How COVID-19 is affecting funding, and what think tanks and donors can do about it

6 May 2020
SERIES COVID-19 25 items

Many large donors have responded to the COVID-19 crisis by introducing new funds to support COVID-19 related research or sought to make existing funding more flexible. Initial findings from our survey of think tanks has identified both these actions as a great help for many. However, as think tanks begin to look beyond the initial crisis response, to concentrate on recovering and rebuilding, things don’t look as promising.

This article provides a brief reflection on initial findings on financial worries that think tanks have reported so far in the COVID-19 think tanks survey. We will study them in greater detail as more information becomes available.

Drawing on these initial findings, we conclude that hard funding decisions and new funding models will have to be explored if we want think tank communities to resist in the short term, and re-emerge strengthened in the long term.

To join the conversation, please join the OTT COVID-19 initiative.

More funding, but only for a few think tanks

The first concern we have identified among some thinktankers is that, while they have welcomed responses from many large foundations and policy research funders, most of the new resources on offer are being channelled through existing contracts or invite-only calls.

This approach makes sense in the short term. Funders need to act fast and offer an immediate response. Working with organisations that they know well, or that they already have a funding relationship with, is a sure way to do so.

However, the medium- to long-term effect of this is that think tank communities will potentially lose their least resilient members. So far, over 30% of respondents (n=100) think that ‘Most [think tanks] will suffer big setbacks – only a handful will do well.’ Another 43% expect there will be some setbacks, and close to 10% think that they will suffer greatly – some believe they may even have to close down or downsize significantly.

This is an extreme situation of what is in fact common across think tank funders. Both development and political funders tend to work with a few think tanks, and grants and projects tend to roll-over into new grants and projects. Over time, this has created very unequal policy research communities across the world, in which a few centres tend to receive most of the available resources (funds, experts and access).

In some cases, this inequality, combined with the effects of the crisis and the exclusive approach followed by some funders, may lead to the significant shrinking of policy research communities. This would result in a negative outcome for all.

In the months to come, funders may have to consider how to broaden their networks and find new organisations to support in the policy research communities that they fund. This could involve:

  • Making collaboration with other organisations a condition for funding, as a way to introduce funders to new grantees.
  • Funding networks rather than individual organisations as a way of reaching more think tanks without necessarily increasing the administrative burden of funder programme officers.
  • Proactively generating more data on think tanks, such as through the Open Think Tank Directory, to make it easier to make informed decisions.
  • Providing more ‘beyond the dollar’ support to think tanks, such as national, regional and global conferences, training and resources.

More funding, but only COVID-19 related

As a funder, we see pressure from our funders (governments, philanthropies), to re-direct attention to COVID-19 related research immediately.

Not all think tanks are able to respond quickly to this new demand. And the inequities we refer to above have practical implications. Smaller and less well-resourced think tanks have found it harder to move on-line, re-focus their agendas, mobilise the support of their boards, respond to COVID-19 related research calls, or undertake necessary adjustments to their strategic plans.

Smaller think tanks also tend to be focused on one or two issues over the long term. Losing them, if they are unable to sustain their business models over the next year, would mean losing critical expertise in areas that will no doubt regain relevance as soon as the current emergency subsides.

Funders should consider their portfolios carefully. Some funds should be directed not at new research or achieving impact, but simply at keeping programmes or think tanks open for the remainder of the crisis.

Flexibility, but no income to cover running costs

Many funders’ initial response was to relax the terms of their grants or contracts with think tanks. They recognise that many will find it hard to deliver their projects on time – or to the expected standards. For example, qualitative research, especially involving fieldwork, has come to a halt.

Some activities required in person activities or field work, [that we are] unable to perform due to the mobility restrictions. Research activities, such as interviews and presentations also show difficulties.

Major projects with data collection and outreach are cancelled.

Several survey respondents reported that their funders have agreed to put their projects on pause, allowing outputs to be delivered later in the year – or even later in 2021 – when social distancing policies may be lifted and research can resume.

Unfortunately, this does not address the cashflow problems facing think tanks. Pausing a project also means pausing payments until the project can resume. In the short term, think tanks are without the income they need to pay for staff, rent, utilities, etc.

The solution is not as straight forward as asking funders to advance payments on paused projects. If the outputs are to be delivered later on, then researchers will still have to work for a project that is generating no income. So, in essence we are simply kicking the problem into the future.

Funders might have to consider some drastic options:

  • Writing-off funding to think tanks and accept that certain projects will never be delivered.
  • Increase budgets on existing projects if they want them delivered later on.
  • Ask grantees to redesign their projects or come up with new ways of using the funds in the short term (so funds do not simply pay for staff to sit at home). This will demand some creative-thinking on the part of think tank leaders and managers, who should consider how to reallocate funding across the organisation and not simply on a project by project basis.

Most think tanks are not funded by flexible large donors

Most think tanks are small and exist on small grants or project funding from sector specific funders or relatively small foundations. These include: government programmes, programmes in bilateral or multilateral agencies, private sector social corporate responsibility initiatives, corporate donations, small family foundations or donations from individuals.

The largest challenge, as an organisation that is supported almost entirely by small to mid-sized private donors is with financial uncertainty.

Many of these funders will have seen their resources reallocated towards the COVID-19 response and may not be able to make additional funding commitments for the rest of the year, or even 2021.

Small foundations and private donors are also likely to be experiencing significant losses to their endowments and won’t have the same funds available to support think tanks.

It will be easier for think tanks with a few large funders to communicate and negotiate with them. It will be much harder for those with upwards of 20 different funders at any given time.

Furthermore, many think tanks in developing countries depend on public funds. And unfortunately, the public purse is under stress everywhere.

The government makes up a great bulk of our yearly activity [funding]. As priorities on public spending changed with the pandemic, delays have become frequent in the payment of activities that we have undertaken; this highly constraints our financial resources.

We know think tanks have started contacting their funders to explore how to manage existing projects. But we understand most of this has taken place bilaterally. This may be an opportunity for some think tanks to create connections between their funders (public or private).

Both long term funders and members of think tank boards can, and should, step-up to provide support to the executive directors by acting as conveners of these meetings between funders.

In this context it is critical that think tanks are able to manage their finances at an organisational level, because even a single project could tip the balance in favour of bankruptcy.

Even large donors are reducing their funding in the medium to long term

Think tanks experience this reduction in three ways: First, some are being excluded from new funding that donors are mobilising to respond to the crisis.

Second, funding to respond to the crisis is being drawn from other portfolios and as a consequence many think tanks have seen opportunities for funding for their long-term agendas dry-up:

[Our] funds come mainly from research and study projects commissioned by institutions such as the World Bank, UNDP, CODESRIA, CREA, etc. COVID-19 resulted in a slowdown in calls for applications and the suspension of certain activities such as conferences and seminars. [Our] researchers will not be able to take part in these activities, which enabled them to have an income.

Third, additional funding today is translating into less funding in the future.

[We] expect to see the negative effects in 2021 when the donor completely shift their funds to COVID-19.

Most of the announcements made by donors have emphasised the short term. Centres feel reassured about donor commitments as they deal with the crisis response, but there is a lot less clarity about what will happen as they rebuild and prepare themselves for the future.

We would recommend greater transparency and engagement on funders’ medium- to long-term plans, including:

  • Convening grantees to help design medium- to long-term plans, including involving them in developing possible scenarios or identifying trends to inform plans.
  • Sharing information about funders’ contextual and organisational constraints (e.g. about their financial situation, the limits imposed on them by their mandates – there are things that foundations, international agencies and governments will simply not be able to do).
  • Updating grantees about the different funding windows and mechanisms as soon as they know about them so as to help them prepare for when they become available.

Few think tanks have been included in government support or stimulus packages

Think tanks across the world fall outside governments’ efforts to support small and large businesses to weather the crisis. 62% of respondents so far have reported that their sectors have not been considered in their governments’ support policies.

In fact, civil society in general appears to have been left out of initial crisis responses. Governments have taken measures to rescue small businesses but not NGOs. Loans to help small- and medium-sized businesses cover their payroll in the medium term are out of reach for NGOs that are unable to meet banks’ lending conditions.

It may fall on the few think tanks that have benefited from additional support to speak out about this oversight. Policy research organisations are only one of many types of civil society organisations that offer the most vulnerable a host of services of increasing importance during this pandemic.

In the global South, and in particular in countries where foreign aid accounts for a significant portion of public sector spending and think tank support, it may fall to international funders to either develop think tank support packages of their own, or encourage governments to do it.

For funders, certainly, the next year should focus not on influencing policy but sustaining and strengthening the institutional framework that supports civil society.

A long-term focus on think tank communities is needed

This initial survey analysis suggests that think tanks are facing important challenges in the short, medium and long term. While some funders have responded and offered their grantees a welcomed breathing space, new challenges are emerging quickly. These challenges will require new ways of thinking about how funders support think tanks.

In our view, this calls for a focus on think tank communities rather than individual think tanks. This may include working with think tank networks, funding organisations that offer support to think tanks, advocating for greater public support for civil society organisations and academia, or even convening and nurturing spaces for think tanks to come together and help each other.

It also calls for a long-term commitment to think tank communities as individual organisations respond to the crisis, rebuild their organisations and reinvent themselves to ensure they are better prepared to deal with future crises.

Policy research centres themselves will need to rethink their business and funding models before they are able to engage meaningfully with their current funders. Calls for ‘more funding’ are quite valid but won’t take think tanks beyond the short-term crisis response. Soon, those funds will dry-up again and new calls will be necessary.

Finally, even those think tanks that are doing well out of the crisis should consider the overall health of their communities and focus as much of their attention to supporting their peers. Weak policy research communities can only sustain weak think tanks.