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23rd Jul 2019

Make Money & Deliver Your Mission

Charities should generate money while delivering their mission

LifeArc is the biggest smallest charity you’ve probably never heard of.

By the size of its investment assets, LifeArc has recently been propelled into the major league of medical research charities from the sale of its $1.2bn royalty interest in Keytruda, an immunotherapy drug. Having helped develop the drug LifeArc retained a proportion of the royalties in it. And now LifeArc has the resources to ‘significantly expand its mission of advancing research that has direct benefits for human health’.

I love this story. LifeArc is a young charity, just 25 years old. It’s a spin-out of the Medical Research Council. As a charity without shareholders it can reinvest all its income in medical research to benefit patients. But LifeArc set out to fund its work differently. It set out to be ‘self-funding’ from, for instance, the royalties on its greatest asset, its knowledge.

Keytruda is an amazing drug. It encourages patients own immune systems to fight cancers such as non-small-cell lung cancer. It’s exactly the sort of drug that helps deliver LifeArc’s mission to ‘turn research into practical products that benefit patients.’

By helping to develop Keytruda and then selling its interest, LifeArc has generated moneyand delivered its mission at the same time.

If I told you that charities in the UK are sitting on £billions of unexploited income that could help deliver their missions you'd probably think I was deluded. But I reckon I’m right because so much income is 'locked-up' in the commercial potential of charity assets, capabilities and knowledge - in the work their frontline staff are giving away… for free; in the knowledge their researchers generate and distribute… for free; in their unique understanding of the issues they exist to solve… given away for free. 

How many other LifeArc-style opportunities might be uncovered if charities applied a more commercial lense to their assets, capabilities and knowledge? Of course, not every charity has the intellectual property potential of a medical research charity like LifeArc. But every charity has assets, skills and knowledge with the potential to generate a commercial return and deliver charitable mission at the same time.

Some leading charities are already unleashing this commercial potential. Versus Arthritis is using its expert understanding of people with arthritis to design, manufacture and sell products that improve the lives of people with arthritis and provide a sustainable income for the charity. St Johns Ambulance’s first aid training delivers income and educates the public to help save lives. Aspire, the spinal-cord injury charity, own 50% of a law firm that solely represents spinal-cord injury claims. Its clients keep 100% of their damages and 50% of the firms profits are donated to Aspire. In a few years it will be donating in excess of £2m a year to the charity.

But charities are only just beginning to scratch the surface of what's possible. 

Diversifying into commercial income comes with significant challenges. How do charities balance the tension inherent in delivering mission while making money? How do they make the case for investment in commercial opportunities with so many competing priorities? How do charities incubate new ideas and act like a start up? 

Overcoming these challenges is not easy, but it’s not impossible either (we'll be sharing the lessons we've learnt to do this in our next blog). And in the current giving climate charities should be exploring more radical approaches to generating the money required to deliver their missions.

Have you ever considered how much income is locked up in your charity’s assets, capabilities and knowledge? 

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