In the U.S., in math, at my R1 university, a tenure-track person who does not have an NSF grant will have a hard time getting tenure, currently. Ironically, it's not that mathematicians truly need money to "do research", since we don't need labs or equipment, really, nor "research assistants" to wash test tubes or do field work. True, funding to go to conferences can be viewed as necessary... "conferences" (=pointless jet-setting around the world...) are an issue in themselves.
The point (in my context) is that somehow the approval, expressed in terms of grant funding, of the NSF, is the purest (!?!) expression of the value of one's research. :)
Ok, perhaps no one really believes this in their heart-of-hearts, but it's an easy sell to other faculty who don't understand the work, to the Dean (most often an engineer, for whom funding is ... forgive me... everything), and to VP's. Within the department, non-grant-funding is an "excellent" excuse to sabotage a tenure vote, freeing up a space for one's own clique.
After tenure, things are not quite so precarious. Still, extra summer salary, and funding for trips to conferences, are things that are useful and attractive. In some places, I'm aware that lack of external grant funding will cause Deans or department heads to assign extra teaching or other punitive things. As though external funding per-se were the ... only? ... goal.
Given all the vagaries of "federal funding", depending on one's frame of mind, one might want to ... at some point... work through/beyond that, and be able to think about one's subject without imagining bureaucrats leaning over one's shoulder, disapproving, etc.
Sadly, it does appear that many idealistic models of "the academy" are ever-less viable.