How to fund think tanks? A few questions that may help decide

19 February 2014
SERIES Funding for think tanks part one: domestic funding 16 items

“Who to fund, what to fund, and how to fund” are questions that think tank funders ask themselves all the time; but not necessarily in sequence. To answer these questions however, we must first ask another one: who are these funders?

We need to differentiate between at least two types of funders of think tanks in developing counties (these are simplifications, of course, but may help with the argument).

  • First, there are the funders that fund think tanks to ‘do their own thing’. In other words, funders who, having seen what think tanks are doing, and liking what they see, fund them to help them do more of what they do or to do new things they (the think tanks or the funders) would like to do. These are often domestic funders and are members of the same policy communities that the think tanks belong to. (But they are sometimes foreign funders who contract or sub-contract the think tanks to carryout specific projects -sometimes on their behalf.) These funders do not ask much more from the think tanks they fund than that they perform, at least, at the levels that caught their attentions in the first place. Countries with more mature political elites such as Mexico, Chile, Brazil, India, and China have these kind of funders. Sometimes, foreign political foundations play this role, too.

So logically, the first group should focus on think tanks that they, at least, perceive to be sufficiently competent for their needs and interests; and the second group on think tanks that they, at least, perceive to be in clear need to reform.

Most importantly, these two groups should not be confused and should not be mixed up together. If a think tank is funded to ‘do its own thing’ it should not be also expected to do things differently. If it is funded to carryout a project it should be trusted to do it properly -otherwise, the funder must question its own competence: why did it fund or hire an organisation incapable of fulfilling its commitments in the first place? (This does not mean that you could not use a research project as a capacity development opportunity, but expectations on the quality of the research outputs should be adjusted accordingly.)

On the other hand, if a think tank needs to reform -to improve- then funding should be focused on reform. Expectations that, as well as improving its management, research and/or communications, the think tank should influence policy successfully, for example, are utterly irrational. It is equivalent to being expected to get top grades on an end-of-year test at the beginning of the term.

In the real world, of course, think tanks need to ‘do their own thing’ while also ‘develop their competences’. They cannot wait until everything is perfect (in fact, learning by doing is an excellent way to develop capacity: see the case of PMRC in Zambia.) This simply demands clarity and adequate expectations. Think tanks should be funded in full knowledge of what they can and cannot deliver. There should be no shame in accepting that one is not as good as one could be (this is another reasons why McGann’s popularity rankings are so dangerous -they hide the nuances of the ‘quality’ of a think tank and may lead some to think that being well known is enough.)

There is another aspect to the question of who the funders are and that is what the funders are capable of? Many of the shortfalls one sees in terms of think tank funding have to do with funders’ own limite capacity. Few have the teams needed to deliver all they would like to deliver, many are burdened by their own bureaucratic nightmares (few funders have been set up to fund think tanks only), and all are still learning to do this.

So, to answer the first question, who should funders fund? we first had to ask who the funders are and what they want. If they want to inform or change agriculture policy, for example, they should fund the best agriculture policy research think tanks. But if they want agriculture policy research think tanks to be better at what they do then they should fund the ones that need to be better at being think tanks. Not the ones that are already pretty good.

But funding think tanks is not enough. If a funder wants to change agriculture policy it needs to think about who and what else is needed. The funder may want to consider funding trade unions, lobby groups, universities and scientific research institutes, the media, etc. It would be wrong to assume that a think tank on its own (or think tanks on their own) could change policy. This is the idea behind the whole sector modelthat some donors are now pursuing.

Similarly, if the funder is interested in improving the performance of think tanks it needs to consider the environment in which this performance can be improved. It may need to support others too: management schools, universities (from where future researchers will come from), the media and NGOs (to be better users of think tanks’ work), local philanthropic organisations, etc.

What to fund? then, may be easier to define. The first group of think tanks (the ones who are doing alright) will be able to define what needs funding better. They will be able to put together funding proposals that cover their organisation’s real costs -they may even identify what they may have to improve and plan accordingly. The funders should be able to challenge them on their proposed budgets and even haggle a bit. The think tanks’ reputation will go a long way in defining who gets the most out of this process, but this is a reputation that should be earned.

The second group may pose a bigger challenge for funders. Funders will have their own views of what the think tanks need -or may have their own ideas of what their own comparative advantage, vis a vis, other funders is. They may be limited by their own mandates to fund research capacity or communications and outreach. Or they may be more flexible and attempt to cover all the basis. In my experience, when funders rely on contractors to deliver their funding and support they open the door to a kind of moral hazard in which the contractors identify and highlight needs that they can address hence securing more work for themselves, while minimising and dismissing needs that they do not know who to meet or that they are not interested in.

In any case, funder should avoid funding everything -just for the sake of funding everything. My advice is that they fund what they are good at. They ought to look at their own organisations, at their funding history, at their own domestic think tanks (e.g. British, Australian, Canadian, American, Japanese, etc.) and decide what is it that they are particularly good at -not what their consultants say they can tell others about but what what they are, objectively, good at.

This ‘focus-on-what-you-know’ approach is important because support is never just about money. Money is really only a way to open the door. The real intervention is in the ideas that will be shared in the process; and ideas are best shared by people.

And funders should not worry that their support is not covering all the bases because this is not something they can  (or should) do on their own. This needs to be a multi-funder effort.

And so to the question of how to fund?

The first groups of donors and think tanks have it relatively easy: grants or contracts. Funders can provide an organisational grant or an initiative grant or a project/consultancy contract. These grants/contracts should not include a separate set of indicators that the think tanks are expected to monitor and report on. If the funder funds the think tank under this category then it should do so under its own risk. It the funder does not think that the think tank is sufficiently competent or reliable, and it is not the kind of funder that is interested in developing their capacity, then it should demand that the think tanks gets its act together before requesting its funds.

Funders of these think tanks should not worry too much about harmonising their grant/contracting rules, either. Their grantees should be capable of managing multiple grants. But it would be expected that these would not be too burdensome -and should be, at least, adequate to the local legal context. They should also avoid funding via intermediaries that change the nature of the relationship between funder and think tank. For example, many funders provide funding via private sector (for and non-for profit) contractors who introduce legal, financial, and commercial complications to the relationship. In many cases these intermediaries introduce potential or real conflicts of interests for the think tanks.

Funders should not shy away from making their national, ideological (values) or partisan allegiances known; and think tanks should not shay away from them either. We all know they have private economic and political objectives; denying them only looks silly and makes them more, rather than less, suspicious.

Foreign funders in particular should consider how their funding can be used to leverage domestic funds of this kind. Can then fund via domestically governed research funds? Can they establish partnerships with local foundations? What about funding think tanks to study and seek to reform the local philanthropic scene?

The second groups of funders and think tanks, on the other hand, face multiple challenges. To begin with, funders need to be careful that their funding mechanisms do not create extra work for their grantees. There are cases of think tanks hiring a new staff member only to deal with a single funder.

Funders, too, need to choose the right mechanism for what they want to fund. Developing research capacity and improving an organisation’s governance are very different things. Should they be funded/supported by the same funding mechanism?

In some cases, funding should be given to the think tanks directly; in others, an umbrella organisation, a service provider, or a completely different institutions (e.g. the media, universities, etc.) could be more appropriate recipients and users of the funds.

How to fund will also depend on the relative capacity of the organisations themselves. Some may be capable of managing a staff development programme -others won’t. Some may be capable of contracting expert services -others won’t. Some may be capable of including other organisations in their capacity development efforts -others won’t.

Just as in the case of the first groups, the funders ought to be ultimately responsible of the adequate use of the funds. If they fund an organisation incapable of procuring competitively priced services they should not be surprised by funds mismanagement. I know of cases where think tanks with no financial management capacity have been given hefty sums of money to improve their financial management capacity -among other things.

Equally, though, think tank need to be responsible for their commitments and must acknowledge their limitations. There is no shame is asking a funder to appoint a third party to manage funds for them or to manage the delivery of the services the organisation needs.

A sub-question of the how to fund question is: for how long? The popular thing to say is that long term funding is better than short term funding. But this, of course, depends on who funds, who is funded, for what, and how. We could therefore imagine a number of appropriate options (such as):

  • A one-off grant
  • A long term (e.g. 4 years) grant, renewable every year (or more)
  • A grant for a specific initiative (proposed by the think tank)
  • A short term or a long term contract to deliver a specific service
  • A short term grant to improve one or more aspects of the organisation (which could be provided per issue or to address all issues)
  • A long term grant to address a number of organisational challenges over a long period of time

More interestingly, funders should consider how their funding can be used to develop the sector further, for instance by testing the resilience of the organisations they support or fund and their sectors (this is an idea taken from Goran Buldioski who is always thinking of new ways to improve think tank funding). Foreign funders from the first group, in particular, could:

  • Demand increasingly higher shares of domestic funding -to match theirs; as a way of encouraging think tanks to reduce their dependence on foreign funds.
  • Introduce ‘funding gaps’ into long term think tank funding -e.g. year 1 yes, year 2 yes, year 3 no, year 4 yes; to encourage think tanks to plan for a rainy day and test their resilience.
  • Encourage cooperation by funding through shared funding mechanisms -for instance a shared reserve and emergency fund.
  • Incorporate a political variable into their funding cycle -mimicking the funding cycles of domestic funders in developed countries that often increase and reduce their funding to think tanks in accordance to political cycles; thus encouraging think tanks to adapt their strategies to match local political cycles, increase their organisational flexibility, and find it easier to work with local funders in the future.

Funders interested in developing think tanks capacity could also:

  • Include a ‘no seconds’ clause in their grants or contracts -meaning that a think tank may only be allowed to ask for funds to develop their communications capacity once; thus avoiding the ‘never-ending capacity development processes’ that some think tanks are involved in.
  • Demand that any such grant or participation in a capacity development project be published in their websites; to avoid think tanks asking for the same thing to other funders.
  • Promise successful grantees to use them as mentors or experts in future capacity development efforts -so once a think tank has demonstrated it has learned a lessons it could profit from sharing it with others; as a way of encouraging think tanks and their staff to ‘graduate’ into the category of think tanks that do not need to be supported to change or improve.
  • Consider grouping think tanks together not by region or country but by level of competence or organisational development need -who is to say that all Peruvian think tanks need to learn together? Why can’t one learn with a Zambian think tank, one with an Indonesian one, and one with a Serbian think tank?

More than a list of things to do, I hope this post presents a list of questions to ask. They may end up with an entirely different portfolio of funding mechanisms but, at the very least, it will be more think tank-appropriate.