- The world was unprepared for the COVID-19 pandemic, despite the impact of SARS, MERS and Ebola in recent years;
- A new form of catalytic philanthropy could help the world prepare for future pandemics and tackle urgent existing health crises;
- To create real change, high risk rather than risk-averse institutional funding is needed from philanthropic organizations.
The annual global cost of pandemics is anywhere between $570 billion and $4 trillion per year, depending on severity, according to estimates by the Coalition for Epidemic Preparedness Innovations (CEPI). Looking at the economic paralysis that has gripped so many countries across the world in the past few months due to COVID-19, it’s easy to understand why.
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What is harder to understand is why this was not more widely anticipated. The SARS and MERS outbreaks of the past two decades were fatal warnings that a global epidemic of this scale could be lurking, while the 2014 Ebola outbreak in West Africa took more than a year to contain – despite a vaccine being in development for more than 10 years.
In the midst of that crisis in 2015, Bill Gates explained that the high mortality rate of Ebola meant the spread ultimately contained itself, as the illness is so severe it renders victims bed-ridden at the point of contagion. “Next time, we might not be so lucky,” he said. “You can have a virus where people feel well enough while they’re infectious that they get on a plane or they go to a market.”
Gates is the leading voice in the current generation of private philanthropists around disease prevention and response. He has helped initiate and manage a number of organizations such as the Global Health Investment Fund. Structured by Lion’s Head, its capital contribution has been very successful in crowding private sector investment in disease control. It is this type of giving, which stimulates change through “high risk, high-reward” action, that should define what it means to be a true philanthropist, someone at the summit of Maimonides’ hierarchy of giving.
Like any early stage business venture, this approach – what I call catalytic philanthropy – involves putting in loss-absorbing capital and building domain expertise on an issue to bring about long-term change. It is about investing time, nurturing expertise and aligning your investment with your values and insights while expecting no financial gain in return.
Philanthropists can direct their patient resources to fund iterations of hypotheses with experiments to discover long-term solutions to seemingly remote or intractable societal problems without the pressure for immediate results that other investors might seek. Unlike others, Gates’ years of commitment to tackling infectious diseases means that when he redeployed his resources into finding a COVID-19 vaccine, it could be considered as more than just charity, but real change-making philanthropy.
He follows in the footsteps of some of history’s greatest philanthropists, who themselves dedicated much of their wealth to building expertise to tackle the greatest health crises of their own times. J.D. Rockefeller, perhaps the early 20th century’s most famous philanthropist, gave away $530 million during his lifetime, $450 million of which – or around $8.5 billion today adjusted for inflation – went into medicine. While he was best known for his more traditional charitable giving, the legacy he left paved the way for generations of his descendants to practice catalytic philanthropy, with Rockefeller-endowed philanthropic entities instrumental in finding vaccines for hookworm and yellow fever and providing critical aid and vaccinations to soldiers in the First World War.
Beyond this current pandemic, philanthropists need to ensure they activate their funding for other global health issues while ensuring we are more prepared for the next pandemic. One of the ways this can be done is through advanced purchasing commitments such as the Gates-supported GAVI immunization scheme. Like grand prize competitions, these commitments incentivize a market response for greater industry investment in the development and launch of the next vaccine needed.
There are many other challenging but high-impact issues that need patient exploration with high-risk capital and perhaps other diseases would benefit from an advanced purchasing commitment. Catalytic social investments by philanthropists play a crucial role in building underappreciated models and private philanthropists, as owners of capital, are uniquely positioned with the financial freedom to act when others are unwilling or unable. They are unlike governments in that they are not beholden to an electorate and unlike businesses who are accountable to their shareholders with shorter time horizons and lower tolerance for risk.
In this pandemic, we have seen this through the patient capital invested to jumpstart vaccine candidates. This form of philanthropy is invaluable across the spectrum of global health issues.
My work in poor vision has demonstrated how risk capital and domain expertise can bring about major changes. Poor vision is the largest unmet disability in the world with estimates of up to 2.5 billion people affected today.
In conjunction with the Rwandan government, our NGO, Vision For a Nation, achieved the previously unthinkable objective of making Rwanda the first developing country in the world to provide affordable eye care for all. The global campaign, Clearly, is making great strides in encouraging world leaders to prioritize the issue of vision correction by reframing it as a way to hasten SDGs rather than a low-priority and siloed health issue.
What is the World Economic Forum doing to manage emerging risks from COVID-19?
The first global pandemic in more than 100 years, COVID-19 has spread throughout the world at an unprecedented speed. At the time of writing, 4.5 million cases have been confirmed and more than 300,000 people have died due to the virus.
As countries seek to recover, some of the more long-term economic, business, environmental, societal and technological challenges and opportunities are just beginning to become visible.
To help all stakeholders – communities, governments, businesses and individuals understand the emerging risks and follow-on effects generated by the impact of the coronavirus pandemic, the World Economic Forum, in collaboration with Marsh and McLennan and Zurich Insurance Group, has launched its COVID-19 Risks Outlook: A Preliminary Mapping and its Implications - a companion for decision-makers, building on the Forum’s annual Global Risks Report.
Companies are invited to join the Forum’s work to help manage the identified emerging risks of COVID-19 across industries to shape a better future. Read the full COVID-19 Risks Outlook: A Preliminary Mapping and its Implications report here, and our impact story with further information.
While all social sector funding is perceived as of equal value, I would argue that a dollar invested in risk-taking capital has far more value. It is these dollars, without the burdensome restrictions and impact-diluting caveats often incumbent with risk-averse institutional funding, that have the freedom to create real-world change. In this case, it is the risk capital that will have put in place the flexibility to turn around a vaccine faster than ever before.
In the context of life beyond coronavirus, governments are absorbed by the present – providing loans and funds to help people survive, supporting healthcare and keeping peace – and most businesses are distracted or crippled. There is a tremendous opportunity and necessity for the world’s philanthropists to embrace the catalytic philanthropy approach and take the lead in focusing on many other challenging issues, in health and beyond, facing our world today, before they too become critical and calamitous.