Robert Pozen has an op-ed in the Wall Street Journal today supporting a recent clarification to the rules for charitable giving that would make it easier for start-ups to raise money. The former MFS chairman, now a senior fellow at the Brookings Institute, thinks that the change proposed by the Treasury Department, which would allow foundations to make "program-related investments" to private companies, could encourage foundations to shift their giving away from research universities and toward commercial companies.

Pozen thinks that this type of giving "can be more effective in certain situations. Some of the world's most talented scientists work in commercial companies. And they have a financial incentive to make breakthroughs in areas that foundations consider vital to their charitable mission."

If a foundation makes a grant to a company that leads to a breakthrough, Pozen writes, the foundation can win big. "Imagine that an Alzheimer's foundation's investment leads to a blockbuster drug. That drug would improve the lives of Alzheimer's patients, and the foundation would realize a return that would replenish and grow its endowment." 

Edited by: Chris Cumming


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