This study aims to advance understanding of the relationship between policies and practices in public funding of co-research, in view of the ongoing academic reorientation towards a wider and deeper societal engagement – seen as an expression of public sector innovation. Based on a review of three calls by the Swedish Research Council for Health, Working Life and Welfare (Forte), similarities and differences regarding concepts, motives, stakeholders and methods for co-research are distinguished in call texts and applications. The results reveal an ambiguous relationship between co-research policies and practices, with a high compliance among applicants with the calls’ request for co-research but with little guidance on how to esteem, prioritize, design and conduct co-research. This complicates the balancing act between the co-existing rationales of academic freedom and public interest in public research funding as part of the two-directional relationship between innovative institutions, processes and solutions in public sector innovation.