State of AI Grants 2026: Annual Funding Intelligence Report

Three billion dollars in federal AI research money. Half a billion from foundations. And a European Commission doubling down with a fourteen-billion-euro work programme. The numbers tell a clear story: artificial intelligence funding is no longer a niche budget line — it is the central contest in science policy worldwide. But the landscape in 2026 looks radically different from even twelve months ago, with civilian research agencies facing unprecedented cuts while defense spending surges and philanthropic coalitions step into the gap.

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Federal Funding: A $3.3 Billion Pie, Sliced Differently

The federal government's core AI research budget for FY2025 reached $3.3 billion — split between $1.95 billion in direct AI R&D and $1.36 billion in crosscutting support. NSF led civilian agencies with $494 million in core AI funding, followed by DARPA at $314 million, NIH at $309 million, and DOE at $187 million.

The real story, though, is FY2026. The President's budget request proposes cutting NSF to $3.9 billion total — a reduction of $4.7 billion from FY2025 enacted levels. Meanwhile, the Department of Defense would see a $21 billion increase to $112.9 billion in R&D, a 23% jump that signals a decisive tilt toward defense-oriented AI. For researchers at universities and nonprofits, the implication is stark: the competition for shrinking civilian pots has never been fiercer.

Not every civilian program is contracting. NSF's National AI Research Institutes network grew to 29 institutes in July 2025 with a $100 million round that funded two new centers — the AI-Materials Institute at Cornell and the AI Research Institute on Interaction for AI Assistants at Brown. And the DOE's Genesis Mission deployed over $320 million for AI-driven scientific research, including robotics, automated laboratories, and foundational AI models for materials and climate science.

DARPA and Defense: Where the Growth Is

DARPA remains the sharpest edge of federal AI investment. Its I2O Office-Wide BAA for FY2026 seeks proposals in information science, cybersecurity, and trustworthy AI systems. The SABER program — Securing Artificial Intelligence for Battlefield Effective Robustness — is building a red-teaming framework to stress-test AI-enabled battlefield systems, with proposal deadlines in spring 2025. And the AI Forward initiative continues issuing rapid AI Exploration opportunities with streamlined three-month contracting timelines.

For small businesses, the picture is more complicated. Congressional authorization for the SBIR and STTR programs expired on September 30, 2025, and both NSF and NIH have paused new applications. Until Congress acts, the small business pathway into federal AI research is effectively frozen — a gap that pushes startups toward defense prime subcontracts or foundation funding.

Foundations Fill the Vacuum

Private philanthropy is making its largest coordinated move into AI. In October 2025, ten major foundations — including Ford, MacArthur, Mellon, Packard, and the Omidyar Network — announced Humanity AI, a $500 million five-year pooled fund for people-centered AI research. Grants from the fund begin disbursing in 2026, targeting democracy, education, and the protection of creative work from unchecked automation. Rockefeller Philanthropy Advisors will manage the fund.

That initiative followed the launch of Current AI, a separate coalition anchored by MacArthur with an initial $400 million and a $2.5 billion five-year target. The combined signal is unmistakable: philanthropy views the retreat of civilian federal funding as a gap it must fill, particularly around AI safety, equity, and governance. Nonprofits working in AI ethics, workforce development, digital rights, and community-centered technology should treat these funds as primary targets.

The International Picture: Europe Goes Big

The European Commission adopted its Horizon Europe 2026-2027 Work Programme in December 2025, releasing fourteen billion euros for the final two years of the current research cycle. AI is central: the Commission is doubling annual AI investment to over three billion euros, with 307 million euros specifically earmarked for trustworthy AI services and data sovereignty in a recent 2025 call. The broader AI Innovation Package commits up to four billion euros across 2024-2027 for GenAI4EU and related deployment programs.

For U.S.-based researchers, some Horizon Europe calls allow international participation, and several member states maintain bilateral agreements that facilitate collaboration. The application window for the 2026 calls runs through April 15, 2026.

What to Watch in 2027

Three dynamics will shape the next twelve months. First, the SBIR/STTR reauthorization fight in Congress will determine whether the primary small business innovation pipeline reopens or remains frozen. Second, the NAIRR Operations Center — NSF's plan to transition the National AI Research Resource pilot into a permanent shared computing infrastructure — will begin its buildout, potentially democratizing GPU access for under-resourced institutions. Third, the Humanity AI and Current AI disbursements will reveal whether philanthropic AI funding can achieve scale and speed comparable to federal grantmaking, or whether the bureaucratic overhead of pooled funds slows delivery.

The bottom line for grant seekers: diversify across federal defense programs, DOE mission-driven science, foundation AI initiatives, and international calls. The era of relying on a single agency pipeline is over. Granted can help you track open solicitations across all of these channels and move from monitoring to proposal-ready faster than going it alone.