As the race for a COVID-19 vaccine continues, it is a continuing question what role philanthropy should play in ending the crisis. In June, the foundation with the most experience in dealing with vaccines, the Bill and Melinda Gates Foundation, announced a five-year, $1.7 billion grant to Gavi, The Vaccine Alliance. As I understand it, Gavi is primarily an international organization funded by governments, but the Gates Foundation is a significant enough donor that it has a seat on the organization’s board.
This is a major grant by the largest foundation in the world—but even a grant of this size is only being used indirectly to aid the quest for a COVID-19 vaccine. The money will be used to continue to provide existing vaccines to developing countries and to help distribute the COVID-19 vaccine to lower-income countries once it becomes available.
Gavi operates by an “advanced market directive” in which governments agree to purchase massive doses of a vaccine should it enter the market. That’s important because the market for vaccines, particularly those that are only administered once, is much thinner than it is for drugs that are taken every day over a lifetime. Guaranteed purchase orders spur research and development.
A team of economists including Nobel Laureate Michael Kremer, George Mason University’s Alex Tabarrok, and Susan Athey, has proposed that governments can help support massive investments in the factories that will produce the COVID-19 vaccine, on the grounds that the benefits to the world economy for a successful mass-produced vaccine are far more than the costs to get the vaccine to market.
An advanced market directive is the 21st century version of what previous centuries called a prize, and if we are to determine if prizes are a good use of philanthropy, we should learn more about the history of prizes to achieve goals. Tim Harford, an economics columnist for the Financial Times and the author of several books discusses the problems of prizes in an article printed on his website.
He notes that the path to a COVID-19 vaccine is a complex endeavor and that a simple solution that everyone overlooks might be something foundations could find. He illustrates his point with a story that marked a victory for Soviet intelligence.
On August 4, 1945 the Young Pioneers, a Soviet youth organization, presented American ambassador Averell Harriman in Moscow with a large wooden replica of the seal of the United States of America. American counter-intelligence agents scanned the large piece of wood and found no batteries or electronic equipment in it. After they pronounced it safe, Harriman hung it in his study, where it became so familiar that embassy staff called it “The Thing.”
The device transmitted American secrets to Soviet spies for the next seven years.
Léon Theremin, best known for creating the electronic musical instrument that bears his name, created it while a political prisoner in the Gulag. The wooden seal was hollow, and inside was “an antenna attached to a cavity with a silver diaphragm over it, acting as a microphone.” It was activated when Soviets sent a signal to it and used the energy from the signal to power a transmitter. When the Soviets turned off their radios, the Thing was silent. This made it a simple—and powerful—tool.
When looking at technological advances, Harford argues, we overlook simple things. We celebrate Johannes Gutenberg’s ability to print books, but we fail to recognize that he could never do it without affordable paper. Similarly, there may be a roadblock to fund a vaccine that we don’t know about—perhaps a better method of creating the vials the vaccine will be in, or making sure there are reliable sources for the products used to create the medium in which the vaccine will be stored.
While no foundation has the capacity to fund vaccine research to the extent the Gates Foundation does, there are countless smaller problems that smaller foundations can support. For example, a simple COVID-19 test comparable to, and costing as much as, a home pregnancy test would be a tremendous advance. Perhaps there are steps towards that test that would be within the research budgets of a medium-sized foundation.
Harford also notes that times when the world is stressed produce unforeseen innovations. In 1816, Mount Tambora in Indonesia erupted, covering the earth with its ash. Farmers couldn’t grow crops and many starved.
But in Germany, Justus von Liebig never forgot the dreadful hunger of that year and started a career that led him to create infant formula and beef bouillon. Another German, Karl von Drais, saw horses die because farmers couldn’t grow the oats horses ate. He decided to create a “mechanical horse” everyone could use and came up with a device that evolved into the bicycle.
“One crisis may lead to many creative responses,” Harford writes. If I were running a medium or large foundation based in a city, I’d have a program officer keeping up with interesting research from local universities. I might practice spread betting to give small grants to tomorrow’s innovators. They should remember that the first grant a creator receives is often the most important—and doesn’t have to be very large.
“It is possible that future generations may point to 2020 as the year the innovation slowdown ended,” Harford concludes. The foundations that successfully support the lasting innovations of this year will get a great deal of well-deserved credit.