How Do We Fill the Cleantech Funding Gap?

I recently finished reading the book Abundance by Ezra Klein and Derek Thompson. In short, the book lays out a potential policy agenda focused on building the future we want (e.g., clean energy, highspeed rail) as opposed to subsidizing demand and letting the market decide how to meet the demand (e.g., EV tax credits, Affordable Care Act).

The book’s message stands in stark contrast with current Federal policies in the United States. The administration is stopping research on the next generation of clean technologies, pulling back on National Electric Vehicle Infrastructure funding, cancelling incentives for battery research and production, etc., etc., etc.

The Administration is obviously not interested in the cleantech, despite China and other countries putting their foot on the cleantech accelerator pedal. In fact, it is at war with technologies like offshore wind, climate science and adaptation strategies. My local newspaper just reported on the imminent closure of the Climate Adaptation Science Center, based at the University of Massachusetts and extending to over nine other institutions across the country, due to the hollowing out of the US Geological Survey.

And It’s not just cleantech. Other sectors such as pharmaceuticals, healthcare, and telecommunications are either having their research and development funding slashed or having their contracts changed to favor political donors.

In 2024, the United States spent nearly $1 trillion — roughly 3.5 % of total economic output — on research and development. When it came to the kind of long-term basic research that underpins American technological and scientific advancements, the government accounted for about 40 percent of the spending.

Abundance includes many examples of successful, new technologies that were birthed by government funded, early-stage research. They were taking risks on ideas that may not have immediate economic viability, but showed great promise for society.

Taking risks is exactly how innovators go from a vision to developing the next promising technology that becomes a market game changer. Think Tesla!

Yet, it is harder than ever for U.S. innovators and start-up cleantech entrepreneurs to get funding. Government dollars are drying up, but so is private investment and venture capital firms. They are looking for proven bets, but taking risks on the next big thing.

So, how do we fund the innovations that appeared so promising in 2024, but get spurned in 2025?

NextRound Philanthropy has an answer. The mission of NextRound is to match philanthropists with innovators who have a solution that addresses their passion. Instead of the donor’s money going to a charity, why not funnel some or all that funding to a start-up focused on that passion. For example, rather funding a non-profit environmental organization, send some or all that money to an innovator working on new battery technologies or nature-based climate solutions.

NextRound leverages Donor Advised Funds (DAFs) to finance innovation, so the philanthropist still receives a tax deduction. The Donor Advised Fund enables NextRound to create a customized giving strategy that gives the donor flexibility and control over where the donations go. For the donor, they receive approximately 40 cents on the dollar back from the IRS, and retains control (but not ownership) over the investment. The donor can focus on specific causes, create custom grant-making strategy, and in many cases, become an advisor to the innovators they fund, not just a source of money.

NextRound has been working with innovators in the MedTech, healthcare, BioTech, environmental sciences, as well as cleantech industries. Current cleantech companies in the NextRound portfolio include NGENX; a company building battery data analytics, Nectivio, which measures carbon footprint in the supply chain; Thermagel, an aerogel insulation technology that is economic/sustainable; and Yonder, using generative AI to create materials more sustainably.

NextRound Philanthropy is an innovative solution to funding the kind of innovation that our society desperately needs.

For more information, contact NextRound Philanthropy at https://nextroundphilanthropy.com/contact/.