Prof. Sigrid Hemels, professor of tax law at Erasmus School of Law, appeared in the Financieele Dagblad on 27 March, 2020. She wrote an opinion piece on the importance of medical research for developing countries and the rationale for charitable donations to commercial organizations as an alternative form of philanthropy.
Hemels calls it a market failure. In a correctly functioning market, supply and demand come together, whereby a competitive price and quantity of a product can be created. In Western countries, this ensures that the most profitable medical examinations are performed. Governments can assist with investigations they consider essential. In developing countries, however, capital-rich demand is lacking, and the government also has no opportunity to intervene, as a result of which it is often impossible to recoup research investments aimed at such countries, such as vaccines. This means that research and development efforts to serve this market often fail to materialize, while the Western world also benefits from such research.
Some charities fill this gap by making donations to commercial organizations that develop cheap vaccines for diseases that mainly affect developing countries. Hemels finds such contributions generally useful if they are merely a means for good causes to achieve their overall useful purpose as effectively as possible and not a way to favour companies. "For example, Dutch charities can also contribute to effective solutions to the major challenges the world is currently facing," said Prof. Hemels.
