Friday, December 21, 2007

GiveWell’s Not Getting It Well — Medical Research Is Not Charity

FasterCures President Greg Simon responds to The New York Times piece by Stephanie Strom “2 Young Hedge-Fund Veterans Stir Up the World of Philanthropy,”

The article states, “Mr. Karnofsky and Mr. Hassenfeld, both 26, founders and sole employees of GiveWell, which studies charities in particular fields and ranks them on their effectiveness. GiveWell is supported by a charity they created, the Clear Fund, which makes grants to charities they recommend in their research.”

After reading this, the third article I’ve seen about these refugees from Wall Street, I feel moved to point out a few things. First, it’s unfortunate that what has drawn attention to their work is using blogs to flame the admittedly flawed ratings groups like Charity Navigator. Second is this obsession of equating philanthropy with “charity.” I do not know any medical research group that considers itself a charity. They are nonprofit disease research organizations developing cures for deadly and debilitating diseases. Charity has nothing to do with it – these organizations represent investments – and yes I feel silly pointing that out to people who used to do research for hedge funds.

Once you realize organizations that are trying to save lives through research are an investment, you evaluate these organizations differently. You look at their strategies, their resources, their connections, board members, partners, and risk taking, and then you can create a diversified portfolio of disease cure investments going forward. That is what FasterCures is doing with our Philanthropy Advisory Service with grants from Gates and Robert Wood Johnson – and it takes time and more than asking a hundred questions and seeing who sends you their annual report faster than others – that really only measures receptionists.

Unfortunately, GiveWell’s approach of “cost per life saved” is the equivalent of what investors call “chasing performance.” Some groups may be efficient in handing out condoms but to discuss “charities” saving lives and not mention groups like IAVI that are developing vaccines for AIDS is like focusing on iron lung distributors instead of a polio vaccine.

We are all trying to get more out of our philanthropy, but saving lives requires strategies that try to create the future – and measuring that is harder than counting dollars and cents – or condoms.

Read the "Philanthropy 2173" blog for more information at:


Greg Simon, President, and Margaret Anderson, COO said...

Carl, thank you for your thoughtful reply. First, I am not incensed about the confusion between "charities" and investments - more like irritated. For example, you note that donors don't internalize the benefits of their donation. Well, unlike speculative investments which may return zero, donors realize an immediate return through reduction of their taxes; so there is an immediate and predictable return. The fact that they do not examine these philanthropic investments as rigorously as their speculative financial ones is precisely why FasterCures is developing the database to allow them to do that.

Second, case in point about the confusion. You say diversified portfolios don't make much sense in the medical research area because donors should put their maximum donation into high return areas. Pray, which ones are those? How would average philanthropists -- even very wealthy, sophisticated ones -- know whether to fund immunotherapy or chemotherapy in treating melanoma? How would they know which of the warring theories about Alzheimer's disease is right? Should they have a five, 10, or 30 year window for a cure breakthrough? NIH takes 30 years for most things and thinks it is doing a great job. Most of the organizations we work with have five or 10 year plans and are willing to change the rules (re: IP, publication, data sharing, etc.) to get there. In our opinion, without diversification of risk, time horizons, and therapeutic theories, donors are guessing. But where are they to get the data to figure out where any particular nonprofit sits on the continuum from high to low risk, short or long term strategies? That is what we are trying to provide through our program.

Our Philanthropy Advisory Service is a two year project. Our first reports will be out by third quarter 2008. We have a team of people and advisors developing a system of metrics that make sense for medical research. We will do due diligence interviews with organizations in diseases we are studying. Most importantly, we are not trying to pick winners and losers. We are providing the information on every nonprofit in a given disease area so donors can compare them across multiple qualities and then make their own decisions about which ones to fund. We are not going to look at all the groups in a given area and then say "that one." I think that is folly. We are trying to match a donor's proclivities and expectations with the capabilities of organizations. We hope through transparency the innovative groups will stand out. But we are not trying to predict the future. We are trying to make clear what disease research groups say they are trying to do and then examine them to see if that is what, in fact, they are doing. Is what they're doing novel or stale? Is it going to matter to patients or just to other scientists? Is it properly supported by the right people and resources to get it done? But no one can say whether one strategy is going to cure cancer versus another; believe me, if we could do that, we would already be glad to be out of business. And as for measuring our success, no one can guarantee a donor that they can expect a return by funding one course of medical research over another. But we can increase the amount and diversity of philanthropy in both global and domestic diseases by giving donors more assurance that they know what they are funding and what they can expect in terms of risk, effort, and timeline.

Thank you again,
Greg Simon, President, FasterCures

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