Universities across the US and Europe face unprecedented research-funding cuts, but their response exposes a deeper moral crisis: retreat from knowledge production for the public good. Seeking to replace lost funds, universities turn to commercialization and industry partnerships, while neglecting research directed toward socially desirable innovation. Their dual funding model compounds the problem. Block funding encourages duplicated, uncoordinated agendas, while competitive grants reward disciplinary “excellence” and peer judgement over societal relevance, consuming researchers’ time in proposal writing. Meanwhile, governments pursue nation-first technological sovereignty through state-led missions that may bypass universities. Neither funding model reliably directs research toward societal needs, despite rising investment and declining research productivity. I propose a collaborative, mission-oriented social-innovation agenda. Governments, universities, civil society and industry should deliberate together, pool research capacities and pursue challenges such as the energy transition. This cooperation could reduce competition and restore universities’ responsibility to produce knowledge for the common good.