The key portion of the stimulus is

As government agencies, faced with budget difficulties, reduce their funding for scientific research, a greater amount of such research is being funded by private foundations. This shift means that research projects likely to produce controversial results will almost certainly comprise a smaller proportion of all funded research projects, since private foundations, concerned about their public image, tend to avoid controversy.

That means the assumption could be that answer shows the public sector is more inclined to fund a project that could be compromised or not optimal. The private sector is more conservative due to public concerns

(A) Only research that is conducted without concern for the possibility of generating controversy is likely to produce scientifically valid results.
We do not know and the answer with ONLY is too extreme. OFF
(B) Private foundations that fund scientific research projects usually recognize that controversial results from those projects cannot always be avoided.
This does not say anything about the compromised projects
(C) Scientists who conduct research projects funded by private foundations are unlikely to allow the concerns of the funding organizations to influence the manner in which they conduct the research.
Scientists is out of scope. We care of the project NOT who conducts the project itself
(D) Many government agencies are more concerned about their public image than are most private foundations.
The other way around
(E) Government agencies are more willing than are private foundations to fund research projects that are likely to produce controversial results.

Correct according to our outlook above