Investment opportunities such as those provided by crowdfunding websites inevitably carry risks, and the major issue raised in the fallout of America’s recent JOBS Act and reiterated in response to my last article by one of our own readers, has been the unnecessary and wide-ranging exposure of public investors to scam artists. Indeed, investment platforms such as those offered by Kickstarter, Petridish and Kiva, among many others, offer no security that monies collected from advertised fundraising ventures will be used to support the projects they market – a practice that is currently being addressed in academia with the filing of regular progress reports.
While the Securities and Exchange Commission in the United States is presumably rewriting its rules to protect the public from scammers, a bigger cause for concern is the time-proven truth that most businesses fail. This is doubly true for research, and I often brag that my lab has a nearly 1% success rate. Moreover, present private iterations of the crowdfunding model for science do not provide prospective investors with a robust history of the investigator, academic institution, or research proposal on which to form a sufficiently educated opinion of feasibility – something federal funding agencies such as the National Institutes of Health in the United States and the Canadian Institute of Health Research in Canada have been addressing through the use of peer review committees for years.
Lastly, there is the question of visible return on investment. While most public companies have dealt with this in the form of financial revenues proportional to share holdings for their investors, non-profit organizations such as Kiva have re-branded public investments as “loans” which the investor is returned upon successful completion of an advertised venture. In the interim, both public companies and non-profit institutions hold shareholder meetings or otherwise publish updates to keep investors informed of the progress being made as a result of their initial/continued investments.
A major advantage of this practice is that it reconnects investors with the projects they help support and forces the recipients of public dollars to justify their ventures. Although researchers must inevitably report to the funding agencies that support them, most of these agencies are themselves funded by the public and do very little to communicate the value those initial investments (mostly derived from taxes, in the case of federal programs) help create. What results is a disconnect between science and benefit where most people have a very limited grasp of the underlying state of the art in any given research discipline, and less idea still of the advancement in that field they themselves are funding. This was recently illustrated by a 2012 Gallup poll confirming that a whopping 46% of Americans still believe in creationism – a percentage that has all but remained static in the last 30 years!
“What a strange set of historical circumstances, what odd disconnect between science and society, can explain the paradox of organic evolution – the central operating concept of an entire discipline – remains such a focus of controversy, even widespread disbelief, in contemporary America?” (Stephen Jay Gould, 1999)
As a result, major advancements the public should be congratulating themselves on having helped achieve are all but being ignored. Without question this has long-lasting implications on how society approaches policy decisions, most recently exemplified by the issues surrounding climate change – a topic about which scientists have been publishing for years. One solution is to have federal governments host crowdfunding initiatives apart from their traditional research grants through existing research institutes. This will be the topic of my next post.