Funding Open Science projects - thoughts, ideas, experience, bureaucracy

Rapid grants from Invest in Open Infrastructure - due this Monday! (Dec. 7th)

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How about starting a hedge fund? Top universities do this to fund projects. Typically, a hedge fund compensation structure is ‘2 and 20’ (2% of assets under management and 20% of profits), and universities have very high fixed costs (things like building maintenance, extensive staff/admin etc.) so a considerable amount of the proceeds are wasted. Even if you were starting very small (with respect to capital), over time it could be a very powerful tool if efficiency is maintained (FWIW I am considering some kind of approach like this).

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Could you elaborate on this a bit more @grant (or link to any other material)? Specifically:

  • If a university has a hedge fund, where are they investing this - in the market, or in themselves?
  • Where is the fund money from, is it raised from investors that need or return, or is it just profitable way to manage endowments (i.e. money the university already holds)?
  • In practice, how much money is required to start a hedge fund, would 5 to 7 figures in USD cut it, or more?
  • Is using funds in this way intended to create long term revenue or raise capital for immediate use?

Sorry for all the questions, I know very little about advanced investment mechanisms. (use a Vanguard ETF is about the limit of my investment knowledge :stuck_out_tongue:)

universities have very high fixed costs (things like building maintenance, extensive staff/admin etc.) so a considerable amount of the proceeds are wasted. Even if you were starting very small (with respect to capital), over time it could be a very powerful tool if efficiency is maintained

Part of IGDOREs vision is to have more efficient administration than traditional academia, and we should be able to beat them at that :rofl:

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@gavin I’ve been looking into this quite a bit so I’m happy to elaborate. I found a really great overview here. It is a long read but it is an excellent overview of what universities are currently doing, along with some points of criticism and concern.

Top universities are treating their endowments in the same manner that hedge funds treat their capital. They are involved in all manner of investments/trades within the capital markets, both domestically and abroad. So for instance see this bloomberg article detailing Caltech’s 17.8% returns.

The funds are primarily (or entirely) raised from charitable giving. If you look at the case of say Harvard/Princeton/Yale, tracing their endowments from the 90’s to today, a lot of the endowment is actually just the tax-free compounded gains over that period of time.

I may attempt to do it with ~50K just for practice. The cost drivers are taxes (which you can avoid as a non profit…a not unimportant detail, fees to managers–which you eliminate by managing the fund yourself, and transaction/reporting costs–which are minimal especially for small capitalization funds). Just take a dollar amount, project a compounded gain over X years, and then decide on some payout per anum (say 5% of managed capital to fund projects, and say you are making 10% in annualized returns…so 5% growth per year etc).

This is intended to create a source of sustained funding. It’s like the interest you get from a savings account on steroids. The larger the fund gets (through compounded annual returns), the more it kicks off each year to directly fund…well whatever you want. This is what Warren Buffet, Jim Simons, DE Shaw, and in a more secret way what the guys at TGS did.

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Got a few slides referencing preprints funders from @SridharGutam presentation:

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Stiftung Mercator - German fund which focuses on funding projects around Europe, integration, climate change, cultural education. The priority is given to projects in Germany.

Rudolf Augstein Foundation funds journalism, art, social affairs.

As I discussed with @cooper, should I also bring here journalism foundations if they are not directly related to science/science policy/open science?

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hi @grant and @Gavin: why only a hedge fund? why not a venture capital fund? :slight_smile:

@surya, the term hedge fund is a bit of a misnomer at this point (I’ve heard the term defined as a fee structure: 2% of assets and 20% of profits, rather than defining any particular strategy. A particularly funny take on this recently is the hedge funds that got smoked in the GameStop affair…why no hedging? :slight_smile: ). So the more modern view of hedge funds is that they are absolute return vehicles: make money doing whatever you can: global developing markets, credit swaps, venture capital, real estate (both global and domestic), more traditional long-short strategies…whatever you can think of. Most hedge funds will focus on a core strategy that is a subset of the total investment space–but anything is fair game. University endowments actually do usually contain a portion of venture capital investment, and if you look through their reports this will fall under the category alternative investments, which has been a growing chunk of the endowment allocation pie. What would be interesting (and more beneficial) is maybe pursuing venture investing in science (I think @gavin linked to or mentioned a book about this awhile back).

thanks @grant. i’ve actually had this window open since your reply because i think it’s very important in many respects to what i have discovered and doing now.

subconsciously, i think i compared HEDGE FUND vs. VENTURE CAPITAL is precisely because of the ‘absolute return’ aspect…

my discovery is the FUNDAMENTAL aspect of ISLAMIC FINANCE is the RISK/RETURN-SHARING aspect of investments… so it’s ok to lose money in investments, as long as everything is done in good faith and efficiently…

for hedge fund, and any other ‘absolute return’ financial vehicles (e.g. sovereign wealth fund - swf), the criticism of ‘make money doing whatever you can’ is precisely being directed at the scandinavian swf…

empirically, money is made the most by catering to basic human needs… positive examples such as food, clothing, shelter, communication, etc… negative examples such as sex, drugs, alcohol, weapons, etc…

my intuition tells me a lot of money circulating in indonesian startups, as perhaps also elsewhere like silicon valley, NEGATIVELY may come from MONEY LAUNDERING FINANCIAL VEHICLES/OPERATIONS… that’s why it’s ok for them to ‘BURN MONEY’!

i know that also because back when i was an aspiring and working film producer, my friend told me that many hollywood companies set up shop in germany to take advantage of ‘stupid german money’ as well as making it easier to declare a loss and hence not pay taxes, worse, sometimes get (federal) state(s)’ subsidies…

positively, but not in indonesia, they may come from GOVERNMENT SPENDING, per mazzucato’s popularization in her books, articles and videos…

as per university endowments, i think it’s common knowledge that a lot of western UNIVERSITY and ENDOWMENT theory and practice come from ‘islamic(ate) civilization(s)’…

the ‘west’ just made it PUBLIC by LAND-GRANTS etc…

i recently wrote that the indonesian government should ‘invent’ SEA & SPACE GRANTS to renew the endowment concept…

so back to science, i think now it’s obvious that i deem ALL MONEY IS ‘FILTERED’ THROUGH A GOVERNMENT’S ‘LENS’… not only from my postings in this page, but by my frequent ‘push’ for scientists and scholars to learn modern monetary theory (mmt) here and elsewhere…

so, venture investing in science (& technology) is something that have been done since world war 1 by the u.s and their allies, and since the 2000s in china, both to the world’s detriments… :frowning:

this is where open science comes in… the RISK/RETURN-sharing aspect i think not many would argue… HOW TO GET GOVERNMENTS’ HEAD OUT OF THEIR A*SES to invest in OPEN SCIENCE is the thing to do now…

as for non-government organizations or institutions, such as universities, well, perhaps FIDUCIARILY according to WESTERN(IZED) laws they have no choice but to become ‘absolute return’ financial vehicles…

this make sense as they are not the CREATORS OF CURRENCY, unlike GOVERNMENTS!

currency creators could afford to lose as much money as needed, as long as the (science) projects are done efficiently and in good faith… when losing currency, they just create more currency, which is what is being done at the moment all over the world to deal with the pandemic…

so the most effective altruistic thing (@Gavin ;)) to do at the moment to my mind is to ‘INSTALL’ and ‘UPGRADE/UPDATE’ national leaders to understand mmt and open science… then act on that understanding!

the rest, as they say, has been, and would be, history… :slight_smile:

p.s: can’t resist these links… :wink:

Interesting idea, would be interested to learn more (what about parts of the rainforest?)

I think this is the part I would like to see change the most, I don’t think these funds need to be operated in this way. Historically, the most talented analysts/traders have been attracted to the top NYC investment banks/funds because of their own desire for wealth accumulation. I’d like to see commune/community focused funds (or more of them), managed for the profit of communities.

Here is a spreadsheet of funders for independent research and open science project that @sivashchenko shared with me earlier this year. If anybody sees anything that looks promising, please do point it out to the community.

Here is a second, shorter list of science funders (2nd tab) from the Open Philanthropy projects’ overview of the Open Science landscape.

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Lot’s of Open Science funding under Horizon Europe:

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This session at OSFair could be of interest (SEPT 21, 16.30 - 18.00 CEST)

THE PERILS OF BEING INVISIBLE. COLLECTIVE FUNDING MODELS FOR OPEN SCIENCE INFRASTRUCTURE.

Honorary mention by Slowpen Science Collective (https://yseulthb.github.io/). We have been listed as part of the Open Science Movement! SlowScience.pdf (1.5 MB)

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There is an honorary mention of @alex.lancaster @arika.virapongse Anne Thessen’s 2018 joint paper in this as well.

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This is an interesting set of awards. The submission deadline for all categories pass in March, but it will be interesting to see what sort of projects get awards.

https://www.einsteinfoundation.de/en/award/

The Einstein Foundation Award for Promoting Quality in Research aims to provide recognition and publicity for outstanding efforts that enhance the rigor, reliability, robustness, and transparency of research in the natural sciences, the social sciences, and the humanities, and stimulate awareness and activities fostering research quality among scientists, institutions, funders, and politicians. To acknowledge the outstanding role early career researchers (ECRs) have in promoting research quality, ECRs will be invited to propose projects that foster research quality and value. Projects will be competitively selected for funding and internationally showcased.

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Just came across this:

Free lists of grants and fellowships around the world available online

Three searchable databases provide information on global opportunities for graduate students, postdocs and junior faculty members.

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And the winners of The Einstein Foundation Award for Promoting Quality in Research were:

:drum: :drum: :drum:

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Looks like a good opportunity for OS projects in the US. H/t @arika.virapongse

The FAIROS RCN program seeks to create three-year Research Coordination Networks (RCNs) which will foster catalytic improvements in scientific communities focusing on the FAIR (Findability, Accessibility, Interoperability, and Reuse, see Program Description for more information) guiding principles and Open Science best practices (inclusively summarized by the combined phrase FAIROS for purposes of this program). This program will support a broad range of activities by these new RCNs to advance the means by which investigators can share information and ideas, coordinate ongoing or planned research activities, foster synthesis and new collaborations, develop community standards, and in other ways advance science and education through communication and sharing of research products through FAIROS strategies.

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