EUROPE

Summer 2008

by Gerard Salole

Europe’s efforts to strengthen its research and innovation performance are still flagging, but now the world of charitable and philanthropic foundations is taking a hand. Gerry Salole reports on their activities, but warns that EU policymakers have yet to lighten their legal burdens

The most recent figures from Eurostat show scant change in Europe’s research and development (R&D) spending over the last three years, and there is mounting evidence that the EU will fail to meet the Lisbon Strategy commitment to invest 3% of its GDP in R&D by 2010. Europe will continue to lag behind the United States in annual R&D spending, lying in third place behind Japan in some sectors, and now faces competition from elsewhere in Asia, notably from China and India. With scarcely two years to go before the 2010 deadline, the burning question now is how can we save the situation and enable Europe to gain ground in this technological race?

Europe must promote R&D investment by creating an integrated market for innovation. Perhaps our most vulnerable gap is our failure to effectively capture, share and retain knowledge. Europe’s highly fragmented patents arrangements put us at a competitive disadvantage because they deter potential innovators and entrepreneurs, with the result being that Europe has a relatively poor record for commercialising new products and processes – a missed opportunity given our top-class research institutes.

There are other serious inconsistencies. European patent applications are on the increase, but the European Patent Office has decided to grant fewer patents by emphasising quality over quantity. The EPO’s strategy could be symptomatic of a more worrying trend, that of the Europe-to-America brain drain in which high-calibre researchers being lured to the US by better equipped laboratories, easier financing and more research-friendly conditions. Researchers based in Europe are still prevented from moving more freely between EU countries, which is quite ironic considering the importance of transnational networks in our globalised economy.

If the EU wants to meet its 3% target, it can’t do so on its own. It must discover how to mobilise policy actors at all levels to create the dynamic and competitive knowledge-based economy it desires.

In one area, though, Europe’s efforts to boost the potential of philanthropic funding for the European Research Area are on the right track. The European Forum on Philanthropy and Research Funding, launched by the European Foundation Centre (EFC) last December, with support from the European Commission and some research-focused funders, is the latest in a series of initiatives designed to bolster EU cooperation on research. Europe’s science and research commissioner Janez Potočnik has said that “the forum is proof that the research and philanthropy worlds are ever more interested in each other…the time has come to put this relationship on a firmer footing.” The new forum supports philanthropic funding for research in Europe through the exchange of best practice, cooperating on research funding, and promoting a more favourable environment for foundations and private philanthropy.

An important feature of the forum is that it emphasises collaboration. This doesn’t mean foundations reinventing the wheel, but it does mean providing an equal platform for all stakeholders − foundations, public authorities, industry, and most importantly, universities − to work in partnership. Europe’s universities are central to building the European Research Area, but they are also struggling to keep up with a rapidly changing international environment, and often have great difficulty in coping with the tighter funding conditions that are being imposed by national public authorities. Philanthropic organisations and foundations will increasingly need to be a more significant source of university research funding.

So how exactly can foundations make a difference in supporting research excellence? The past few years have seen growing innovation by foundations across Europe, which are proving increasingly creative and ever more adept at delivering specialised products in their areas. They succeed because they are willing to test new approaches to old problems, use resources more imaginatively, make connections between people, ideas, knowledge and practice, and seek sustainable change whose outcome sparks constructive debate and problem-solving. By making best use of their competitive advantages − autonomy, alertness and flexibility − foundations are well-placed to make a difference in research. It is not the total sum spent, but the approach to spending it that will win foundations a seat at the R&D policymaking table.

In research, foundations can act autonomously to support pilot-phase experiments in new areas and take risks funding unknown or less researched territory − areas which public authorities shun. A new consortium of European foundations made up of VolkswagenStiftung, the Fondation Mérieux, the Fundação Calouste Gulbenkian and the Nuffield Foundation has recently been established to fund research on neglected tropical diseases and on delivering treatment to their victims.

Unlike publicly-financed agencies which depend on political decisions, private foundations need not wait for political consensus. They can act far more freely, flexibly and quickly. The Foundation for Polish Science’s HOMING Programme is a telling example of foundations taking initiatives to staunch Europe’s brain drain regardless of government policy. Following the EU’s enlargement in 2004, over 1.5m people left Poland, many of them professionals and young scientists. The HOMING Programme encourages young Polish scientists to return home after an extended research stay abroad. It gives them financial support to ease their return, and boosts their academic careers by offering improved working conditions in Poland. Each year grants to young scientists from the HOMING Programme amount to €560,000.

Foundations can enhance higher education reform and research by stimulating private means and initiatives, with long-term public benefit. The Wellcome Trust UK, which spends about €626.7m each year, funds some 5,000 researchers in 40 countries. It cooperates with the US-based Howard Hughes Medical Institute (HHMI) and allows its research fellows to work in new environments by offering them a chance to take part in HHMI’s exchange programmes.

Foundations are also working to redress the under-representation of women in European research. The Robert Bosch Stiftung, for example, funds studies which explore the role of women in research, and recommends ways their numbers could be boosted.

Europe’s foundations can nurture new developments, encourage front-runners in institutional reform and devise creative models to replace outdated institutional practices. Take for example, the TT Venture, a new Italian fund for technology transfer set up by Fondazione Cariplo in early 2008. In addition to spending €30m each year on scientific research, this new fund is based on a mission-related investment strategy. The fund invests in initiatives pooling private capital, entrepreneurs and university research and boosts research-oriented investments in biomedicine, materials science, agro-food and energy, environmental technology and innovative cross-sector projects. Since its launch, the fund has raised €60m from other foundations and from the Milan Chamber of Commerce.

But while foundations are adept at providing the ideas, dexterity, and seed financing for launching potentially high-impact projects, the long-term value of these efforts is constrained if they are not scaled up with government cash. EU please note: European foundations are showing increased interest in setting up public-private partnerships to consolidate their work. Foundations want to collaborate with other sectors, not just in research but also in health care, the environment, education and the other areas where they are active. The EU should take advantage of this. Advances made in related policies might have the serendipitous potential to fuel the broader European research agenda.

Yet legal barriers still prevent Europe’s foundations from doing more. If they are fully to support the EU’s goals in research and all policy areas, foundations need better legal backing, particularly with a growing number of them engaging in cross-border activities. Late last year, the Commission began work on a feasibility study on a European foundation statute which, if realised, would allow European foundations to carry out public-benefit activities across the EU without the undue legal and administrative burdens that at present hinder them. Completion of the EU’s internal market, its competition rules and reviews of state aid should not impede foundations from achieving the Lisbon objectives − from supporting excellence in research, knowledge and innovation, to helping include socially and economically disadvantaged people. A European statute would enhance these efforts.

It is ironic that given foundations' track record of supporting and encouraging research, the sector is virtually having to plead to be taken more seriously with the adoption of a European foundation statue. Initiatives like the European Forum on Philanthropy and Research Funding undoubtedly show that as a sector, we are keen to capitalise on our capabilities. But until significant steps are taken at EU level, the full potential of foundations' efforts to strengthen European research and innovation may not be realised.