In fact, I would say your model has it backwards -- as a philanthropist, rather than devote my money to a cause, I should coerce/influence politicians with money, so as to compel through force of law other peoples money to flow to that cause.
Research subsidies capture the positive externalities to society that result from conducting that research. In other words: because much or all of the value of discovering--for instance--a new, accurate model of mental illness is leaky and impossible to capture, it's underprovisioned by the market. Government funding correct the inefficiency that would otherwise result.
That's the obvious reasoning, and I'm sure you knew this when you asked the question. Whether a specific topic has those particular externalities or not is always up for debate.
One could argue that increased government funding for science is more likely to fund basic science and other "non-sexy" but still important and likely to pay dividends research.
In theory (and hopefully) but all of the non-sexy stuff ends up as political wedge issues. And when that happens we have people like Palin decrying research on fruit flies in Paris, France.
This science research is very, very expensive costing many billions of $$$ on an ongoing basis. Regular charity is a "drop in the bucket" for this kind of research which should be paid for by governments anyway. For health, total spending was $3.8 trillion this past year. Spending more money on health research could have significant ROI in terms of reducing the growth rate of that bill.
And for those who didn't see the live presentation, they all made the point that the biggest story here was that they hoped this announcement would galvanize the community in order to drum up more attention, excitement and thus money.
As an example, many of the big pharma companies have already or currently are pulling out of the psych field. If this huge investment jump starts more researchers to go into this field instead of something else (e.g. cancer) it could create a positive feedback loop.
I don't prefer that model from a moral point of view, but it is worthwhile from a practical point of view. Lobbying the government has a higher ROI than research for most companies. As such many companies lobby heavily for loopholes, benefits, etc all in explicit name of jobs. (And private benefit for execs and owners)
Why concede that fight? If very long term basic science is of communal benefit and can't happen in the current market structure, why not use 10% of the money to fight against lobbyists asking for corporate handouts?
Because in so doing, you're just getting into a shouting match saying "My handouts aren't really handouts. They're important." Which is precisely what everyone who is looking for government money does.
Rather than taking part in the K Street circus of perverse incentives, why not just spend the money on research?
In fact, I would say your model has it backwards -- as a philanthropist, rather than devote my money to a cause, I should coerce/influence politicians with money, so as to compel through force of law other peoples money to flow to that cause.