Nonprofit disease foundation investments in biotechnology companies : an evaluation of venture philanthropy

In the past decade, the practice of venture philanthropy, defined in this research as the provision of capital by a nonprofit entity to a for-profit company, has become an increasingly common asset allocation strategy for nonprofit disease-focused foundations.' Both nonprofit organizations and biotechnology firms alike have praised these funding relationships as instruments that help enable, de-risk, and ultimately accelerate the development of new therapies. However, data on the composition and performance of these venture philanthropy investment portfolios remains scarce. While the field of venture philanthropy is too young to have robust outcome data as of yet, we attempted to understand the methodologies for venture philanthropy portfolio construction, the historical mix of projects funded, and the performance of these portfolios thus far. We hypothesized that our independent assessment of grant portfolio composition would be congruent with stated portfolio policy. Instead, we found that organizations did not have a predetermined asset allocation framework against which to compare their investments. We collected data on industry-funding portfolios from three major participants in venture philanthropy in three different disease areas: the Cystic Fibrosis Foundation (CFF), the Juvenile Diabetes Research Foundation (JDRF), and the Michael J. Fox Foundation for Parkinson's Research (MJFF). Data was gathered from organization websites, annual reports, and financial filings. Interviews were conducted with grant program executives at each of the three organizations. While it was not possible to confirm or reject our hypothesis on the basis of portfolio congruence, we were able to show that in the absence of articulated portfolio policy, investment choices may not be aligning with stated program aims to fund earlier-stage, risky projects.

Department dc:contributor.department

Harvard University--MIT Division of Health Sciences and Technology.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2011

Author dc:creator

• Fielding, Sarah (Sarah Tabbals)

Advisor dc:contributor.advisor

• Jeff Behrens and Fiona Murray.

• Harvard University--MIT Division of Health Sciences and Technology.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/68463

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/68463