It is named after Joseph von Fraunhofer who, as a scientist, an engineer, and an entrepreneur, is said to have superbly exemplified the goals of the society.

The other 30% of the budget is sourced in the proportion 9:1 from federal and state (Land) government grants and is used to support preparatory research.

[5] The Fraunhofer model grants a very high degree of independence to the institutes in terms of project results, scientific impact and above all for their own funding.

[9] Recent studies have shown that the presence of a Fraunhofer center can boost the patent output of local firms and inventors in at least 13%.

[14] The Fraunhofer Society was founded in Munich on March 26, 1949, by representatives of industry and academia, the government of Bavaria, and the nascent Federal Republic.

The criticism continued in the following decades and became a topic of public debate, including the need to improve resilience, defence capabilities and the protection of civilians and against cyber-attacks.

Its mission statement of 2000 committed the Fraunhofer Society to being a market and customer-oriented, nationally and internationally active sponsor organization for institutes of applied research.

The year 2000 marked a noteworthy success at Fraunhofer-Institut for Integrated Circuits (IIS): MP3, a lossy audio format which they developed.

Amongst these, the society committed itself to improving the opportunities for female employees and coworkers to identify themselves with the enterprise and to develop their own creative potential.

In 2004, the former "Fraunhofer Working Group for Electronic Media Technology" at the Fraunhofer-Institut for Integrated Circuits (IIS) gained the status of an independent institute.

New alliances and topic groups helped to strengthen the market operational readiness level of the institutes for Fraunhofer in certain jurisdictions.

In 2005, two new institutes, the Leipzig Fraunhofer-Institut for Cell Therapy and Immunology (IZI), and the Fraunhofer Center for Nano-electronic technologies CNT in Dresden, were founded.

[25] In 2012, the cooperation of Fraunhofer with selected research-oriented universities of applied sciences based on the "Application Center" model started.

The first cooperation was started with the Technische Hochschule OWL in Lemgo and led to the foundation of the Fraunhofer IOSB-INA in late 2011.