The Emerging Role of Entrepreneurial Philanthropy

1. The Emerging Role of Entrepreneurial Philanthropy Steve KirschKirsch Foundation

2. Agenda • About the Kirsch Foundation • Kirsch Foundation programs • Principles of entrepreneurial philanthropy

3. 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

4. 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

5. 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

6. 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, …

7. 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

8. Collaborative Funding Model (CFM) • Example: Our partnership with Glaucoma Research Foundation (GRF) • Based on success achieved in spinal cord research and Huntingdon’s 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

9. 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 • Couldn’t get funding because VC’s were all investing in Internet startups • Astonishing results in animals • I sit on the board; I bring a sense of urgency

10. 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

11. Adopt best practices • See what works best and copy it • It’s 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

12. 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

13. 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

14. Make a long term commitment • Medical research doesn’t 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

15. 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 wouldn’t have been funded if I hadn’t stepped up

16. 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

17. Bet on people • If we were smarter than the people we fund, we’d fund ourselves • Given that they are smarter than we are, why not trust them to do the right thing? • Hold them accountable; if they don’t do what they said they would, they must renegotiate • Example: • CFM, KI bet on people, not specific projects

18. Be flexible • Don’t always play by your own rules • Example: • United Way of Santa Clara County Emergency Fund

19. 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

20. Get personally involved • It’s 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

23. 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