The one billion dollar business: American think tanks

12 December 2014

In his book, The Argument (which is definitely worth a read), Matt Bai suggests that the Republican Party ‘invested’ about a billion dollars in over a decade in think tanks and other policy NGOs to win over the US government after in 2000. They had funded the development of a “killer argument” that won over the voters. This idea was adopted by the Democrats who, armed with their own backers in New York and California, unleashed a funding machine to develop an argument of their own.This saw the rise of new (and old) think tanks.

USD1 billion for the US Government? A bargain.

Well, Transparify has put together data for 21 of the leading think tanks in the United States and, as it happens, a billion isn’t that much after all. In 2013:

  • The total annual revenue for these 21 think tanks amounts to USD1.077 billion
  • Total assets of these 21: USD2.650 billion.
  • Number of staff: 7,333 and of those 1,417 make over USD100k.

Of course, this paints a rather general picture. Most think tanks in the US, even these large ones, are of a rather ‘normal size’ (the fancier diagrams have been put together by Jeff Knezovich, the others by me (the one on productivity) and by CGD. If you want to learn how to do these (Jeff’s) then visit On Think Tanks Data Visualisation):

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Screen Shot 2014-12-11 at 00.18.19Employment levels in 2013

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But size isn’t all that matters. How efficient are these think tanks? One way of looking at this is to analyse the productivity of their staff:

rev per employ

When it comes to staff ‘financial’ productivity, then, the tables are turned a bit. RAND is no longer at the to of the list. But why is this? Who are GMFUS? Why are their staff so much productive (at least according to this analysis) than the NBER?

GMFUS is the German Marshal Fund of the United States. Its annual budget in 2013 was USD44 million but a not insignificant part of its revenue was destined to be spent on grants. This could explain the high level of income per employee. At the same time, so could the kind of international work this think tank undertakes. The National Bureau of Economic Research, on the other hand, is a much more academic kind of organisation. Its researchers come from universities across the US and therefore incorporates individuals whose role is not to directly generate income for NBER. Maybe NBER’s non-permanent staff should not have been included in the analysis.

Judging a think tank by the numbers alone is a rather delicate matter. Financial productivity doesn’t matter much for think tanks. It is intellectual productivity what matters. A similar set of think tanks has been analysed by The Center for Global Development looking at their online influence.

They consider other sets of data:



RAND and the German Marshal Fund who topped the lists above now do not seem to do very well. In fact, Cato Institute and Pew Research Centre are on the bottom half of the revenue, assets and employees tables. The Cato Institute, in particular, comes across as super unproductive in revenue generation per employee. But its quite the opposite when it comes to visibility The Peterson Institute for International Economics show a similar patter: small in terms of money and staff but rather big in terms of visibility.

Even Brookings, with its huge assets isn’t as visible as smaller think tanks. Yet, according to global perception it is the top think tank in the world. So numbers, about money, people, and web hits and citations matter, but not as much as perception. If people think that a think tank is the best then, well, maybe it is.

But then we know perception can be deceiving.

Being a top think tank has to be about more than being large, being profitable, or just being popular.

The diagrams above, though, do paint an interesting picture of the make up of the larger American think tanks. And the point that Transparify makes rather well is that we can have this conversation because this information is easily available.

You can find these and other analyses here: The financial and employment health of the top 21 US think tanks based on the data collected by Transparify.