Skip to main content
SpringerLink
Log in

Accelerating commercialization: a new model of strategic foundation funding

  • Published:
The Journal of Technology Transfer Aims and scope Submit manuscript

Abstract

Venture philanthropy presents a new model of research funding that is particularly helpful to those fighting orphan diseases, which actively manages the commercialization process to accelerate scientific progress and material outcomes. This paper begins by documenting the growing importance of foundations as a source of funding academic research as traditional funding from industry and government sources decline. Foundations are known for their innovative techniques and we consider the evolution of the ways that foundations fund academic research and form partnerships across academia and industry. We examine the example of the Cystic Fibrosis Foundation and the development of the drug Kalydeco® as a demonstration of the principals of strategic foundation funding. The Cystic Fibrosis Foundation adapted to a venture philanthropy model and took an active role in drug development, stewarding the commercialization process from funding basic scientific work in academic institutions, to making an equity investment in a start-up firm. We conclude by evaluating the advantages and disadvantages to venture philanthropy for the academic researchers, industry partners, foundations, and universities and consider an agenda for future research.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

Notes

  1. Valleys of Death are defined as the period of transition when a developing technology, while perceived as promising, is unable to attract funding for its continued development (Auerswald and Branscomb 2003).

  2. Until 2010, the National Science Foundation includes foundation and nonprofit funding in the “other” source category with foreign government investment.

  3. University practices are heterogeneous. Any gift that is targeted for a specific research project and for which there are expectations of a reporting relationship should be considered as sponsored research. There are, however, organizational issues related to credit for fundraising, accountability and donor relationships that limit these arrangements. Many foundation gifts provide funding for research on a specific topic for which the university holds competitions and provides oversight.

  4. Even established medical research funding organizations, such as Robert Wood Johnson are experimenting with this model in their Complex Chronic Care program.

References

  • Aebischer, P. (2012). Philanthropy: The price of charity. Nature, 481(7381), 260.

    Google Scholar 

  • Aronson, J. K. (2006). Rare diseases and orphan drugs. British Journal of Clinical Pharmacology, 61(3), 243–245.

    Article  Google Scholar 

  • Auerswald, P. E., & Branscomb, L. M. (2003). Valleys of death and Darwinian seas: Financing the invention to innovation transition in the United States. Journal of Technology Transfer, 28(3–4), 227.

    Article  Google Scholar 

  • Bain, L. J. (2006). Drug development in critical times. Neurotherapeutics, 3(4), 540–543.

    Article  Google Scholar 

  • Barbic, K. (2012). The accelerator. Philanthropy Roundtable. http://www.philanthropyroundtable.org/topic/excellence_in_philanthropy/the_accelerator.

  • Berman, E. (2002). The economic impact of industry-funded university R&D. Research Policy, 19, 349–355.

    Article  Google Scholar 

  • Bhattacharjee, Y. (2006). Industry shrinks academic support. Science, 312(5774), 671.

    Article  Google Scholar 

  • Blumenthal, M. D., Causino, N., Campbell, E. G., & Louis, K. S. (1996). Participation of life-science faculty in research relationships with industry. The New England Journal of Medicine, 335, 1734–1739.

    Article  Google Scholar 

  • Blumenthal, M., Gluck, K. S., Stoto, M. A., & Wise, D. (1986). University-industry research relationships in biotechnology: Implications from the university. Science, 232(4756), 1361–1366.

    Article  Google Scholar 

  • Britt, R. (2012). With help from ARRA, Universities Report $61 Billion in FY 2010 Total R&D; New Details from Redesigned Survey. National Science Foundation, March 2012, NSF 12-313.

  • Campbell, E. G. (2009). The future of research funding in academic medicine. The New England Journal of Medicine, 360, 1482–1483.

    Article  Google Scholar 

  • Carayol, N. (2003). Objectives, agreements and matching in science industry collaborations: Reassembling the pieces of the puzzle. Research Policy, 32, 887–908.

    Article  Google Scholar 

  • Chang, J. (2010). Best practices for VP collaborations between disease-focused foundations and for-profit life science companies. Massachusetts Institute of Technology Masters Thesis.

  • Charity Navigator. (2012). Cystic fibrosis foundation report. http://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=9142.

  • Cohen, W. M., Florida, R., Randazzese, L., & Walsch, J. (1998). Industry and the academy: Uneasy partners in the cause of technological advance. In R. Noll (Ed.), Challenge to the university (pp. 171–199). Washington, DC: Brookings Institution Press.

    Google Scholar 

  • Couzin, J., & Miller, G. (2007). Boom and bust. Science, 316(5823), 356–361.

    Article  Google Scholar 

  • Cystic Fibrosis Foundation (CFF). (2009). Strategic report. http://www.cff.org/UploadedFiles/aboutCFFoundation/Publications/StrategicReport/Strategic-Report-2009.pdf.

  • Cystic Fibrosis Foundation (CFF). (2012). About the foundation and research overview. http://www.cff.org. Accessed 6 June 2012.

  • deCourcy Hero, P. (2001). Giving back the Silicon Valley way: Emerging patterns of a new philanthropy. New Direction for Philanthropic Fundraising, 32, 47–57.

    Article  Google Scholar 

  • DeFrancesco, L. (2000). Aurora biosciences receives funding from the cystic fibrosis foundation. Bioresearch Online, June 5, 2000, http://www.bioresearchonline.com/doc.mvc/Aurora-Biosciences-Receives-Funding-from-the-0001.

  • Dorsey, E., de Roulet, J., Thompson, J., Reminick, J., Thai, A., White-Stellato, Z., et al. (2010). Funding of US biomedical research, 2003–2008. Journal of the American Medical Association, 303(2), 137–143.

    Article  Google Scholar 

  • FasterCures Strategic Plan. (2012). Fastercures.org.

  • Federoff, H. J., & Rubin, E. R. (2010). A new research and development policy framework for the biomedical research enterprise. Journal of the American Medical Association, 304, 1003–1004.

    Article  Google Scholar 

  • Fielding, S. (2011). Nonprofit disease foundation investments in biotechnology companies: An evaluation of venture philanthropy. Massachusetts Institute of Technology Masters Thesis.

  • Finkbeiner, S. (2010). Bridging the valley of death of therapeutics for neurodegeneration. Nature Medicine, 16(11), 1227–1232.

    Google Scholar 

  • Fleischer-Black, M. (2002). Patient, heal thyself. Corporate Counsel, June 2002 edition.

  • Fleishman, J. (2007). The foundation. New York: Public Affairs.

    Google Scholar 

  • Frumkin, P. (2003). Inside venture philanthropy. Society: The Third Sector in Transition, 40(4), 7–15.

    Article  Google Scholar 

  • Garnier, J. (2008). Rebuilding the R&D engine in big pharma. Harvard Business Review, 86(5), 68–70.

    Google Scholar 

  • Gibbons, M., Limoges, C., & Nowotny, H. (1994). The new production of knowledge: The dynamics of science and research in contemporary societies. Thousand Oaks, CA: Sage Publications.

    Google Scholar 

  • Gilbert, J., Henske, P., & Singh, A. (2003). Rebuilding big pharma’s business model. IN VIVO, The Business & Medicine Report, 21(10), 73–80.

  • Hall, P. (2006). A historical overview of philanthropy, voluntary associations, and nonprofit organizations in the United States. In W. Powerll & R. Steinberg (Eds.), The nonprofit sector (pp. 1600–2000). USA: Yale University Press.

    Google Scholar 

  • Hart, D. (2001). Antitrust and technological innovation in the US: Ideas, institutions, decisions, and impacts, 1890–2000. Research Policy, 30(6), 923–938.

    Article  Google Scholar 

  • Haugh, R. (2010). Disease foundations prime the drug pump. Hospitals and Health Network, 84(2), 19.

    Google Scholar 

  • Hendricks, B., Pool, S., & Kaufman, L. (2011). Low-carbon innovation. Center for American Progress. www.americanprogress.org.

  • Herper, M. (2012). Cystic fibrosis data that sent vertex stock soaring were incorrect. Forbes.com, May, 29, 2012. http://www.forbes.com/sites/matthewherper/2012/05/29/cystic-fibrosis-data-that-sent-vertex-stock-soaring-were-incorrect/.

  • Higgins, R., LaMontagne, S., & Kazan, B. (2007). Vertex pharmaceuticals and the cystic fibrosis foundation: Venture philanthropy funding for biotech. Boston: Harvard Business School Publishing.

    Google Scholar 

  • Hu, M., Schultz, K., Sheu, J., & Tschopp, D. (2007). The innovation gap in pharmaceutical drug discovery & new models for R&D success. Kellogg School of Management.

  • Institute for the Study of Aging & The Alzheimer’s Drug Discovery Foundation. (2008). The pipeline project report. Alzheimer’s Drug Discovery Foundation.

  • Kay, L. (1993). The molecular vision of life: Caltech, the Rockefeller foundation, and the rise of the new biology. New York: Oxford University Press.

    Google Scholar 

  • Khoury, M., Gwinn, M., Yoon, P., Dowling, N., Moore, C., & Bradley, L. (2007). The continuum of translation research in genomic medicine: How can we accelerate the appropriate integration of human genome discoveries into health care and disease prevention? Genetics in Medicine, 9, 665–674.

    Article  Google Scholar 

  • Kingdon, J. (1994). Agendas, alternatives, and public policies. New York: Harper Collins.

    Google Scholar 

  • Kohler, R. (1991). Partners in science: Foundations and natural scientists, 1900–1945. Chicago: University of Chicago Press.

    Google Scholar 

  • Kolata, G. (2010). Sharing of data leads to progress on Alzheimer’s. New York Times, August 12.

  • Kolata, G. (2011). Vast gene study yields insights on Alzheimer’s. New York Times, April 3.

  • LaMattina, J. (2011). The impact of mergers on pharmaceutical R&D. Nature Reviews Drug Discovery, 10, 559–560.

    Article  Google Scholar 

  • LaPook, J. (2012). Cystic fibrosis drug Kalydeco® approved by FDA: What does it mean for patients? CBS News. http://www.cbsnews.com/8301-504763_162-57368992-10391704/cystic-fibrosis-drug-Kalydeco®-approved-by-fda-what-does-it-mean-for-patients/.

  • Ledford, H. (2011). Charities seek cut of drug royalties. Nature, 475(7354), 275–276.

    Google Scholar 

  • Ledford, H. (2012). Alternative funding: Sponsor my science. Nature, 481(7381), 254–255.

    Google Scholar 

  • Leibell, D. T. (2009). Gates embraces Philanthro-capitalism. Wealth management.com. http://wealthmanagement.com/financial-planning/gates-embraces-philanthro-capitalism.

  • Letts, C., Ryan, W., & Grossman, A. (1997). Virtuous capital: What foundations can learn from venture capitalists. Harvard Business Review, Mar-Apr, 2–7.

  • Littlewood, J. (2011). The history of cystic fibrosis. http://www.cfmedicine.com/history/index.htm.

  • Loftus, P. (2012). 2nd UPDATE: Vertex overstated efficacy of cystic-fibrosis drug. Dow Jones Newswires, WSJ.com.

  • Marshall, B. C., Penland, C. M., Hazle, L., Ashlock, M., Wetmore, D., Campbell, P. W., et al. (2009). Cystic fibrosis foundation: Achieving the mission. Respiratory Care, 54(6), 788–795.

    Article  Google Scholar 

  • Ministry of Commerce & Industry Task Force. (2008). Strategy for Increasing Exports of Pharmaceutical Products. Department of Commerce, Government of India.

  • Morrissey, S. R. (2006). Elias A. Zerhouni: NIH director has steered agency through congressional inquiries and paltry budget increases with bold actions to position agency for future. Chemical & Engineering News, 84(27), 12–17.

    Article  Google Scholar 

  • Moukheiber, Z. (2001). Drug Money. Forbes, April 2, 2001.

  • Murphy, S. (2005). Industry overview report: Pharmaceutical drug discovery & development. http://www.bioinfogen.com/publications.html.

  • National Science Board. (2010). Science and engineering indicators 2010. Arlington, VA: National Science Foundation (NSB 10-01).

  • National Science Board. (2012). Science and engineering indicators 2010. Arlington, VA: National Science Foundation (volume 1, NSB 08-01; volume 2, NSB 08-01A).

  • Opar, A. (2011). Excitement mounts for first disease-modifying cystic fibrosis drugs. Nature Reviews Drug Discovery, 10(7), 479–480.

    Article  Google Scholar 

  • Pollack, A. (2012). FDA approves new cystic fibrosis drug. New York Times, February 1, 2012.

  • Potts, J. K. (2011). Venture philanthropy: A case study of three nonprofit organizations. Dissertations, Theses and Capstone Projects. Paper 483. http://digitalcommons.kennesaw.edu/etd/483.

  • Reuters. (2012). A cystic fibrosis treatment is called ‘Game - Changing’. New York Times, May 8, 2012.

  • Rose, L. M., & Neale, R. (2010). Development of the first inhaled antibiotic for the treatment of cystic fibrosis. Science Translational Medicine, 2(63), 63mr4.

    Google Scholar 

  • Salamon, L. (2003). The state of nonprofit America. Washington DC: Brookings Institution Press.

    Google Scholar 

  • The Economist. (2011). Giving for results. The Economist, May 12, 2011.

  • The Economist. (2012). All together now, charities help Big Pharma. The Economist, April 21, 2012.

  • Tierney, T., & Fleishman, J. (2011). Give smart: Philanthropy that gets results. New York: Public Affairs.

    Google Scholar 

  • Treasury Department. (1965). Report on private foundations: Committee on finance of the United States Senate. 89th Congress, 1st Session.

  • Vertex. (2012). Kalydeco®. Vertex Firm Publication. http://mms.businesswire.com/bwapps/mediaserver/ViewMedia?mgid=309631&vid=1&download=1.

  • Wulffson, R. (2012). Breakthroughs continue for cystic fibrosis treatment, Examiner.com, May 7, 2012, http://www.examiner.com/article/breakthroughs-continue-for-cystic-fibrosis-treatment.

  • Zerhouni, E. (2006). NIH in the post-doubling era: Realities and strategies. Science, 314(5802), 1088–1090.

    Article  Google Scholar 

Download references

Acknowledgments

This material is based upon work supported by the National Science Foundation Science of Science Policy Program under Grant Number 1158755. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation. We appreciate comments received from participants in the Johns Hopkins University Quantum Leap Workshop, Robert Cook Deegan of Duke University, and participants at the APPAM Fall Conference.

Author information

Authors and Affiliations

  1. University of North Carolina at Chapel Hill, Chapel Hill, NC, USA

    Maryann P. Feldman & Alexandra Graddy-Reed

Authors
  1. Maryann P. Feldman
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Alexandra Graddy-Reed
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Alexandra Graddy-Reed.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Feldman, M.P., Graddy-Reed, A. Accelerating commercialization: a new model of strategic foundation funding. J Technol Transf 39, 503–523 (2014). https://doi.org/10.1007/s10961-013-9311-1

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10961-013-9311-1

Keywords

JEL Classification

Search

Navigation