Getting Ahead in the Race for a Cure: How Nonprofits are Financing Biomedical R&D

Abstract

In recent years, nonprofit firms focused on specific diseases have increased their grantmaking efforts in the search of a cure. They have become more aggressive in directly funding research and lobbying for public support, even if their cause affects a small number of people. This paper contributes to the literatures on R&D financing by developing the first production function for disease and medical research nonprofits, a growing funder of biomedical R&D. Using IRS data, the model estimates the role of market competition and firm demographics on the adoption of grantmaking and lobbying strategies. Most notably, results provide evidence that firms in more geographically concentrated (less competitive markets) are more likely to adopt a lobbying strategy and less likely to be grantmaking on the extensive margin. Descriptive cases also illustrate funding discrepancies between charitable and government support across disease prevalence.

Keywords: Research & Development, Nonprofit Organizations, Grantmaking, Lobbying, Biomedical

JEL Classification: O32, L31, H41