The Wissenschaftskolleg is funded in equal parts by the German federal government and the Federal State of Berlin. It receives regular donations from Switzerland as an institutional sponsor. Projects are financed through third party funds. Additional private funds are received from the Friends of the Wissenschaftskolleg Association. With these funds, private donors guarantee the funding flexibility the Wissenschaftskolleg needs in order to respond on short notice to new challenges and opportunities.

The Land (State) of Berlin founded the Wissenschaftskolleg in 1981; the VolkswagenStiftung provided a one-time founding contribution of 3.5 million DM and made a present of the building at Koenigsallee 21 to the Wissenschaftskolleg. Then the Land of Berlin erected a new building adjacent to the main building. In 1984, the German federal government began to cover half the costs, making it possible for the Institute to attain its current, ideal size of 40 Fellows in the academic year 1985/86.