The Wall Street Journal reports this week that the Bill and Melinda Gates Foundation will launch a $100 million fund specifically to support “unorthodox approaches to global health”:
Typical multimillion-dollar Gates Foundation grants require lengthy applications supported by data, financial oversight and peer review often taking six months to a year or more — which can overwhelm scientists in underdeveloped countries. "As grants get big, the risk element can get squeezed out," Mr. Gates said, adding "if you’re giving away $5 million at a whack," it requires accounting oversight and a mature development plan at odds with novelty.
…"New ideas shouldn’t have to battle for oxygen as hard as they do," said Tadataka "Tachi" Yamada, the foundation’s executive director of global health. He points out that one "ludicrous" challenge to conventional wisdom — the idea that bacteria and not stomach acid caused ulcers — eventually won a Nobel Prize and changed the standard of medical care.
One example Mr. Gates cited was the foundation’s sponsorship of a program that uses radiation to zap malaria parasites in their invasive stage, known as sporozoites. "Most people look at that and say, ‘Whoa, this is pretty wild,’ " Mr. Gates said.
In investment management, it is accepted theory that even conservatively managed portfolios can have high-risk investments in them. This is because the overall risk of the portfolio is the relevant measure to the investor, not the risk characteristics of each investment. With this concept in mind you can see how even large, conservative foundations do not need to keep all of their grant dollars in proven methods.
In addition, I think that there is something very important about that concept that one of philanthropy’s strengths is the fact that it can take risks that don’t pan out without being voted out of office or enduring shareholders wrath. Maybe in philanthropy, innovation for the sake of innovation does make sense.