Investmilanthropy comes to biotech

If you’re wealthy, and you have an interest in cancer research, you could give $1 million to the American Cancer Society, which would result in $1 million going to the American Cancer Society. Or, you could give $1 million to BrightEdge, the American Cancer Society’s venture fund, and the people there will invest your $1 million into for-profit biotech companies. If they do a good job, it might result in, say, $2 million going to the American Cancer Society instead.

“Traditional philanthropy is shifting,” BrightEdge Managing Director Bob Crutchfield told Barron’s. “There’s a new type of philanthropic donor that wants to not just do transactional giving, but really put money to work in an investment-like way.”

The firm, founded late last year, promises that its returns “will be reinvested in the American Cancer Society’s research and mission. It has made two investments: one in the diagnostics company Castle Biosciences and a second in the liquid biopsy outfit Freenome, announced yesterday. BrightEdge began with $25 million from the American Cancer Society, and now it’s looking to wealthy donors in hopes of raising up to $125 million more.

Winning over those wealthy people will depend on the math above. Giving $1 million to BrightEdge could put $2 million in the hands of the American Cancer Society. But if Crutchfield and company are wrong about the likes of Castle and Freenome, that $1 million donation could result in zero dollars going to the American Cancer Society.