[Editor’s note: this post has been written by Goran Buldioski and is part of the series of posts developed for the Indonesian Knowledge Sector Initiative. The author is director of the Open Society Foundations’ Think Tank Fund. The opinions presented in this article are solely of the author and by no means represent an official standpoint on behalf of the Think Tank Fund. The views expressed in these publications are those of the author(s) and not necessarily those of the Commonwealth of Australia. The Commonwealth of Australia accepts no responsibility for any Loss, damage or injury resulting from reliance on any of the information or views contained in this publication]
For a long time, core and institutional support has been considered as the holy grail of grant making by grantees and donors alike. These days, donors that provide this type of support to think tanks are far and apart. In this think piece I present, briefly, the main components of core and institutional support to think tanks focusing on the elements that can make this type of support an effective capacity building tool. Then the piece examines different ways to provide more targeted support and thus help think tanks build their capacity faster and better.
Core and Institutional support –what is it (usually)?
Most core and institutional grants I have seen can be broken down into three ‘constituent’ components:
- Sustainability component,
- Development component, and
- Seed funding – incubator of new ideas.
The first component, sustainability, refers to funds that partially underwrite the grantees’ payroll, administrative, technical and other core expenses. In other words this is general budget support that helps the think tanks to operate.
The development component refers to the funds spent on developing the capacity of employees and improvements in the centres’ research infrastructure/methodological enhancement. In addition to issue-related competences, diligent donors will also include support for building/improving think tanks’ communication capacity, management practices, and governance.
The third component, seed funding, refers to the portion of the grant that is directly spent on policy research. Sometimes this serves as match-funding to projects where other donors require think tanks to make their own contribution. Most of the time, however, it is used for drafting analytical products or carrying out activities that others are not ready to support, but that the organization feels very strongly about. These are usually ideas that are yet not attractive to other donors or that the grantee prefers to pilot carefully or design further before scaling it up and applying to project-based donors.
Clearly delineating these three components within a single organization is impossible. For example, a donor may provide 50% of a senior researcher’s salary. Half of this amount could compensate the researcher’s time spent on incubating an idea while the other half could be a sustainability contribution to keep that person full-time (and usually will not be properly accounted for).
Or consider a portion of director’s salary that think tanks routinely charge against the core and institutional support grant. In a hypothetical example one could assume that a core grant covers 20% of her/his time dedicated to management (sustainability component) and 10-20% for developing new ideas (seed/incubator component). Therefore, this distinction is more important as a tracking devise only. It helps both sides to identify and trace the purpose and usage of the support awarded.
There are a number of general organization-related factors that determine if core support will be successful. These include:
- Think tanks are mission-based as opposed to expertise-based. We, donors, are frequently mesmerized by competent experts and analysts and often think tanks play this well, by placing big names on their boards or at the head of the organisations. However, if this expertise is not complemented by a heartfelt vision about the organization and the country or region in which it operates, the think tank in question may be nothing more than a consultancy attracting profitable projects. And while we may have nothing against consultancies, and they can play important roles in the realm of policy research, they are still a poor substitute for a real think tank.
- The level of maturity of the think tanks. This aspect is best reflected in the attention given to strategic planning and overall management. Of course, overdoing it does not bring any good results either. Drawing from the practice of the Think Tank Fund, many think tanks have so far approached the core portion of our grants as a raft to weather difficult times in project funding, rather than as a bridge or highway to further organizational development and move away from this unhelpful business model. The sustainability and maintenance of the organization have often trumped developmental goals even when the latter would have been a smarter long-term investment. As a result, less attention has been paid to improving key components like research quality, communications, and internal management in ways that that would ultimately help an organization succeed in the future. Luckily, gone are the times when donors were eager to underwrite a full operation of a think tank and ask them to focus only on their research. Such a strategy has put many organizations in Eastern Europe at risk not to pay attention about their sustainability in long-term. And no donor is there to stay forever.
- Finding the right balance between ‘the market for policy advice’ and ‘the market for funding’. Surviving in policy environments where decision makers genuinely do not value policy-relevant research is hard. To endure, think tanks must pay a lot of attention to donors too. But some pay too much attention to funders to the detriment of other important actors.(A simple indicator of focus is checking the time spent in research activities, interacting with decision makers as opposed to talking to donors or filling out application forms.)
Similarly, there are a number of key donor-related factors that determine the success of core and institutional grants. Success is more likely when a donor is able to:
- Critically assess when to apply a hands-off style (with mature think tanks) or a hands-on approach (with those think tanks that need advice in addition to the money).
- Determine if the support is allowing a think tank to be sustainable or subsidized. On the latter, at the Think Tank Fund we have detected that several fellow donors who award project funding have been ‘free riding’ on our support. Namely, they decided not to pay for any overhead or administrative expenses, only the direct costs of the research or its presentation, because we were paying for it already. In other words, they put their logos on the final products, while we, the core and institutional donors, have silently subsidized them.
- Discern between grantees that are genuinely concerned with and work towards their betterment and others who pay a lip service as a disguise for maintaining their expensive existence –and exist in a never ending state of capacity development.
Core and Institutional support –the relationship between the grantees and the donors holds the key
Donors who award core and institutional grants, unlike their peers who underwrite projects, have a fuller picture of the organizations they support. Given that most core support commitments last longer than two years the relationship between the donor and grantee, provided it is properly developed, can develop to be trustworthy. This is not to suggest that project donors cannot develop deep relationships with their grantees. It is simply the somewhat discrete nature of project support that is usually short that allows for shorter attention span and focus on a peculiar policy problem and not so much on the overall organization picture. As a donor who gives both types of grants, I could experience and empathise with both types.
This allows the donor to look at the capacity building needs of the organization as a whole and not just focus on separate individual needs as most specialized capacity builders do. However, the many donor-grantee relationships I have been able to experience warn me not to draw too rosy a picture.
There is clearly a negative side to this relationship. For example, some donors rush to bundle their funds with the advice they give or render; and grantees, too often, accept the advice in fear not to lose the funds. Donors must be careful not to fall into the trap of confirmation bias and not confuse acceptance of their ideas with actual agreement.
These are only a few reasons why core and institutional fund has the potential to become a key tool for capacity building, if dealt with caution by both the donor and the grantee.
What are we at the Think Tank Fund thinking about in these days?
To address these challenges and emphasize the capacity building side of our support, the Think Tank Fund is considering how to sharpen its core and institutional funding by transforming it into organizational development grants. These grants will provide support for three specific areas:
- Quality control of research products,
- Communications and advocacy capacity, and
- Internal institutional development and governance.
Instead of applying broadly for institutional support, applicants will be required to present a plan for overall organizational development clearly indicating in which of these three areas they require improvement and how they will implement it. We are also considering tightening the application conditions further by requesting that applicants not only demonstrate the willingness to improve, but also provide a specific plan for improvement and some record that changes in that area have started taking place. Although the grant would continue paying for personnel, technical, and administrative expenditures, it would dramatically limit the eligibility for covering for such costs by requesting they be tied to proposed changes at hand.
For instance, we would be able to pay part of the salary for a communications officer, but not for an accountant or even a senior researcher, if neither works on improving the communications capacity of the think tank. Likewise, much of the support for administrative and other technical expenses not directly linked to the organizational development strategy would no longer be allowed.
We see several advantages to this change:
- Applicants will come to us with a clear sense of what may not working well and a plan for how to improve it; instead of leaving it to us to discover them, sometimes through a series of unpleasant surprises in the second or third year of our funding.
- The level of engagement will be more mature from the very beginning. We now spend a lot of time assisting some grantees in identifying necessary changes, but often paying a high price in staff time. With a few of them we have been unpleasantly surprised when some simply did not see the need or did not set time aside for improvement. In other words, from now on we will work only with the mature and the willing: those who have not only recognized a need but have actually prepared themselves for the sacrifices that change demand.
- It will be easier to monitor the impact of our funding by comparing the ex-ante and ex-post conditions in one or two specific areas.
- Finally, the sharpened focus would enable us to “cut the fat” for peripheral expenditures and achieve the same mission of facilitating organizational growth with less money. The Think Tank Fund would also have the freedom to choose which institutional development component for a specific organization it considers the most important by targeting its funding towards it.
At the same time, sharpening our focus in funding organizational development will not come without tradeoffs, including:
- Our organizational development grants will lose the sustainability component that enabled think tanks to cover administrative costs in the past.
- The changes will eliminate the seed funding that has allowed our grantees to pursue interesting topics or experiment with innovative methods on existing research agendas.
- Finally, think tanks will not be able to use our grants for infrastructural support, like buying or upgrading necessary equipment.
These tradeoffs will have at least two immediate ramifications: either donors operating locally will step-up and cover some of these expenditures, or local policy organizations will have to survive completely on project grants by increasing their prices per unit with fewer funds to spare on broader investment in their organizations.+
Balancing the benefits and trade-offs, we hope to turn our core grants into development vehicles. This will have effects both on the grantees and the donor. In the absence of other donors providing core and institutional support in Central and Eastern Europe, the grantees will be forced to ‘adequately price’ their work. This is a feasible proposition even in difficult environments for policy analysis such as the Western Balkans and the South Caucasus. Similarly, the donor’s staff will have to hone their skills –they will now be both grant issuers as well as immediate advisers. The money and the advice will go hand in hand and will reinforce each other instead of the money always preceding the advice, as it was the case with the core grants.