Check Your Charity!
It's not that the National Breast Cancer Research Center is a scam. It's more like a charity within a charity, run by an organization called the Walker Cancer Research Institute. The parent organization, based in Aberdeen, Md., dutifully files tax returns that show it raised $12.7 million in 2009 and spent 52% of it on fundraising. The return also reports that the organization spent exactly $487,505, or about 4% of its income, on research — most of it for probing plant life for anticancer compounds. Given that kind of research commitment, the group is unlikely to make significant advances anytime soon.
That said, Walker has a better chance of accomplishing something than the National Charity for Cancer Research, part of the Optimal Medical Foundation Inc. in Fremont, Calif. The group gathered $5.3 million in 2009, of which zero seems to have gone toward research. And don't confuse that with another Walker affiliate, called simply National Cancer Research Center, which uses the exact same fundraising letter as its California counterpart. Wonder what share of the $487,505 this branch gets to spend. "I shudder when I look at how many groups have 'cancer research' in their names," says Greg Simon, a board member and former head of FasterCures, a nonprofit focused on improving medical research. "The general public is throwing its money away."
That's why you may need to fire your cancer charity. Despite a terrible recession and its aftereffects, Americans will donate some $300 billion to charitable organizations this year, an avalanche of generosity that no other nation can match. If you've got a cause — poverty, veterans, ducks, the apocalypse — Americans will find a few nickels to spare. But when it comes to vicious diseases like cancer, we can be generous to a fault.
The cost of badly managed cancer charities isn't just wasted money. People are dying while these outfits mishandle funds that could go toward care. Search the word cancer in GuideStar, a database of nonprofits, and 7,747 names show up.
Traditional charities become focused on what they do — fundraising or attracting high-profile board members — rather than how they do. Many charities get started to memorialize loved ones, say, but never reach critical mass. "About 90% of nonprofits never make it over the $1 million mark," says Kathy Giusti, a former Big Pharma exec and cancer survivor who co-founded the Multiple Myeloma Research Foundation (MMRF). "It really gets hard to develop new ideas." Giusti's organization, which has brought a number of drugs to market in a short period of time using a venture-capital model, has leapfrogged other charities that target multiple myeloma, a cancer of the blood.
The more prevalent the cancer, the more pernicious the problem. Pediatric cancer is a typical sector in which proliferation doesn't mean performance. Research focus is potentially diluted by thousands of small foundations. The mail is full of heart-tugging pitches replete with pictures of bald kids fighting cancer. "Last chance to send a teddy bear to a pediatric cancer patient for Valentine's Day," pleads a missive from the Children's Cancer Research Fund (CCRF), which has a nickel attached to make the plea more plaintive — a common direct-mail gimmick. In 2009 the charity sent $2.7 million to the University of Minnesota, its sole beneficiary, for research, which is admirable. But it also spent about $9.8 million on direct mail and other expenses to deliver that funding, which is a lot of teddy bears. Is it efficient? No, says Charity Navigator, a group that grades philanthropies and gives the CCRF a zero rating. Yes, says marketing manager Kris Huson, since investigators can often use seed money to apply for larger grants and multiply the money that CCRF provides, which can lead to bigger things. The university, for instance, has a brain-tumor vaccination in clinical trials.
You can't find any teddy bears at CureSearch for Children's Cancer, which is aiming to become a national center of research. CEO John Lehr says there's a direct connection between financial leverage and breakthrough research. His organization is one of the main funders of the Children's Oncology Group, a coalition of 210 hospitals that coordinate research and have the ability to run large clinical trials on, say, acute lymphoblastic leukemia, the most common childhood cancer. "They have been at the forefront of all the clinical breakthroughs that have occurred over the last several decades," says Lehr.
The throw-weight argument is also made by Susan G. Komen for the Cure. Komen is the largest funder of breast-cancer research after the government-run National Cancer Institute. Komen has $300 million in grants outstanding, but in the past couple of years it has focused on giving what it calls Promise Grants — those that have the best chance of producing tangible results within a decade.
Elizabeth Thompson, Komen's president, says the recession has forced some rethinking within the sector. "We have been approached by other organizations during the worst of the economic times about consolidating. [But] organizations are almost always founded by someone who had a particular or specific vision. The idea of giving that up is difficult."
One of the major reasons that charities underperform is that they aren't held accountable. "We don't have high-functioning markets the way we do in the for-profit deal," says Professor Allen Grossman of Harvard Business School, who has pushed reform by developing analytical tools for nonprofits. "In the for-profit world, if you don't serve your customers, they go away."
That lack of market discipline is being challenged by a new type of charity largely run by venture philanthropists operating in a venture-capital mode. Using tools like those being developed by Grossman and FasterCures, they can measure output — how has a charity advanced the science, for instance. By demonstrating effectiveness, this new breed is outcompeting traditional charities in the race for available funds, especially from philanthropists and big foundations.
The stars of the venture-charity model include MMRF and ABC2 (Accelerate Brain Cancer Cure), started by AOL founder Steve Case and his family, which posits that a "nimble, focused and entrepreneurial model" will make advances against a cancer that has a poor long-term survival rate. The Melanoma Research Alliance, started by Wall Street mogul Leon Black and his wife Debra, is now the largest nongovernment funder of melanoma research. According to FasterCures, no other group was spending as much as $1 million on research.
Critically, FasterCures has sought to link these evolving groups through a program it calls TRAIN, an acronym for the Research Acceleration and Innovation Network. It's trying to spread best practices across a host of health care groups, a break from the past in which researchers and organizations shielded their work to protect their grant money and intellectual property. "Those that are willing to change want to learn from other groups," says Margaret Anderson, executive director of FasterCures. "They believe in 'Let's make it as efficient as possible.'"
Many traditional cancer nonprofits aren't going to measure up in this entrepreneurially driven, results-oriented world. And more to the point, they are going to be unmasked as better information comes into the marketplace. The one thing that isn't likely to change is our generosity. People will spend lots of time and money trying to snuff out a leading cause of death. But they will have to eliminate some organizations to achieve the best results. That may be harsh. So is cancer.