The system of funding mechanisms through which the federal government supports research performed in universities is reviewed. Problems in the system and conclusions/recommendations for its improvement are discussed. The historical development of federal government interest in support of research, particularly research performed in universities, is described. Funding mechanisms used to support academic research, the views of government and research universities about the funding practices, and the issue of university-based research centers and their potential effects on the character of the research universities are considered. Among the problems in the current system of funding mechanisms are a rapidly developing equipment inadequacy problem, inadequate provision for new research initiatives and for sustaining research capacity, and erosion of institutional support for research in the humanities and social sciences. (SW)