Interest in philanthropy has witnessed a resurgence in recent decades, paralleled by a steep increase in the creation of individual fortunes. Originally being a more conspicuous phenomenon in Anglo-Saxon countries, philanthropy has become increasingly salient in traditional welfare states. However, the economic implications of philanthropy basically remain unknown. Here, we examine whether donations to research at higher education institutes (HEIs) in Sweden affect their knowledge output, as reflected in scientific publications and patent applications. The analysis is confined to the STEM-disciplines (science, technology, engineering, and mathematics) for the period 2001 to 2015. We have access to data on the respective HEIs' total research funding for STEM divided into donations, corporations, public block grants, and other public sources. In the analysis, we compare the effects of different research funding on knowledge output relative to their base funding. Implementing numerous controls, we find that patent applications are positively associated with a higher regional share of donations, whereas no such effects are detected for scientific publications. This is indicative of philanthropy being positively related to growth, since contemporary microeconomic models assign a critical role to innovation in promoting growth and societal prosperity.