In Germany, many stables are constructed with subsidies from the Farm Investment Scheme (FIS), a measure of the EU Rural Development Programme. The FIS is considered to be “the most important measure for the promotion of investments into welfare friendly housing systems” by the Federal Ministry for Food, Agriculture and Consumer Protection. We evaluated the effect of the FIS on animal welfare in dairy and pig farms, applying and adapting an environment based method. Information on animal housing conditions before and after the investments was gathered in a telephone survey carried out in 2007. The farms were selected in a random disproportional sample, stratified according to the federal states. The sample sizes amount to 18 % of the population of assisted dairy farms and 32 % of assisted fattening pig farms. The analysis shows that the FIS does not achieve important improvements in the behavioural aspect of animal welfare at the examined farm types. Although there are some meliorations in the dairy farms, these are mainly due to the abandonment of tethered-stalls. At the pig farms, restriction of animal behaviour is a much more severe problem, and the FIS can not account for any progress. Should the FIS strive for achievements in the field of animal welfare, expert based definitions of investments which really lead to improvements in animal welfare are a precondition. Additionally, the measure needs to be integrated into an approach involving tightened legislation, guidelines for welfare friendly housing systems, consumer information campaigns and possibly even compensation payments.