This article focusses on third party funding of research in German universi
ties. The central question is, whether funding data can function as suitabl
e indicators for the measurement of research performance of university depa
rtments. After a brief description of the importance and the extent of thir
d party funding in the German system of research funding, the quality of da
ta is discussed and the funding indicator is compared with bibliometric ind
icators. Resultened, one can say that in subjects where external funding of
research is usual, the funding indicator points to the same direction as o
ther indicators do. Because of the peer review process involved in grant aw
arding, a funding indicator is in many subjects a suitable indicator to eva
luate R&D impacts.