Think tanks and the private sector: opportunities and challenges

12 July 2019

[This is a summary of the sixth working paper of the Working Paper Series, “Think tanks and the private sector: opportunities and challenges“].

Engagement with the private sector is increasing for think tanks across the world, and while some have been doing it for years, for others it is a new practice (particularly for those in low- and middle-income countries). Working with the private sector is a good funding source (especially in the currently changing funding environment), but the practice has its detractors (see article by Judis, 2017), as well as its challenges and risks, especially the risk of credibility loss. 

Despite the increasing prevalence of these collaborations there is little known about how they happen. To cover this gap this scoping paper seeks to address how and why think tanks engage with the private sector, as well as the challenges they face in doing so. This will enable a better understanding of the opportunities of engagement, take advantage of them and help think tanks understand the risks involved and protect themselves against them.

To do this, this study first reviews existing literature on the relationship of NGOs and Universities with the private sector, as they began engaging with companies and corporations earlier, and their experiences can serve as examples to emulate or practices to avoid. Both for universities and NGOs, the most important motivation for collaborating with the private sector is access to funds, but other strategic and stakeholder reasons are important as well: access to specific resources, commercialization opportunities and the possibility of reaching other actors. On the other hand, the private sector works with NGOs mainly for public relations and marketing (stakeholder reasons), and to improve the context in which they operate (strategic philanthropy), while collaborations with universities are mostly sought after by companies and corporations for the services and resources they can provide (research outputs and expertise).  For both the main risks are loss of self-determination and loss of legitimacy and credibility towards their audiences.

The interviews conducted for this study (9 think tankers and 13 expert informants) showed that think tanks engage with private sector actors around governance issues, funding and resources, and stakeholder communications. In relation to governance, private sector actors are found to be founders of think tanks, board members, or members of advisory boards (either on a personal basis or representing their organisations). Additionally, in terms of funding and resources think tanks receive non-ear-marked donations from businesses, grants for specific projects, in kind-resources or undertake consultancies. Finally, engagement also happens around stakeholder matters, as private sector actors can be providers of access to other actors and contacts, actors to be consulted in the research process (as experts, advisers, or to provide data), or actors to be informed about the results.

Thus, the main motivations for think tanks to work with the private sector are greater than securing funds and resources (strategic drivers). For some it is also ingrained in their organisational setup as they were founded by corporations or businesspeople or have had them as board members since their inception. Finally, stakeholder engagements are also a key motivation, and private sector actors are consulted during research projects (when they are seen to have expertise) and they are also audiences to inform, providers of access to other actors, and finally an avenue for increased impact. 

Companies and corporations seek think tanks for strategic reasons that include strategic philanthropy, research outputs, advice and expertise, and a way to engage in key debates. Think tanks are also sought for stakeholder engagement mainly for public relations and legitimacy, as the credibility of the think tank validates companies and corporations to certain actors.

The main funding arrangements with private sector actors found were monetary donations, membership fees, grants, consultancies and in-kind support.  But each think tank has specific parameters to manage this, which serve to control the influence of the funder.

Establishing a relationship with the private sector was mentioned as challenging by interviewees, the main reason cited for this was poorly developed philanthropic sectors. Another difficulty most struggled with was convincing actors of the value of a think tank’s work and funding research, as most companies were interested in supporting more tangible charitable actions. Additionally, the nature and focus of a think tank’s work, which sometimes criticises private sector practices made relationships difficult. Moreover, connecting with private sector actors is a struggle for some, as they don’t usually participate in the same spaces, while for others connecting is not an issue as they have several lines of communication (e.g. board members and councils).

The main risks found for think tanks that collaborate with the private sector echo those of NGOS and universities: risk of losing their self-determination, and stakeholder and reputational risks. Think tanks risk losing their self-determination as a result of resource dependency, as access to funds and resources is the most important motivation for engagement. This can lead to funders influencing their research agenda or research methods, shifting it to their own interests or ideological line. Additionally, reputational risks for think tanks exist because a strong connection with the private sector can affect their ability to connect with other actors, but also because specific actors have themselves legitimacy issues, and engagement with them will affect their reputation in general and their ability to challenge certain practices and policies

As boundary organisations, think tanks occupy several spaces and navigate economic, academic, political and media fields (Medvetz, 2012). But engagement with different actors entails extensive relationship management not to be drawn to much into one space and losing scope in another, as well as safeguarding their credibility. Both risks identified have the potential to affect the credibility of the think tank and their ability to engage with other actors, so they should be dealt with care for think tanks not to lose their scope of action in other fields.

To address these challenges and protect their credibility, organisations engage in several strategies. Most importantly think tanks aim to control funding sources and mechanisms, namely controlling the type of funding they accept, avoidance of specific funders, revenue diversification, and incorporating clear specifications when undertaking consultancies, and more generally in their agreements. They also strive to maintain a strong intellectual independence by having strong and clear research agendas and limiting funder engagement in the research process. Additionally, being transparent helps protect their credibility when research quality is contested. Finally risk and due diligence assessments processes and policies are established to evaluate partnerships, the extent of this greatly varies, with some organisations having established very clear processes to others doing it in an ad-hoc basis.

Addressing these challenges gives way to interesting engagement opportunities. And to capitalise on them, think tanks need to first acknowledge the different ways in which they can (and want to) work with the private sector and the benefits to be gained by both actors. Most importantly think tanks needs to understand why they are attractive to specific actors and what they are willing to offer. To do so, they should research potential partners to be able to capitalise on the aspects that make them attractive, while also strengthening their position when negotiating agreements so that their self-determination is not lost, nor their credibility tarnished. The key strengths in which to build the strategies are the legitimacy and credibility that think tanks can provide, as well as research outputs, specialised knowledge and expertise (akin to universities). Capitalising and strengthening these assets can increase their leverage when engaging with the private sector, paving the way for a more equal relationship in which both benefit.

Finally think tanks needs to work on better explaining to private sectors actors what they do, why do it and how they contribute to the development of their country as well as to specific actors: they need to be better at explaining their impact.

Read the paper.