Last week, during the OTT Conference 2026 in Rabat, Morocco, I co-convened a session that explored a challenge that many think tanks know too well: how to navigate complex and often strict donor requirements in an increasingly constrained funding environment, while protecting organisational sustainability, autonomy and mission delivery.
The session was titled “Navigating Funder Requirements on Budgeting: Facilitating Collaboration Between Think Tanks and their Donors”. It brought together think tank leaders, finance professionals and donors to reflect on budgeting, compliance and implementation. I had the pleasure of co-convening it with Bryan Schwartz, Director Institutional Advancement at CGD, Gabriela Suárez, Executive Director at FARO, Anne von Au, Policy Advisor | Knowledge for Transformation in Africa at GIZ and Jenny Lah Trust, Accountability and Inclusion Collaborative Advisor at TAI. By the way, thanks to each one of them for accepting my invitation to co-convene this session, which I enjoyed very much.
Budgets were the entry point into a much bigger issue: how funding systems shape the way think tanks organise themselves, make decisions, manage risk, relate to funders and sustain their missions over time.
A key premise — reflected in On Think Tanks’ broader work — is that funding conditions are not neutral administrative details butstructural forces that shape organisational behaviour, incentives and even institutional design. Funder requirements influence how budgets are constructed, negotiated and implemented across different funding relationships.
Crucially, as Gabriela Suárez pointed out: funder requirements can affect think tanks missions!
A key resource for the session was a public tool developed by On Think Tanks to map funder requirements and restrictions. The tool aims to improve transparency and shared understanding of funding systems. It is public and will continue to be updated as they evolve.
Funder restrictions shape organisations
Funder requirements have a direct effect on organisational design and sustainability, internal operations, decision-making and risk distribution.
Complex contracts and subcontracts often shift financial and operational risk down the implementation chain. Organisations are expected to absorb administrative, coordination and compliance costs that are not always explicitly recognised or funded.
Indirect cost gaps, rigid budget lines and reporting-heavy systems constrain long-term planning, staffing decisions and institutional investment. These pressures also generate a significant administrative burden, diverting time and resources away from core research and, more importantly, away from the mission.
This burden becomes especially difficult when reporting requirements and audits come into play. More often than not, the same funders that require complex compliance systems do not fully fund the real costs of meeting those requirements.
This has direct implications for how think tanks structure staffing, partnerships and delivery arrangements. A budget is never just a budget. It reflects assumptions about power, risk, responsibility and value.
This is why budgeting should not be treated only as a financial exercise. It is also a governance process and, in many cases, a negotiation about power within the funding relationship.
Funder restrictions shape organisations – sometimes for the better
However, not everything is bad news. Funder requirements can also raise the quality of operations. As Denis Foretia from Nkafu Policy Institute mentioned, and as I have discussed many times with Enrique Mendizabal, OTT’s Executive Director, funder requirements can prepare organisations to up their game, face different environments and work with different types of funders.
They can strengthen internal systems, improve financial discipline, encourage clearer processes and support better organisational prioritisation. They can also help organisations understand themselves better, which is key to defining boundaries: where flexibility is possible, where it is not, and where we need to draw the line. Knowing our organisations better is something we, at OTT have been pushing for a long time and have included a specific financial budgeting workshop within our School of Think Tankers (applications are open for 2027 edition!) and will be soon as part of OTT’s Membership Programme.
These negatives and positives, reflect a long-standing OTT finding: there is a persistent gap between funding models and organisational needs — a gap we are trying to close. But while this happens, we still need to work together to navigate it.
Key ways forward
First, timing matters. Many implementation challenges arise when assumptions about costs, staffing or eligibility are clarified too late in the process. Early conversations help align expectations, reduce friction and improve the quality of budget design. They also strengthen relationships.
One clear solution is for think tanks to invest in stronger financial narratives. Spreadsheets are necessary, but they are not enough. Organisations must be able to explain why institutional costs matter, how they generate income, why operational profits are necessary, etc.
Finance, communications, coordination, leadership, learning and administration are not distractions from the mission. They are what make mission delivery possible.
This requires a shift from a narrow “cost recovery” mindset towards a broader understanding of organisational sustainability.
Second, think tanks need to adapt to increasingly complex funding environments. Compliance requirements are growing, donor expectations are fragmented and organisations are often expected to adapt to multiple systems at once.
Many of these changes are not random. Funders also operate within constraints — political mandates, accountability frameworks, institutional rules and internal pressures. As Anne von Au reminded us, understanding these constraints is essential to navigating funding systems more effectively.In response, some think tanks are strengthening coordination between finance and programme teams, improving internal budgeting and compliance systems, centralising proposal review processes and sharing practical budgeting strategies across peer networks.
Finally, better funding relationships require both sides to be more transparent about what is possible, what is difficult and what needs to change.
Relationships based on trust are the core strategy
Ultimately, the issue is not only how think tanks comply with donor requirements but how think tanks and funders build relationships that make sustainability, autonomy and mission delivery possible. The first step is to open conversations.
Tools, templates,guidance for better budgeting, budgeting systems and rules matter; but are not enough.
The key message emerging from the session is that one message stood out clearly: navigating funder restrictions is fundamentally relational, not purely technical or transactional.
I expected this to emerge as a key takeaway – and I am very happy to see it – especially because it is often underestimated when dealing with funding agreements.
Getting to know funders, engaging with them early, maintaining continuous dialogue and building trust with both programme and finance teams is essential. Many of the most difficult budgeting challenges arise when organisations hesitate to ask questions or assume that requirements are fixed and not open to discussion. Therefore, investing in getting to know your funders, engaging with them early, maintaining continuous dialogue and building trust with both programme and finance teams is essential.
Funding relationships are shaped not only by formal rules, but also by interpretation, trust and mutual understanding. Think tanks and funders often operate with different expectations, different constraints and even different languages. This leads to mMisalignment can easily emerge in budgeting, implementation and reporting.
On the other hand, when relationships function well, they enable practical adjustments such as:
- Clarifying definitions of eligible costs;
- Negotiating thresholds and reporting expectations;
- Adapting internal staffing structures while adjusting budget presentation; and
- Aligning proposals more effectively with donor priorities without compromising mission.
As relationships are built, the fear of losing funding starts to fade. Participants agreed that this matters. Fear often prevents organisations from asking important questions, challenging unrealistic assumptions or explaining what it really costs to deliver quality work.
And in this case, the fear is – or should be – unfounded.