Venture philanthropy is an approach that applies principles from venture capital and business entrepreneurship to the non-profit sector. Within this approach, non-profits, such as patient advocacy groups, make investments that advance their mission. Often, they invest in for-profit organizations like pharmaceutical companies, though not always. When done well, these investments can provide patient advocacy groups with significant returns, which can then be reinvested to further support patient communities.
This approach involves strategic planning and emphasizes clear goals and measurable outcomes. Performance measurement and evaluation are integral to venture philanthropy, demanding evidence-based results and accountability from patient advocacy groups. Collaboration and networking are encouraged, as partnerships between patient advocacy groups, philanthropists, and for-profit stakeholders in which resources are leveraged for collective impact are common. Finally, this approach embraces risk-taking, continuous learning, and adaptability.
One of the first and best-known examples of venture philanthropy is the collaboration between the Cystic Fibrosis Foundation (CFF) and Vertex Pharmaceuticals.
CFF – Vertex Pharmaceuticals collaboration timeline
- 1990s: CFF adopts a more business-like and results-oriented approach to its mission. It begins to invest directly in research and drug development, shifting from a passive grant-making model to an active partner in the development of potential treatments for cystic fibrosis.
- 2000: CFF invests $40 million in Aurora Biosciences – later acquired by Vertex Pharmaceuticals – to fund development of what would become the first therapies to treat the underlying cause of cystic fibrosis in exchange for a share of the profits.
- 2012: The FDA approves ivacaftor (Kalydeco), the first drug to address the underlying cause of cystic fibrosis, for individuals 6 years and older who have at least one copy of the G551D mutation in the CFTR gene. The EMA and Health Canada approve ivacaftor this year as well.
- 2014: CFF sells royalty rights to treatments developed with Vertex Pharmaceuticals for $3.3 billion
Since 2014, CFF has invested over $600 million in research initiatives for cystic fibrosis. This kind of investment was made possible by their adoption of a more business-like approach and original investment in Aurora Biosciences.
The success of the venture philanthropy model in the CFF-Vertex partnership showcased the potential for patient advocacy groups to be more active in the development of medical treatments. It also demonstrated that strategic investments, rather than just traditional grants, could lead to tangible outcomes, creating a cycle of support for continued research and drug development.
This collaboration changed the way successful patient advocacy groups are run today by emphasizing the importance of strategic partnerships, outcome measurement, and active involvement in the projects they fund. Other notable success stories of venture philanthropy in the biomedical space include CureDuchenne, Juvenile Diabetes Research Foundation, Epidermolysis Bullosa (EB) Research Partnership, and many more.
In summary, the venture philanthropy model has played a pivotal role in reshaping patient advocacy groups. It has encouraged a more proactive and business-oriented approach, demonstrating the impact that strategic investments and partnerships can have in advancing drug development.
