For-profits Asking Nonprofits for Money

In a fully functioning financial market, money flows to where it produces the highest return. My focus is on how to make the philanthropic marketplace more efficient, since the for-profit market is at least adequately efficient. But the two are not really separate. In the future, I expect them to be much more interrelated. Here’s an interesting example that turns things on its head a bit; the for-profit market is turning to nonprofits to supply cash.

From the Boston Globe, “Drug Makers Turning to Nonprofits for Cash”:

In addition to raising venture capital and launching stock offerings, Massachusetts biotech companies are increasingly turning to another source of funding to support early drug research: nonprofit foundations dedicated to fighting serious diseases.

For instance, the Cystic Fibrosis Foundation, said it has awarded more than $300 million to for-profit companies over the past decade to help develop cutting-edge therapies for the debilitating disease, including $192 million in the Boston area. Cystic fibrosis, which ravages the lungs and digestive system, affects roughly 30,000 people in the United States.

Epix Pharmaceuticals Inc. plans to say today that the foundation will give it as much as $37.7 million, in addition to about $12 million it has already received, to help the Lexington company discover new cystic fibrosis drugs. The money is contingent on Epix’s meeting certain goals.

Other foundations are following suit…

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