The role of philanthropy in scientific progress in the United States is underestimated

Formally, the secondary role of philanthropy and charity in the financing of science in the United States is greatly underestimated; these investments may explain the significant success of R&D in the United States in comparison with China, researchers at the University of San Diego believe. Philanthropists invest more than the state in basic research, and their key role is funding university science. There they have already become a key link in the “new Gilded Age” of American science since the beginning of the 21st century, primarily due to extremely large investments in new institutes.

The work of Robert Conn, Peter Cawley and Joshua Graff-Zivin of the University of California at San Diego and Christopher Martin of the New Zealand company Vela Science, published in a series of NBER preprints, assesses for the first time in many years the role of philanthropy in the work of the world’s largest R&D system – American. Conn and colleagues in a review article analyzing the differences in 2018–2021 investments in scientific research in the USA and China (they are comparable: the USA, in terms of PPP in 2015 dollars, invested $709 billion in R&D, China – $465 billion, Russia – $40 billion, at the level of Taiwan and Italy, which, according to the OECD, are also included in the world top 10 investing in scientific research in a broad sense), draw attention to a key structural difference: in Chinese science, unlike American science, there are practically no non-profit investments of private individuals and funds, and this may be a significant factor for the development of technology in the United States faster than in China. The article is titled “Science, Philanthropy, and American Leadership.”

Formally, for 2021, the structure of investments in R&D is similar, write Conn and colleagues, the shares of government investments in science by the PRC and the USA are close, universities play a significant role in its financing, and business invests mainly in development – the development of technologies. But in the USA, he invests significantly more in both applied and fundamental research. Non-profit private investment in science (most of it pure charity) in the United States in 2021 amounted to $21 billion – about 3% of all investments. In China, the figures are three orders of magnitude lower, but in fact, it is charitable investments that can be the central factor in the operation of the R&D system in the United States – the reason, the authors of the work believe, is in the accumulated and ongoing charitable transfers to universities: in the United States, the total university expenditures on R&D are higher than the government ones, and a large share of university investments in R&D is fundamental rather than applied research. Contrary to popular belief, universities in the United States rely relatively little, at least in the STEM and IT fields, on government funding. De facto, Conn and colleagues argue, non-state non-profit investments in the United States in R&D in 2021, including university channels, amounted to $114 billion.

This kind of donation, as shown in the work, has certain advantages for organizing scientific and technological progress in the United States in comparison with investments from business and the state, despite the smaller volumes (compared to business investments in R&D). They give the system greater flexibility and efficiency in funding important topics and provide – almost a monopoly – the connection between fundamental and applied research. In addition, philanthropic “mega-gifts” are one-time investments of more than $50 million, for example, the Stephen Schwarzman family’s $350 million investment in a new IT college at MIT in 2022, the Dorr family’s $1.1 billion investment in an interdisciplinary school at Stanford in 2022, $750 million by the Resnik family into the new energy department at Caltech in 2019—in many ways ensuring the continuation of the second “Gilded Age” in science in the United States. The first, also fueled by a boom in philanthropy, is attributed by historians of science in the United States to the second half of the 19th and early 20th centuries. In many ways, institutional investments by private individuals also ensure the specificity of R&D in the United States, with a larger share of biomedical research compared to STEM, where the overall picture differs from both the global and Chinese ones.

Dmitry Butrin