From the August 2015 issue of Investment Advisor • Subscribe!

Funding a Cure for Childhood Diseases

Childhood diseases like cancer have a profound effect on families. One donor-advised fund is working directly with researchers to change that

Children's and Benefunder have partnered to allow investors to put their dollars toward research for childhood diseases. (Illustration: Jeff Crosby/The Ispot.com) Children's and Benefunder have partnered to allow investors to put their dollars toward research for childhood diseases. (Illustration: Jeff Crosby/The Ispot.com)

In June, Children's National Health System and Benefunder, a hosted donor-advised fund, announced a partnership to increase funding for pediatric research. That's important because, according to Pam King Sams, executive vice president of development and chief operating officer of the Children's Hospital Foundation, funding for pediatric research is low compared with other areas.

“Funding for pediatric research is limited compared with other research,” Sams told Investment Advisor in an email. “For example, in the area of pediatric cancer, there is limited funding for research, drugs and treatment.”

She continued, “Private industries often are not motivated to invest in new drugs for pediatrics, and the FDA has approved only two drugs for pediatric cancer in the last 20 years. The National Cancer Institute allocates just 4% of its annual $5 billion budget to pediatric cancer research. Private philanthropy is vital to our ability to invest in new therapies that can save and improve lives.”

Funding for Children's National increased 8% in 2014 to $64 million, $40 million of which is from the National Institutes of Health, according to its 2014 “Power of Partnerships” report.

According to St. Jude Children's Research Hospital's 2013 annual report, daily operating costs were $1.9 million. Three-quarters of operating costs come from private donations. St. Baldrick's Foundation, which raises funding to support childhood cancer research, raised $28.7 million for grants and advocacy in 2014, according to its annual report.

The NIH reported that in 2014, it provided $3.4 billion in funding for pediatric research, $188 million for autism and $105 million for childhood leukemia. By comparison, it provided $5.4 billion for cancer research, $5 billion for infectious diseases and $3.9 billion for women's health. NIH noted that its funding categories are not mutually exclusive, so projects being funded in the cancer or infectious diseases categories, for example, may directly benefit pediatrics.

More adults are diagnosed with cancer than children, but according to St. Baldrick's, the average number of years of life an adult loses to cancer is 15. Children who are diagnosed with cancer lose an average 71 years.

‘In Pediatrics, You Can Save a Lifetime’

“Our physicians often say that in adult medicine, you can save a life, but in pediatrics, you can save a lifetime,” Sams said. “By investing in therapies and cures for childhood diseases, we can improve the health of people throughout their lives. Even for people with chronic conditions, we can improve the quality of their lives by improving outcomes and reducing side effects.”

The House and the Senate Appropriations Committees voted in June on spending bills that affect child health care. For fiscal year 2016, the House proposed an additional $1.1 billion for the NIH for a total of over $31 billion. The Senate proposed a similar increase.

The partnership between Children's and Benefunder is an attempt to open a pipeline of funding to pediatric research.

Benefunder partners with wealth management firms to provide a donor-advised fund, the Benefunder Charitable Innovation Fund, that connects donors directly with research being conducted at universities. Christian Braemer, cofounder and CEO of Benefunder, said the focus on university research is due to the fact that “universities are responsible for over half of all research and development going on in the U.S. today.”

The fund covers a broad range of causes at different stages of innovation, Braemer said. “It could literally be anything under the sun. Right now we’re covering technology, life sciences, environment and arts and humanities [and] everything from basic understanding of certain things all the way through to clinical trials and developing new materials that can be directly applied to technologies.”

Of the partnership with Children's, Braemer said, “Children's National is one of, if not the largest, pediatric health systems in the country, so they’re a unique combination of a hospital and a research institute, which is incredibly important because it gives them first-hand access to patients,” he told Investment Advisor. “They can perform their own clinical trials, and they also have the capability for the doctors and the researchers to work in close collaboration. That offers a unique opportunity for donors to get more directly involved.”

One of Benefunder's goals for the partnership is to create direct access to some of that research and “to develop relationships with the researchers and doctors who are working there; that's pretty unique in itself,” Braemer said.

“We want to do lab visits with them. We want to engage and actually bring donors on site, and of course, in any area that a donor might have interest in the area of pediatrics,” he added.

Braemer said the value of Benefunder to advisors is that his firm acts as a product specialist; “they have a new ability to open a philanthropic conversation with a client and bring us in as a philanthropic specialist to help guide the conversation through to actually thinking through and creating a portfolio of causes that match the goals that the donor might have.”

He said they follow the same process that wealth managers use with their clients, starting with a needs assessment, developing a proposal, implementing the plan and reviewing progress at certain intervals.

“If we understand that a client is interested in cancer research, for example, we would help find the best-of-breed cancer researchers across the country that address the most pressing needs in cancer,” he explained. “Once that portfolio's implemented, there would be a giving plan—it might be three years, it might be six years—and there's an annual review to look at, ‘What are the milestones? What are the objectives that have been reached in that year?’ If the donor client isn't happy with the way things are going, we can make adjustments.”

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