Alberta Ingenuity Fund may use new funding to launch series of research institutes

The Alberta Ingenuity Fund (AIF) is one step closer to implementing a new model for provincial research institutes. The concept of dedicating portions of its endowment to specific research areas in conjunction with funding partners was given a boost last week when the Alberta government announced it would use $100 million from its surging oil and gas revenues to increase AIF’s endowment. The funding is the first tranche in a $500-million commitment made earlier this year.

“This is big picture, long-term and will allow us to take on big issues, ” says AIF president and CEO Dr Peter Hackett. “Ingenuity Institutes would allow us to spend the interest from the additional $500 million in a different way, on a small number of areas.”

Potential areas of research for the so-called Ingenuity Institutes would be provincial priority areas such as energy, water, nanotechnology and technologies relating to international development. The institutes would be designed to address previously identified areas for AIF’s new endowment funding — talent recruitment and building on its pre-competitive research program with industry.

The concept so far is to take $200 million in new endowment funding and use the interest along with partnership investments to create a large pool of research capital. Work is underway on the design of the institutes and identification of potential partners in industry, other levels of government and private philanthropy. A $200-million investment would generate approximately $100 million over 10 years without touching the principal.

“It’s absolutely sustainable,” says Hackett. “We operate on a three-year spending rule which keeps our outflows at a conservative 4.5% of a three-year average. It’s great public policy.”

New investments in AIF’s endowment are ultimately dictated by the price of oil and gas and the size of the Alberta’s surplus revenues. Hackett says that while there is no specified timeframe for when AIF will receive the remaining $400 million, the next tranches will likely be announced as part of the province’s quarterly fiscal updates. Each $100-million investment will generate $1.5 million after one year, $3 million after two years and $4.5 million in the third year. The first Ingenuity Institute could be launched as soon as AIF receives another $100 million in investment.

The concept for creating a series of institutes emerged when the Alberta government handed AIF the authority to manage the new Alberta Prion Research Institute (APRI), a $38-million, seven-year research initiative focused on transmissible diseases caused by misfolded prions. APRI will have approximately $42 million to spend once interest from the original investment is factored in. It will operate in parallel with PrioNet, the new Network of Centres of Excellence announced in the 2004 federal Budget

“APRI got us thinking along doing these institute lines. APRI will be closely integrated with PrioNet and we will be co-investing in projects,” says Hackett. “At the board level, there will be cross appointees … and together the budget will be $77 million. It’s a huge commitment.”

AHFMR FUNDING BOOSTED

The Alberta Heritage Foundation for Medical Research (AHFMR) has a more predictable time table for new funding than the AIF. Of the $500 million announced last January, $200 million is being delivered in $50-million allotments every quarter, with the full amount to be invested within three years. By the end of FY05-06, the Foundation will have received $200 million, bringing its total to about $1.1 billion.

AHFMR president and CEO, Dr Kevin Keough, says that unlike the AIF, no major changes in its awards strategy are being contemplated. “Our core activity is unlikely to change from support for individuals,” he says. “We have enough experience and sense of comfort that this sort of investment is worthwhile.”

That said, there may be a push to find more funding partners in strategic areas to lever AHFMR’s funding even further. “Our past model never had a top-down approach, but in the future we may look for funding partners to support individual salaries or initial project support in strategic areas.”

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