When I revealed in an earlier blog that, prior to the election of George W. Bush, I’d been a registered Republican, readers admitted they were surprised. We live in a complex world, I replied, and I’m not averse either to profits or the stock market. (Blog 5/19/15)
Not to put too fine a point on that complexity, I was amused by a short article Jen Wieczner wrote for Fortune magazine. (“Charities Are Making Big Money By Acting Like VCs,” pgs 16-17.) In it, the writer noted that in 2000, the Cystic Fibrosis Foundation made a decision to give money to a small biotech company, hoping their research would provide an insight into treatments for the disease. The charity got lucky. The little biotech developed Kalydeco, a drug with an estimated value of $3.3 billion. The Cystic Fibrosis Foundation eventually sold its stock, enjoying a massive windfall which it put to good use in a search for a cure for the illness. That success was a signal to other non-profits. Though not widely touted, several more became venture capitalists.
Ironically, non-profits have had the right to act as entrepreneurs since 1969, but the idea never caught on until the success of the Cystic Fibrosis Foundation. (Ibid pg. 17) Prior to that, charities feared they’d be criticized for getting into bed with Wall Street, particularly if their investments failed. They also feared, heaven forbid, that if they were successful, their unseemly profits would damage their reputations. (Ibid pg. 17) .
As the needs of charities always exceed the numbers of donors, venture capitalism is a way of getting large cash injections into much needed research that, hopefully, will open doors to more discoveries. The Michael J. Fox Foundation, for example, invested $17 million in biopharma companies last year alone. One observer noted, “It sometimes feels inconsistent with charitable work , but it really shouldn’t…” (Ibid pg. 17)
No, it shouldn’t. Closed minds mean closed opportunities. Nothing is either good or bad but thinking makes it so. (Hamlet, II, ii)