The Blog

David Koch's Philanthropy

4:16 PM, Jun 28, 2012 • By DANIEL HALPER
Widget tooltip
Single Page Print Larger Text Smaller Text Alerts

Evan Sparks, writing for Philanthropy magazine

“I’m interested in developing the treatments that, once approved by the FDA, will cure tens of thousands of patients,” Koch explains. “That’s what I think my role should be.” Cancer research is the core of his philanthropy—representing his biggest gifts, followed, in order, by arts and culture, education, and public policy. Despite the notoriety Koch has been assigned by left-of-center commentators for his free-market giving, he insists that “probably the smallest amount of money that I give is to public-policy institutions.”

Given the importance of medical research in his giving, Koch is sensitive to what kind of environment will produce the cancer breakthroughs he hopes to see. First, he acknowledges the role that the for-profit pharmaceutical sector has in innovating cures. “One thing I worry is that someday the government may pose price controls on drugs,” he explains. “It’s the profits off of those drugs that are providing the funds to carry out this breakthrough research.”

Second, he believes that cancer research needs more funding, philanthropic and otherwise. (And mostly otherwise; philanthropy accounts for only about 2 percent of medical research funding.) From 2005 to 2010, the budget of the National Cancer Institute—the agency of the National Institutes of Health (NIH) that is the principal federal funder of cancer research—averaged about $4.9 billion annually (not counting a temporary bump up from the 2009 stimulus). “Federal support for research has stagnated,” says Tyler Jacks. “In inflation-adjusted dollars, it’s dropped.”

When I ask Koch how he balances his limited-government principles with his support for more federal spending on cancer research, he answers immediately: “It’d be great if there was enough financial support from private institutions and individuals to support this enormous need for cancer research. But there really is this enormous number of very promising projects that don’t get funded through private philanthropy! I think probably the most important thing that the government does is to provide funding to these great institutions. It’s a shame that the NIH’s funding has been cut back because of these massive deficits in government. I think the long-term salvation of a healthcare system is massive and outstanding research.”

“It’s like antibiotics,” he explains, offering a personal example. “I just had a terrible battle with diverticulitis three weeks ago. I was on intravenous antibiotics for a week, then oral antibiotics. If those antibiotics hadn’t existed, my colon would’ve ruptured. I probably would have died. Discovering powerful medications will enormously reduce the cost of medical care in this country.”

And Koch is deeply concerned about a broader threat to philanthropic support for medical research. “I’m worried about the tax increases the Obama administration is lobbying for with Congress,” he explains. “A substantial amount of my income comes to me through dividends.” The administration has proposed, among other tax increases, raising the top dividend tax rate from 15 percent to 39.6 percent.

In concert with other provisions coming into force, the Wall Street Journal notes that dividends for top earners could be taxed at a cumulative rate of 44.8 percent. The cumulative rates “may have as much or greater effect on the [nonprofit] sector as reforms made to the [charitable] deduction itself,” according to Eugene Steuerle of the Urban-Brookings Tax Policy Center in recent congressional testimony.

All told, what the Obama administration’s proposals would do “is take away an extra 30 percent of my pre-tax income and give it to the federal government for general purposes,” Koch laments. “That’s the money that I would like to give—that I desperately want to give—to the great medical institutions, to set up these magnificent research programs, improve the clinics, and be able to hire more good doctors to provide better care.”

Koch becomes more animated, speaking fast and gesturing vigorously with both hands. “There are so many wealthy people who are very generous philanthropically. If these taxes go up enormously, these great institutions—medical, educational, cultural—are going to be starved of the capital they need to continue their mission in this world. That’s one of the greatest fears I have. They’re going to suffer terribly if wealthy people have a substantial portion of their income taken away from them.”

Whole thing here

Recent Blog Posts

The Weekly Standard Archives

Browse 18 Years of the Weekly Standard

Old covers