News and analysis
February 08, 2015

When Scientific Research Can’t Get Federal Funds, Private Money Steps In

Kevin Cruff/Allen Institute

Paul Allen’s $100-million pledge will go to the Allen Institute for Cell Science, which will open in Seattle in the fall. The Microsoft co-founders’s cash was one of three large gifts dedicated to new research institutes.

In an era of stagnant federal funding for science programs and medical research, large donors are stepping in to help. But philanthropists are doing far more than just filling in gaps in federal funding; they are tackling important work shunned by the federal government because it is too obscure, too experimental, or too uncertain.

The donors on the Philanthropy 50, The Chronicle’s list of the nation’s top donors, committed $1.6-billion to causes that range from expanding research at children’s hospitals and university labs to creating new centers that will investigate the workings of the human cell.

Philanthropy should not be seen as a replacement for federal dollars, observers say. All giving from foundations and individuals amounts to less than $4-billion a year, according to the Science Philanthropy Alliance, a group that works to increase private giving for research. That figure is a fraction of the $60-billion in science grants made by the Departments of Defense and Energy, the National Institutes of Health, and the National Science Foundation, a federal agency.

Yet philanthropic dollars have come to play an important role in scientific progress. Large gifts can jump-start new areas of research neglected by federal dollars or provide a jolt to stalled scientific advances.

Take the case of the year’s largest science gift, made by Ted Stanley, founder of MBI and No. 3 on the Philanthropy 50 list. Mr. Stanley’s pledge of $650-million to the Broad Institute is part of the donor’s effort over the years to support the exploration of the ties between genetics and severe mental illnesses. Mr. Stanley has said that he was motivated by watching his son, Jonathan, suffer from a bipolar disorder as a young man in college.

Severe mental disorders affect 3 percent to 4 percent of people worldwide. Many of the drugs now used to treat bipolar disorder and schizophrenia were developed in the 1950s, and some offer only negligible benefits for some patients. Autism drugs have yet to show an ability to improve patients’ lives.

But advancements in technology and a recent quantum leap in the understanding of the genetic underpinnings of mental illness have offered hope for a new generation of treatments.

Though the Broad Institute has several researchers who are supported by the federal National Institutes of Health, Mr. Stanley’s gift allows scientists more time to explore genes that play a role in mental illnesses, say leaders at the institute’s Stanley Center for Psychiatric Research.

Scheduled to play out over a decade or more, the Stanley gift will support efforts to analyze genetic samples from around the world, find the genetic tweaks that cause diseases, and ultimately develop new drugs.

"Diseases like schizophrenia, bipolar disorder, and autism have moved out of this black box where all we understood was that they have a basis in genetics," says Steven Hyman, director of the Stanley Center. "Five years ago, the numbers of known schizophrenia genes was nearly zero. Now we estimate we know about 10 percent of them. We’re at an amazing point in our research. Without private philanthropy, we wouldn’t be able to take risks or get our research up to scale."

Private gifts provide another advantage, Mr. Hyman says: They make it easier for research institutes to work overseas.

"Private philanthropy crosses borders easily," says Mr. Hyman. "The most genetically diverse people in the world are in sub-Saharan Africa. We’d like to see what their genes teach us about the nature of mental illnesses, but it would take a huge administrative or bureaucratic effort to run federal grants there. We couldn’t think of doing that without private money."

Mr. Stanley’s pledge was one of six nine-figure gifts to research entities or medical institutions. Three will be used to start new research institutes, including a $100-million pledge from the Microsoft co-founder Paul Allen (No. 10.) Mr. Allen’s gift will be used to start the Allen Institute for Cell Science in Seattle.

Another new center will be formed with a $125-million pledge from the philanthropist who holds the No. 15 spot on the list, T. Denny Sanford, a banking and finance magnate, to Sanford Health, a consortium of 45 hospitals in the upper Midwest. Mr. Sanford’s gift will go to new technology and training to help physicians use a patient’s DNA profile to determine which medicines would best help fight disease.

"Our goal is to have a genetic profile for every patient in our hospitals," says Kelby Krabbenhoft, the president of Sanford Health. "We’ll be able to screen hundreds of drugs against someone’s genome so they get the best treatments."

If successful, the center’s work could also give a boost to personalized medicine—genetic technologies that could prove a boon at the hospital bedside. The concept was much discussed by scientists after the human genome was first mapped a dozen years ago, but it has yet to be widely adopted.

"Our feeling is that people have waited long enough for this," says Mr. Krabbenhoft. "We already do genetic therapy and analysis for diabetic patients. It’s time to do the research that can expand that to other diseases."

Young Scientists

Private funds often help research centers support younger scientists with fresh ideas who haven’t yet been able to tap into the federal-grants pipeline.

The average age at which researchers receive their first federal grant is 43, with only 1 percent of grants from the largest federal funder, the National Institutes of Health, going to researchers 35 and younger.

Some leaders of research institutions, including Ronald Daniels, the president of the Johns Hopkins University, have sounded the alarm, saying many young researchers are leaving the field because they can’t afford to stay in it—and are taking the possibility of important discoveries with them. Recently, some members of Congress and the White House pledged to work to reverse the trend.

Some research institutes use private donations to help fund faculty positions for researchers under 40.

"The groundbreaking ideas often come from young, fertile minds that are more likely to work against established dogma," says William Brody, president of the Salk Institute for Biological Studies. "When you’re young, you think you’re invincible, so you take big risks. We have to be able to support their labs until they get that first [federal] grant."

The institute received a $25-million gift last year from Conrad Prebys (No. 30), a San Diego real-estate developer whose brother suffered from polio, which Jonas Salk developed a vaccine to prevent. Such private gifts, or parts of them, are often used by research organizations to hire young scientists, Dr. Brody says.

Over all, the Salk Institute has come to rely more and more on private dollars as federal grants have flattened out. "They haven’t even kept up with inflation, and the costs of doing science run much faster than inflation," says Dr. Brody, adding that federal grants to the organization have gone down by more than 20 percent in the past decade.

The National Institutes of Health accounted for 85 percent of the institute’s budget in 2004, but that figure has dropped to 55 percent of its current budget of $120-million. "In order to keep up, we need to raise more from non-NIH sources," Dr. Brody says.

Besides helping to fill the coffers and hire new talent, Mr. Prebys’s pledge shows another benefit of some private gifts to science: Unlike most public grants, they often come without strings. Unrestricted gifts can enable research organizations to endow chairs for senior professors or improve facilities. "If someone needs a new genetic sequencer, it’s pretty important to have the funds available," Dr. Brody adds.

Donors often choose to focus on diseases and research areas that aren’t receiving a large share of public science dollars.

When Gordon and Llura Gund, No. 37, started the Foundation Fighting Blindness in 1971, they did so because the federal government offered little support for research on diseases of the retina. Mr. Gund went blind at age 31 after contracting retinitis pigmentosa.

"To get research started, we had to seed it," says Mr. Gund, a venture capitalist who made a $50-million pledge to the organization last year. "We rely on private donors all the way and then hope that our best researchers will be picked up by the [federal] National Eye Institute."

Filling Gaps

Taxpayer money often pays for basic discoveries about how the body or the universe works, while private donations are more likely to support research to convert basic findings into cures. That latter type of investigation, called "translational research," aims to rapidly develop drugs or treatments.

Research into orphan diseases— those that affect 200,000 or fewer people, like the condition Mr. Gund has— relies especially on private gifts because it generally receives little in federal grants or interest from drug companies.

Though researchers are grateful when private gifts fill gaps left by the federal government, some observers are concerned that private gifts tend to disproportionately benefit institutions that are well funded, like Harvard and Johns Hopkins, at the expenses of smaller institutions. Many of the wealthier research centers already receive a large number of federal grants, which raises questions about whether both private and public support is being spread well enough to guarantee a diverse flow of discoveries.

Another worry is that some politicians could use high-profile gifts to downplay the need for an increase in federal research funds. "It’s a legitimate concern," says Vicki Chandler, the chief science program officer at the Gordon and Betty Moore Foundation. "We have to remind people of the primacy of federal research dollars."

Meanwhile, research centers of all kinds would do better if they could show donors concrete results, says Mr. Krabbenhoft. Support for science at the federal level may not rise anytime soon, he says, making it more imperative for those seeking private help to work toward better therapies.

"Nowadays, it has to be about producing more than just another journal article or creating more basic science knowledge," he says. "That means we have to be more productive and accountable. At some point, the work has to make a difference."

Top Donors Give Big to Science

Donors (Philanthropy 50 rank) Amount Recipient Research purpose
Theodore (Ted) Stanley (3) $650,000,000 Broad Institute (Cambridge, Mass.) Mental health
T. Denny Sanford (15) 125,000,000 Sanford Health Foundation (Sioux Falls, S.D.) Establish genomics institute
Ernest and Evelyn Rady (17) 120,000,000 Rady Children’s Hospital -San Diego Pediatric genomics
Paul G. Allen (10) 100,000,000 Allen Institute for Cell Science (Seattle) Cell research
Marc and Lynne Benioff (14) 100,000,000 University of California at San Francisco Benioff Children’s Hospital Strengthen research and clinical care
Gert Boyle (21) 100,000,000 Oregon Health & Science University Foundation (Portland) Cancer
Fred Eshelman (20) 100,000,000 University of North Carolina at Chapel Hill Eshelman School of Pharmacy Pharmaceutical research
John W. (Jay) Jordan II (28) 75,000,000 University of Notre Dame (Ind.) Science and technology
Kavitark (Ram) and Vidjealatchoumy (Vijay) Shriram (35) 57,000,000 Stanford University (Calif.) Bioengineering
Gordon and Llura Liggett Gund (37) 50,000,000 Foundation Fighting Blindness (Columbia, Md.) Retina-related diseases
Gary Michelson (34) 50,000,000 University of Southern California at Los Angeles Bioscience
Raymond Perelman (39) 50,000,000 Children’s Hospital of Philadelphia Pediatric medicine
Conrad T. Prebys (30) 25,000,000 Salk Institute for Biological Studies (La Jolla, Calif.) Endow biological research
Julian H. Robertson Jr. (26) 1,000,000 Rare Cancer Research Foundation (Durham, N.C.) Cancer
Total $1,603,000,000