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ALS patient group unhappy with how $115 million raised by the Ice Bucket Challenge is being spentPublished: Feb 16, 2018 8:19 a.m. ET MarketWatch

By Emma Court

The “Ice Bucket Challenge” became a global phenomenon in the summer of 2014.

Participants lined up to have a bucket of ice water poured over their heads, with videos spreading virally across social media.

Everyone from politicians to executives, athletes, rock stars and even elephants did it (sans the ice), raising awareness of the neuromuscular disease amyotrophic lateral sclerosis (ALS) and generating donations to the cause in the process.

Much of the money raised, about $115 million, went to the nonprofit ALS Association, an unprecedented amount of money for a U.S. nonprofit, of which only a small percentage bring in revenue of more than $10 million a year.  ALSA was a financially sound charity long before the ice and its revenue engine far surpassed that $10 million threshold.

But Matt Bellina, a 34-year-old Navy veteran with ALS, told MarketWatch that he and others are not benefiting from the Ice Bucket Challenge donations that poured into the ALSA.

ALS causes loss of muscle function over time and has no cure. And because most individuals with the disease are killed by it within three to five years, time is everything, he said.

The ALSA says it has committed most of the Ice Bucket Challenge funds: about $96 million of $115 million, which includes multiyear grants for research projects that are ongoing.  The bigger issue is the net assets that they have accrued.  If somebody hands you a bag with $115,000,000 and you are going to spend it all slowly, you don’t stick it under the mattress until you eventually dole it all out. I believe that ALSA issued an rfp for financial management services related to the cash before the end of 2014.  The unspent cash is a revenue engine, too.  And ALSA was not going to stop doing its annual walks and fundraising just because it had ice cash to spend.  It had been a financially sound not-for-profit and retained <$20 million in net assets for years.  Why maintain five times that now?

But a group of about 40 ALS patients and caregivers called Terminally Persistent, which formed through a private social media page and includes members from across the U.S., “would like to see a little more aggressive spending on research that’s applicable to people living with ALS today,” Bellina, who spoke on behalf of the group, said.

“Most people diagnosed with ALS tomorrow will be dead before they could spend all that money,” he said, referring to the roughly $104 million in net assets the ALSA had as of its most recent financial statement. (The group makes annual reports, independent auditor reports and IRS 990 forms available on its website.)

But the ALSA said it is spending the money, and trying to do so in as transparent a way as possible.

The ALSA’s Ice Bucket Challenge-related spending has been detailed prominently on its website and is regularly updated, a strategy that has earned praise from nonprofit experts. The nonprofit also earns high ratings from Charity Navigator, the largest evaluator and rater of nonprofits.  This honestly does not speak well for the ratings services. ALSA research spending details are more like press releases. It’s difficult to sort out annual expenditures and committed funds by project.  Cumulative numbers and multi-year totals make it next to impossible to normalize the dollars into something meaningful. I spent hours a few months ago trying to relate funding announcements to their 990 research grants.  It shouldn’t be that hard if they want to fulfill the spirit of transparency in addition to the letter of the transparency.  Clarity is what many of us seek.

“Some people expect we should have spent $100 million in one year. I don’t think that’s realistic, but I understand where it’s coming from, a place of hope,” said Calaneet Balas, ALSA president and chief executive officer. “There’s a lot of money going out the door but if you have ALS, it might not feel good enough.”  ALSA’s Chief Scientist used to have a nice development hook at the end of presentations after she had highlighted a few projects – “For every project you’ve seen tonight, we have ten more good projects that we are unable to fund.”  I’ve not heard that line lately.  Were it true, it seems to me that all the cash would have been working in labs and clinics long before today.

Patient groups like the ALSA, which aim to represent the sick, are widespread in the U.S. Though these groups provide invaluable information and services, they have become controversial because of close financial ties with industry and advocacy groups that have helped get drugs approved.  ALSA is not immune to this concern, and it does relate to research that is supported.  We have no clarity on donation amounts from ALSA’s industry “partners.”  We are glad to celebrate the philanthropy of corporate donors, but it should also be clear and public knowledge of the donation amounts made by any entity that has an interest in selling goods or services to those with ALS.  It’s simple.  Get the information out on the table.  We can’t even figure out if these “partnerships” affect which clinical trials ALSA promotes.  I wish they would be more vigorous about promoting all trials and not leave us with nagging questions about who gets the special clinical trial publicity.

The ALSA, having stumbled into a small-donations windfall, is in nearly the polar opposite situation. But its financial good fortune raises a similarly pressing, and even philosophical question: What is truly the best way to help patients?

Nonprofits typically look to donors for direction on how to prioritize spending. Should ALSA not be looking to those with ALS?  Individuals living with this beast and the ticking clock are the reason ALSA exists. Donors, as kind and generous and important as they may be, are not necessarily the best ones to come up with bold and transformational ways to invest in ALS research. Donors and not-for-profits may be among the most risk-averse folks on earth!  But here, without particularly detailed guidance, “there’s going to be this tension, a built-in conflict,” said Doug White, a philanthropic and nonprofit adviser. “If the $115 million that was raised cures ALS, everyone’s going to be happy. Lacking that very finite goal, everyone’s going to say we should do x or y.”

Spending controversy

Bellina was working as a pilot in the navy when his hand started cramping on the throttle, fingers twitching. He started having balance issues, and knew something was wrong.

Bellina now lives in Pennsylvania with his wife and three small boys. He gets around in a wheelchair or walker, and needs his wife’s help to eat, bathe and get dressed.

ALS is a progressive disease. For Bellina, it’s getting harder to talk, “and at some point I’m going to be fully paralyzed,” he said. But he doesn’t see the ALSA’s attitude reflecting that.

“There really is not a sense of urgency,” he said.

Most of the ALSA’s spending is on research, because that was the guidance the group got from donors, “to the extent we were getting any communication,” (I was blocked forever from their facebook wall for a polite 2014 post suggesting the money go to research) said Stephen Winthrop, who is chair of the ALSA’s 25-member board and currently the only board member with ALS. The nonprofit made that decision in fall 2014, as part of a five-year plan to spend the Ice Bucket Challenge donations in full, he said.  I believe that donor intent matters and that the overwhelming majority of those thousands of individual ice bucket donors intended their gifts to go to research.  Note that the first $62,000,000+ of those wonderful spontaneous donations that came in during the first weeks of the ice challenge were done so via an online donation form that offered no means to restrict a donation to research.  Also, may all the donors, including the widows who dumped ice and donated $50, see the five-year plan, please?

It is currently funding more than 150 research projects in eight countries, with projects studying how to extend lives and improve quality of life, along with looking at what causes ALS, identifying biomarkers to help treat the disease and more, Balas said.

After research, providing services to ALS patients and the community accounts for the second-largest portion of the ALSA’s spending, according to its most recent financial filing. Most of the group’s annual revenue “went back out,” said Holly Ivel, director of data services at GuideStar, a nonprofit that aims to bring more transparency to the sector, and who reviewed the ALSA’s most recent financial statement.

Moreover, though she noted that she is not a scientist, “I don’t know that accelerating the spending necessarily produces faster results.”  ALS research is risky, and we know that most projects won’t result in a meaningful treatment.  That’s a fact. We need to learn how to fail faster so that we can learn faster.  This is not a disease where we are close to homing in on a single thing.  We need to learn by failures so that we can discard the wrong paths and make sense of the rest.

The ALSA does spend on both long-term research and to relieve the suffering of individuals with ALS today, Winthrop said. But it is “a bit of a Sophie’s choice,” he said, because patients ask why more can’t be done for them. “The problem with that decision in my opinion is that the money would be very well spent, it would alleviate a lot of suffering, and we’d look up six months later, we’d have blown through all that money and we’re no closer to the cure.”  So, if they go slowly, it won’t be perceived as blowing through the money… and we may still not be any closer to a cure.

And while some in the ALS community disagree with the five-year plan, “that’s not what everyone in the ALS community is saying,” Winthrop noted.

This type of conflict is fundamentally the purview of a nonprofit’s board, said Larry Lieberman, chief operating officer at Charity Navigator, who noted that the ALSA is among the highest-rated organizations that Charity Navigator evaluates.

“Beneficiaries are not always donors. And both deserve a voice,” Lieberman said.  This statement troubles me a lot.  Beneficiaries are families dealing with ALS.  Theirs are THE voices that really matter.  They deserve better than a pay-to-play system where high net-worth donors who are vested in an organization set an agenda for them. It’s difficult for major donors to admit that the organization has been wrong and needs to change. They are not the ones who change paradigms.

Other ALS organizations have spent Ice Bucket Challenge donations more quickly, though they received far more limited funds.

The ALS Therapy Development Institute, a nonprofit biotech that conducts ALS research, spent “every single cent” of its $4 million in Ice Bucket Challenge donations within 15 months, primarily to expand participation in a new program and to advance a drug in clinical trials, said ALS TDI’s Rob Goldstein, vice president of ALS community engagement and chief marketing officer. (The ALS TDI has been a recipient of ALSA grants.)

His organization did so because “we thought we could apply that money in a quick amount of time to advance the mission,” and many other ALS groups did too, Goldstein said. “Urgency has to be at the core of everything you do.”

But “other nonprofits may have a different way of allocating their resources, and that’s up to them,” he said. “And it’s up to donors and the general public to decide if that’s what they want to see.”

This isn’t the first time that the ALSA has been criticized in conjunction with Ice Bucket Challenge donations. Back in 2014, the group was slammed for trying to patent “ice bucket challenge” and “ALS ice bucket challenge.”

More recently, in mid-2016, the nonprofit said that a new ALS gene had been found thanks to proceeds from the Ice Bucket Challenge.

But experts questioned whether it was much of a discovery at all.

Two doctors told the publication HealthNewsReview that the gene, called NEK1, had already been of interest in ALS, and that the finding was merely an association with ALS, which is the case with many genes for many diseases.

But Balas, who became CEO and president of the ALSA last December, defended the research in an interview with MarketWatch late last week.   We have red flag words that constantly come up in ALS research announcements – “breakthrough,” “exciting,” “promising.”  The more we discover, the less we really know about the disease.  The task ahead is enormous.  That is the reason why we must not break our arms patting ourselves on the back. We must move boldly with more and novel research.

“What it highlighted was we were able to show progress in a very short period of time from the Ice Bucket dollars. In less than 24 months, we had four new genetic discoveries, and that helps us create targets for therapies,” she said.  So?

Clinical trial conflict

Terminally Persistent also objects to the ALSA not providing funding to a biotech called BrainStorm Cell Therapeutics BCLI, -1.92% The biotech’s stem cell treatment is the only ALS therapy currently in phase 3 trials, it told MarketWatch.

BrainStorm and the ALSA discussed funding for the phase 3 trial, but the ALSA said it does not fund that stage of clinical trials, both parties told MarketWatch.  Fine, but if that’s a new policy, they should have said so.  It appears that they’ve used a high-tech eraser since the BCLI question came up. The title of the Cytokinetics Phase 3 grant they made in 2015-2017 has been tweaked to look less like a Phase 3 grant.  The fact that they would retitle an old announcement is revealing.

Phase 3 trials are too high-risk and high-cost, Balas told MarketWatch.

But Bellina, who owns about $1,000 in BrainStorm stock, said the nonprofit was too set on a paradigm that “we’re way out from finding a cure, so we have to keep the momentum going and hopefully generations later we’ll find a cure.” (Bellina said he bought the stock a while back based on research that impressed him.)  Ok, we know that Bellina invested $1000 in Brainstorm.  We know generally what ALSA has invested in grants to  therapy developers.  We know nothing about what ALSA has accepted from therapy developers who are investing in ALSA.  How about if everybody gets all investments out on the table as clearly as Bellina did with his $1000 and let’s continue the conversation.

“As a result, when we have these new and exciting treatments coming up, we don’t have the ability to jump up and get involved, because that’s not the way their business has been structured,” he said.

See: 5 companies that will benefit from ALS awareness

This is a fairly common conflict for any kind of organization, but especially a nonprofit focused on disease, White told MarketWatch.

“Any disease charity has a tough road, because they have to balance the short term and long term,” he said. “That’s especially true with disease organizations, because you want to end the disease.”

In an interview with MarketWatch, Balas said she didn’t know whether there was a connection between BrainStorm and Terminally Persistent, but suggested that there was one.  This reflects the disrespect and marginalization that many have experienced when they have challenged decisions at ALSA.  It’s not new. There seems to be no sense there that individuals who seek change can be independent and altruistic and well-informed when they disagree with ALSA. There’s not a quid pro quo behind every group or individual. I don't know why they think that way.

Bellina, for his part, said there is no connection, though he has spoken with BrainStorm, which BrainStorm Chief Executive Chaim Lebovits confirmed.

As for Bellina, he still thinks the ALSA does good work, especially his local chapter, which he’s involved with.

But he says he’s willing to fight for change, even if it makes him look like the bad guy, criticizing a nonprofit that works on behalf of patients.

“I think they’re doing more good than harm, but I think allowing them to get away with things that we know are wrong is going to ultimately do more harm,” he said. “In other words, the damage we’re doing to the organization is overall worth the trouble, in order to push them to real transparency.”

BrainStorm shares have fallen 5.2% in the last 12 months, while the S&P 500SPX, +0.54%  has gained 14% and the Dow Jones Industrial Average DJIA, +0.82% has gained 20%.