The Emerging Role of Entrepreneurial Philanthropy

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The Emerging Role of Entrepreneurial Philanthropy

• Steve KirschKirsch Foundation

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Agenda

• About the Kirsch Foundation
• Kirsch Foundation programs
• Principles of entrepreneurial philanthropy

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About Kirsch Foundation

• Supporting organization of local community
  foundation
• 50M endowment
• Gave out 8M last year, 135 grants
• 6 full time staff people
• Goals
• Ensure world safety
• Cure all major diseases
• Restore the environment
• Reform politics
• Reform education
• Support the local community

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Why give?

• Enlightened self interest
• To benefit everyone (including ourselves)
• Results oriented
• Grants are made to achieve goals, not pure ROI
  optimization (asteroids)
• Our motivation is not
• Noblesse oblige/payback or proper
• Increased social status
• Public recognition/image
• Fun

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Why give publicly?

• Those who give anonymously because it proves they
  are altruistic are focusing on the wrong benefit
• There is no benefit to giving anonymously
• Two exceptions
• A controversial cause that may cause more
  questions than answers,
• Example if I donate to gay rights, will people
  spend all their time wondering whether there is a
  hidden agenda?
• You are totally proactive in your giving, have
  no staff, and find that you are spending too much
  time responding to requests for money

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Our enemies

• Mother nature (disease)
• US government
• Seems to make decisions that result in fewer
  lives being saved
• Abortion funding
• Stem cell funding
• BBC TV shows The Weakest Link,

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Kirsch Investigators

• Invest in people like HHMI
• Unique target mid-career scientists
• 540K grants over 3 years (includes overhead)
• Individuals proposed by 10 institutions
• 8 member Scientific Advisory Board evaluates
  applications

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Collaborative Funding Model (CFM)

• Example Our partnership with Glaucoma Research
  Foundation (GRF)
• Based on success achieved in spinal cord research
  and Huntingdons Disease (our innovation is
  partnering with another foundation)
• Goal Applicable to areas where progress has
  stalled (e.g., glaucoma) but where breakthroughs
  in other areas (e.g., neuroscience) may be
  applicable
• Narrow majority of people on panel and
  researchers are from outside the field
• 5 member panel picks 3-5 researchers who agree to
  work together and meet 2x/yr
• Min 3 year, min 1M grants

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Targesome

• Objective diagnose and cure cancers as small as
  1mm
• Approach attach ligands or antibodies for
  angiogenisis to a large molecule along with In
  (imaging) or Yt (therapy)
• For-profit startup 3.5M invested in equity
• Couldnt get funding because VCs were all
  investing in Internet startups
• Astonishing results in animals
• I sit on the board I bring a sense of urgency

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Key principles

• Adopt best practices
• Experiment
• Encourage collaboration
• Make a long term commitment
• Expand your options
• Be proactive
• Bet on people
• Be flexible
• Capitalize on market opportunities
• Get personally involved

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Adopt best practices

• See what works best and copy it
• Its so simple, but ignored so often, e.g., US
  education
• Examples
• KI program was inspired by HHMI
• CFM program is an incremental improvement on
  existing successful programs

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Experiment

• Insanity is doing the same thing over and over
  and expecting different results
• Take risks/try a new approach
• Example
• CFM has collaboration both between foundations
  and researchers
• Most of the people are from outside the field to
  bring a new perspective

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Encourage collaboration

• Scientists tend to be competitive rather than
  collaborative
• Solution
• Be careful choosing research groups
• Interdisciplinary collaboration is much easier
• Reward/require collaboration
• Example
• CFM fosters collaborations between foundations
  as well as between researchers

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Make a long term commitment

• Medical research doesnt respect a 12 month cycle
• 3 to 5 years is a more practical timeframe
• Examples
• KI and CFM are both at least 3 year programs

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Expand your options

• Explore all options available
• Example Consider PRIs
• PRIs are have your cake and eat it too,
  especially for individual investors
• Worst case superior tax deduction
• Best case cure a disease AND make a lot of
  money to use for next disease
• Example
• Targesome wouldnt have been funded if I hadnt
  stepped up

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Be proactive

• Set ambitious long-term goals
• Develop annual strategies and tactics
• Example
• Our goals and strategies are posted on our
  website
• Staff pay is tied to achievement of goals

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Bet on people

• If we were smarter than the people we fund, wed
  fund ourselves
• Given that they are smarter than we are, why not
  trust them to do the right thing?
• Hold them accountable if they dont do what they
  said they would, they must renegotiate
• Example
• CFM, KI bet on people, not specific projects

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Be flexible

• Dont always play by your own rules
• Example
• United Way of Santa Clara County Emergency Fund

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Capitalize on market opportunities

• Look for funding gaps
• Example
• Stem cell research
• KI program focuses on mid-career researchers
• Targesome got caught in the Internet bubble

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Get personally involved

• Its more than writing checks.
• Take a trip out to visit the people you fund
• Do some research yourself!
• Examples
• EV1 car
• ZEV stickers
• Education reform
• Dan Case

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Summary

• Adopt best practices
• Experiment
• Encourage collaboration
• Make a long term commitment
• Expand your options
• Be proactive
• Bet on people
• Be flexible
• Capitalize on market opportunities
• Get personally involved