds
Fraunhofer is not a body that hands out money; it is one that earns money by doing research. According to its official pages, base funding (from the federal and state governments) makes up no more than one-third of the contract research budget, and at least two-thirds is raised from private-sector contracts and public project funding Sourced. Revenue from industry in 2025 was EUR 966 million Sourced. So its influence on functional materials comes not from legal powers but from companies actually commissioning work. Which materials it studies depends on who commissions work and on which public project calls are open.
2. What kind of body it is: the four types of influence
Unlike the companies in this series, the institutions that appear in functional-materials coverage do not make materials themselves. What separates them is the route by which they influence the industry, and that gives four types.
3. What it does for functional materials
Fraunhofer’s work touching functional materials falls into three strands Sourced.
| Strand | Scale and timing | Content | Who does it |
|---|---|---|---|
| Contract and joint research for companies | Industry revenue of EUR 966 million in 2025 (EUR 768 million from contracts, EUR 198 million from licences) | 48.0% of industry revenue comes from manufacturing customers. Fraunhofer’s official page calls it one of the most active patent applicants in Germany and Europe. Materials work runs through all fields, and no materials-only revenue figure is published | Each institute contracts with customers |
| The Group for Materials and Components (Fraunhofer Group MATERIALS) | 21 member institutes (office in Darmstadt) | Covers everything from basic materials science to materials-based system solutions along the whole industrial value chain. The Group is a framework that pools the expertise of the 21 institutes | The 21 member institutes |
| Examples of research hubs Circular materials and programmable materials | IWKS (Hanau and Alzenau). CPM (five core institutes) | IWKS: materials technology for a circular economy. It studies alternatives to critical raw materials and recycling of Nd-Fe-B permanent magnets as an alloy (hydrogen treatment; melting and rapid cooling). CPM (Programmable Materials): IWM, IAP, IWU, ICT and IBP work on materials whose shape, optical and mechanical properties and heat transport can be “programmed” | A cross-institute cluster |
In its FUNMAG project, IWKS ran the motors of an e-bike, an e-scooter and similar vehicles on recycled magnets and, in Fraunhofer’s 2022 press release, showed that they can run without loss of power Sourced. The same release says that functional magnet recycling methods have been developed but have not been applied in practice, and magnets are still melted down with steel scrap. The project was sponsored by the Hessen Agentur. There is a gap between the “recover the magnet and use it again” discussion in our explainers on permanent magnets and rare-earth-free magnets and what is actually used in the market. A result from an institute’s demonstration does not turn directly into a volume-production specification.
4. How far its influence reaches (powers and geography)
| Aspect | What Fraunhofer has | What it does not have |
|---|---|---|
| Powers | The practical ability to take on research for companies and public bodies and move results to companies through patents and licences. Licence revenue was EUR 198 million in 2025. Research with base funding aimed at problems companies will face in five to ten years | Power to set regulations or standards (we found no statement in official materials that it has such power). Power to distribute research money to others: it is a recipient of federal and state base funding and of public project funding |
| Geography | Centred on Germany, with 74 institutes and research units. Customers are international: overseas revenue was EUR 236 million in 2025 (EUR 88 million from the EU, EUR 148 million from outside). The largest markets were the U.S. (EUR 40 million), Switzerland (EUR 32 million) and Japan (EUR 21 million) | Power to move other countries’ industrial policy or rules. Overseas revenue of EUR 236 million is about 7% of the EUR 3.6 billion business volume (our calculation); most income is domestic |
| Time horizon | Base-funded research targets problems five to ten years out. The business volume stays near EUR 3.6 billion (in line with the previous year in 2025) | A guarantee that any given material will be studied for the long term (work shrinks if public projects or company commissions fall) |
| Scale | 30,898 staff and a EUR 3.6 billion business volume (2025). Externally generated revenue made up 71.1% | Staff and budget for functional materials alone are not published |
The EUR 3.6 billion, 30,898 staff and EUR 966 million are all totals across every field, not figures for functional materials Sourced. Dividing overseas revenue of EUR 236 million by the EUR 3.6 billion business volume gives about 7% Our calculation. Which institute’s project led to which materials being adopted is something we cannot read from Fraunhofer-wide figures Not yet confirmed.
5. Organisations connected to Fraunhofer’s work
This section shows only the sources of money and the materials hubs, as stated in primary sources. We could not confirm, from Fraunhofer materials, a direct relationship with any company profiled in this series.
| Organisation | Role (as stated in primary sources) | Link to this series |
|---|---|---|
| Federal Ministry of Research, Technology and Space (BMFTR) and the state governments | Provide base funding in a 90:10 ratio. Federal project funding was EUR 755 million in 2025 (down 11%) | Funders. Fraunhofer is the recipient |
| Industry customers | 48.0% of industry revenue is from manufacturing, and 27.8% from professional, scientific and technical activities | We could not confirm individual ties to companies in this series |
| Hessen Agentur | Sponsored IWKS’s FUNMAG project | A demonstration project on magnet recycling |
| The EU (European Commission) | Public project revenue from the EU was EUR 157 million in 2025. The EU Critical Raw Materials Act requires disclosure of the recycled content of permanent magnets (Article 29) | See our European Commission profile. IWKS’s research and the regulation share a subject, but we found no statement linking them |
| Other research bodies | In this series, the National Institute for Materials Science (NIMS) and the U.S. Department of Energy (DOE) are different types of institution | See their profiles. Fraunhofer differs in not distributing funds |
6. Outlook
| What can be read from the sources | Primary evidence | Type |
|---|---|---|
| In 2025 staff fell by 979 (3.1%) and federal public-project revenue fell 11%, while industry revenue rose 11% | Fraunhofer’s employees and finances pages (2025 figures) | Sourced |
| Whether magnet recycling is used in volume production, we could not find anything after the 2022 press release. The release itself says it is not yet applied in practice | Fraunhofer’s 2022 press release “Magnet recycling pays off” | Not yet confirmed |
| If public-project revenue keeps falling while industry revenue rises, the share of company-driven, near-market projects in materials work is likely to grow | The 2025 revenue mix (federal project revenue down 11%, industry revenue up 11%). It is one year’s change, so we cannot say it is a trend | Inference |
| Because the EU will require disclosure of the recycled content of permanent magnets (from 24 May 2027), demand for magnet-recycling research could rise | Regulation (EU) 2024/1252, Article 29 (disclosure starts on 24 May 2027 or two years after the delegated act enters into force, whichever is later), and IWKS’s magnet-recycling research | Inference |
7. Glossary
- Applied research
- Research that moves basic findings toward technology and products that companies can use.
- Base funding
- Money from the federal and state governments for running the institutes. At Fraunhofer it is at most one-third of the contract research budget.
- Contract research
- Research carried out on commission from companies or public bodies. Fraunhofer’s core activity.
- Group for Materials and Components
- A framework within Fraunhofer in which 21 institutes working on materials and components cooperate.
- CPM
- The Fraunhofer Cluster of Excellence Programmable Materials: a “virtual institute” in which several institutes research together.
- IWKS
- The Fraunhofer Research Institution for Materials Recycling and Resource Strategies.
8. References
- Fraunhofer Profile/Structure (74 institutes and independent research units; founded 1949; business volume EUR 3.6 billion; contract research EUR 3.2 billion; patent applicant; updated April 2026). https://www.fraunhofer.de/en/about-fraunhofer/profile-structure.html
- Fraunhofer Facts and Figures: Finances (2025 business volume, industry revenue, public project revenue, how base funding works, international revenue). https://www.fraunhofer.de/en/about-fraunhofer/profile-structure/facts-and-figures/finances.html
- Fraunhofer Facts and Figures: Employees (30,898 employees on 31 December 2025). https://www.fraunhofer.de/en/about-fraunhofer/profile-structure/facts-and-figures/employees.html
- Fraunhofer Fraunhofer Group for Materials and Components – Materials (21 institutes; location of the office). https://www.materials.fraunhofer.de/en.html
- Fraunhofer IWKS About us (materials for a circular economy; sites in Alzenau and Hanau). https://www.iwks.fraunhofer.de/en/about-us.html
- Fraunhofer IWKS Recycling of permanent magnets (alloy recycling; hydrogen treatment; melting and rapid cooling). https://www.iwks.fraunhofer.de/en/competencies/MagneticMaterials/Recycling.html
- Fraunhofer Press release “Magnet recycling pays off” (2022: the FUNMAG project; sponsorship by the Hessen Agentur; the statement that it is not yet applied in practice). https://www.fraunhofer.de/en/press/research-news/2022/july-2022/magnet-recycling-pays-off.html
- Fraunhofer CPM Fraunhofer Cluster of Excellence Programmable Materials (five core institutes; aims; demonstrators). https://cpm.fraunhofer.de/en/fraunhofer-cluster-of-excellence-programmable-materials.html
- EUR-Lex Regulation (EU) 2024/1252, Article 29 (disclosure of the recycled content of permanent magnets). https://eur-lex.europa.eu/eli/reg/2024/1252/oj/eng
9. Claim-to-source audit
| Claim in the article | Type | Source |
|---|---|---|
| 74 institutes and independent research units; founded 1949; nonprofit; business volume of EUR 3.6 billion; contract research EUR 3.2 billion (88%); patent-applicant standing | Sourced | Reference 1 https://www.fraunhofer.de/en/about-fraunhofer/profile-structure.html Reference 2 https://www.fraunhofer.de/en/about-fraunhofer/profile-structure/facts-and-figures/finances.html |
| 30,898 employees on 31 December 2025, down 979 (3.1%) | Sourced | Reference 3 https://www.fraunhofer.de/en/about-fraunhofer/profile-structure/facts-and-figures/employees.html |
| How base funding works (at most one-third of the contract research budget; federal and state split of 90:10); 71.1% externally generated revenue | Sourced | Reference 2 https://www.fraunhofer.de/en/about-fraunhofer/profile-structure/facts-and-figures/finances.html Reference 1 https://www.fraunhofer.de/en/about-fraunhofer/profile-structure.html |
| Industry revenue of EUR 966 million in 2025 (EUR 768 million from contracts, EUR 198 million from licences); manufacturing 48.0% and professional, scientific and technical activities 27.8% | Sourced | Reference 2 https://www.fraunhofer.de/en/about-fraunhofer/profile-structure/facts-and-figures/finances.html |
| Public project revenue of EUR 1,254 million (federal 755, state 186, EU 157); federal revenue down 11% | Sourced | Reference 2 https://www.fraunhofer.de/en/about-fraunhofer/profile-structure/facts-and-figures/finances.html |
| International revenue of EUR 236 million (EU 88, non-EU 148); the largest markets (U.S., Switzerland, Japan) | Sourced | Reference 2 https://www.fraunhofer.de/en/about-fraunhofer/profile-structure/facts-and-figures/finances.html |
| Overseas revenue as about 7% of the business volume | Our calculation | Our calculation from Reference 2 (EUR 236 million divided by EUR 3.6 billion) |
| The Materials Group has 21 institutes; its office is in Darmstadt | Sourced | Reference 4 https://www.materials.fraunhofer.de/en.html |
| IWKS’s purpose and its sites (Alzenau and Hanau) | Sourced | Reference 5 https://www.iwks.fraunhofer.de/en/about-us.html |
| IWKS’s alloy recycling of magnets (hydrogen treatment; melting and rapid cooling) | Sourced | Reference 6 https://www.iwks.fraunhofer.de/en/competencies/MagneticMaterials/Recycling.html |
| The FUNMAG project’s result, the Hessen Agentur sponsorship, and the statement that it is not yet applied in practice | Sourced | Reference 7 https://www.fraunhofer.de/en/press/research-news/2022/july-2022/magnet-recycling-pays-off.html |
| CPM’s five core institutes (IWM, IAP, IWU, ICT, IBP), its aims and demonstrators | Sourced | Reference 8 https://cpm.fraunhofer.de/en/fraunhofer-cluster-of-excellence-programmable-materials.html |
| The disclosure requirement and start date in Article 29 of the EU Critical Raw Materials Act | Sourced | Reference 9 https://eur-lex.europa.eu/eli/reg/2024/1252/oj/eng |
| Whether Fraunhofer has power to set regulations or standards (none is stated in the sources) | Not yet confirmed | Not found in References 1-9. This article does not infer any |
| A direct relationship between Fraunhofer materials and companies profiled in this series; materials-only staff and budget | Not yet confirmed | Not given in References 1-9. This article does not estimate them |
| Whether magnet recycling is used in volume production after the 2022 press release | Not yet confirmed | Not found after Reference 7. This article does not infer it |
| The four-type classification and the summary in Figure 2 | Our calculation | Our own classification and summary |
| The two inferences in Section 6 (more company-driven, near-market projects; more demand for magnet-recycling research) | Inference | Our own interpretation of References 2, 8 and 9 |
Last updated: 10 October 2026 / Troy Technical
The figures in this article come from the Fraunhofer-Gesellschaft’s official site (2025 figures) and EUR-Lex. Passages marked “Inference” are our own interpretation of the primary sources.