Crowdfunding has raised money to publish books, produce albums and create artistic works. Now the health sector is joining in.
These days, there’s no escaping crowdfunding requests. Incentives are everywhere, asking people to contribute financially to projects that support films, books or music albums. In June, a young British man even launched a bid to raise €1.5 billion to bail out Greece and help repay its debt to the International Monetary Fund. Although that particular campaign did not reach its target, several scientific research projects have been carried out successfully. Some platforms, such as Wellfundr and FutSci, are even dedicated to health projects.
The numerous medical studies that have been crowdfunded include the campaign launched by David Hawkes of the Florey Institute of Neuroscience and Mental Health in Australia. The researcher collected some A$12,000 on www.pozible.com to support his project on the use of viral vectors to treat neurological disorders. Michael Pollastri from Northeastern University in the United States raised $25,000 to launch his project on neglected tropical diseases using the platform Experiment. In May 2015, Grenoble-based Ecrins Therapeutics rounded up 555,000 Swiss francs on Crowd Avenue to develop a new cancer drug. Among the most successful campaigns is Embrace, the connected bracelet developed for epilepsy patients by the Italian start-up Empatica. This device alerts loved ones in the event of a seizure.
“The future of medical research is in private funding.”
The concept of raising money online, in small amounts donated by a large number of people, dates back to the late 1990s when the first crowdfunding sites were created. The model for these platforms remains the same. The project initiator sets the target amount in advance and only receives the money if the total amount is collected.
Crowdfunding has grown swiftly over the past few years. A study by the Judge Business School at the University
of Cambridge reported that in 2014 nearly €3 billion was raised across the entire alternative finance market in Europe. That’s a 144% jump in one year (€1.21 billion in 2013). The Cambridge Judge experts believe that European alternative finance could exceed €7 billion in 2015. Goldman Sachs published a study in April 2015 purporting that crowdfunding has become so successful that the leading American banks could lose €11 billion in annual profits over the next five years, as those funds will instead be invested in platforms like Kickstarter and Indiegogo.
Researchers rely on this type of financing because it is becoming increasingly difficult to raise funds for scientific research. “The future of medical research is in private funding,” says Philippe Ryvlin, chief of the Department of Clinical Neuroscience at Lausanne University Hospital (CHUV). And the professor knows what he’s talking about. He worked for years to round up several million Swiss francs from large and small private donors to set up the Institute for Epilepsy in Lyon. The facility is set to open between now and the end of the year.
This intense fundraising effort convinced him that the research field needs to adjust the way it thinks about financing. “In addressing a broad audience, crowdfunding is in line with the changes in society. We can strike a better balance between what users want from medical research and the amount of money they are prepared to put into it.”
Philippe Ryvlin admits that until only recently, medical researchers were not necessarily concerned about what the public thought of their work. “Today, we have to work more closely with the general public and understand what they expect from medical research, an area they are often passionate about! We must be held accountable to taxpayers, whose taxes finance some of the research, and engage with society in general to explain why we do things the way we do.” It’s not just about raising money but, more importantly, about convincing people of the importance of research.
In North America, some naysayers fear that crowdfunding applied to scientific research only works for the “sexiest” projects. Americans call this “panda bear science” in reference to that cute and cuddly black and white mammal. “Any change can have potentially perverse effects,” says Philippe Ryvlin. “It’s the risk we have to take. We have no choice! And in Switzerland, a country that strongly believes in voting, it would seem unnatural to doubt public opinion about funding for scientific research. Crowdfunding is
a form of the democratic process.” ⁄
Legislation on crowdfunding
In Switzerland, the only legal restrictions that apply to this form of fundraising are based on existing legislation for financial markets. These restrictions apply either to the companies that receive the funds or to crowdfunding platform operators. “For example, Switzerland has what is called the 10/20 rule. This rule states that any Swiss company granted loans by more than 20 non-bank lenders is considered a bank subject to withholding tax,” says Damien Conus, a lawyer specialised in crowdfunding who teaches at the Haute École de Gestion management school in Geneva.
Another scenario: crowdfunding platform operators must comply with the due diligence legislation applicable to financial intermediaries concerning money laundering (especially checking the origin of the funds). They must also obtain a licence under the legislation applicable to banks, depending on the control they have over the funds.
Research is not the only area in medicine to use crowdfunding. In countries where medical treatment is not covered by a national health care system, some patients appeal to the solidarity of the Internet community to pay for their medical care through crowdfunding. GoFundMe is one of the popular platforms used to try to raise the money necessary to pay for treatment. In the “Success Stories” section of the website, visitors can get an overview of the most inspiring crowdfunding campaigns. On that page is the face of Alex Haas, a third-degree burn victim who was able to get the care he needed thanks to the campaign led by his family and friends. There’s also the face of young Kiersten Yow, who was attacked by a shark and sustained injuries to her left leg and arm. The 12-year-old was able to get treatment thanks to crowdfunding efforts. She is now in rehabilitation and is expected to regain the use of her lower limb.