{"id":475,"date":"2015-11-30T21:16:27","date_gmt":"2015-11-30T21:16:27","guid":{"rendered":"https:\/\/onthinktanks.org\/?p=475"},"modified":"2015-12-05T14:34:09","modified_gmt":"2015-12-05T14:34:09","slug":"rarely-discussed-yet-critically-foundational-business-model-among-indonesian-think-tanks","status":"publish","type":"post","link":"https:\/\/onthinktanks.org\/articles\/rarely-discussed-yet-critically-foundational-business-model-among-indonesian-think-tanks\/","title":{"rendered":"Rarely discussed yet critically foundational: Business Model among Indonesian Think Tanks"},"content":{"rendered":"

[<\/em>Editor\u2019s note: This post was written by Ashari Cahyo Edi, Research Associate at\u00a0Institute for research and Empowerment<\/a>\u00a0(IRE) and Lecturer at\u00a0Department of Politics and Government<\/a>,\u00a0Gadjah Mada University and Leandro Echt, consultant of the\u00a0Centro de An\u00e1lisis y Difusi\u00f3n de la Econom\u00eda Paraguaya<\/a>(CADEP) and member of the On Think Tanks and Politics & Ideas\u00a0teams, after a round of presentations of their study on think tanks in business models in Indonesia. The study is one of the projects developed under\u00a0The On Think Tanks Exchange<\/a>.]<\/em><\/p>\n

In the business world, designing and re-examining business models is a must. Indeed, innovation in business models is seen as a way to be leading producers of novel products and services. However, the business model is as important to\u00a0think tanks as it is to any other enterprise.\u00a0Ralphs (2011) defines a business model as\u00a0\u2018the manner by which the think tank delivers value to stakeholders, entices funders to pay for value, and converts those payments to research with the potential to influence policy\u2019.<\/em><\/p>\n

Our study focused on\u00a0eight dimensions of think tanks business models<\/a>:<\/p>\n

    \n
  1. Value proposition,<\/li>\n
  2. Core business activities,<\/li>\n
  3. Governance,<\/li>\n
  4. Funding structure,<\/li>\n
  5. Leadership,<\/li>\n
  6. Staffing,<\/li>\n
  7. Financial management, and<\/li>\n
  8. Communications.<\/li>\n<\/ol>\n

    This approach allows to address each dimension by looking at the interdependence between them. For instance, think tanks are concerned about raising more funds, but how often do they think about the implications of their funding models on their research activity? How many times do we see them covering a broad set of activities (from research to capacity building) without hiring (or having the capacity to hire) qualified professionals that can deal with their specifities? How often does the composition of their Boards not reflect the needs\u00a0of the organisation?<\/p>\n

    Despite the importance of these reflections, discussions about business models among think tanks in Indonesia is quite rare. In October 2015 we\u00a0had the\u00a0opportunity to present the preliminary findings of our study and validate some ideas in Indonesia. Two meetings took place in the Yogyakarta, where the discussion focused on one of the most relevant dimensions of think tanks business models: the funding scheme. The first meeting gathered local think tanks and NGOs at the Institute for research and Empowerment (IRE) and the second one was hosted by the Department of Politics and Government of Gadjah Mada University.<\/p>\n

    A\u00a0third meeting took place in Jakarta, at the\u00a0Knowledge Sector Initiative<\/a>\u2018s office. In the following lines, we present some of the highlights of\u00a0the rich discussions and exchanges we had.<\/p>\n

    At IRE, several topics were discussed, including, the independence of think tanks, the role of donors, fundraising strategies, the role of the private sector and governments in supporting research, among others.<\/p>\n

    Regarding think tanks\u2019 funding in Indonesia, Renny Anggriana Frahesty, Executive Director of\u00a0Narasita Foundation<\/a>, a local think tank in Yogyakarta working on research, advocacy and capacity building in the area of gender and MDGs mainstreaming in public policy, acknowledged that think tanks and NGOs are too absorbed with implementing projects. She recalled that, at the end of 1990s, several donors had warned think tanks and NGOs that international funding was about to shift their priorities away from Indonesia. Nevertheless, insufficient efforts were made to address this. Many NGOs and think tanks still stick with their old business models, models that assume the full support of donors.<\/p>\n

    Participants also agreed that important reasons why think tanks do not discuss funding models as much as they should is their\u00a0reluctance to expose their \u201cdirty laundry\u201d, fear of revealing the organisation\u2019s \u201ckey recipe\u201d, or even their inability to escape from their comfort zone.<\/p>\n

    Halid, an activist of Indonesian Friend of Earth, shared his organisation\u2019s policy on funding. Indonesian\u00a0Friend of Earth<\/a>\u00a0prohibits its organisation from\u00a0accept funding from government, corporations and international donors that are seen to have a\u00a0negative track record. Maintaining independence is paramount since their success of advocacy relies on their credibility.\u00a0Lunch is not free<\/em>, and Halid believes receiving funds from them would be followed by request to act in\u00a0favour of the donors.<\/p>\n

    To cope with that situation, Indonesian Friend of Earth is currently developing a new concept of funding. The organisation believes that the Indonesian public in general and more specifically the community has the capacity to raise funds\u00a0for social causes. Indonesians are eager to contribute small amounts of money\u00a0to charities working for disaster relief, for instance. Tangible impacts, in this respect, are the key to attract people to donate. Yet, it should be considered that funds from the general public or communities usually cover activities but not staff salaries.<\/p>\n

    Paula from\u00a0CD Bethesda<\/a>, a not-for profit focusing on community development in sanitation and hygiene, shared her experience in raising\u00a0domestic sources of funding. She mentioned that funds raised from domestic sources only covered the operating budget of the organisation. Financing programmes needed international donors. Yet working with donors, such as with a consortium as her organisation has been, endangered their autonomy. The agenda is set by the consortium, leaving limited space for the members to influence it. The question is then how can\u00a0think tanks and NGOs protect their\u00a0independence?<\/p>\n

    Some insights came from the experience of\u00a0Grupo FARO<\/a>, a think tank in Ecuador. The organisation has set limits for the proportion of total funding that one donor can provide: Grupo FARO cannot\u00a0receive more\u00a0than 30% of its total annual budget from one funding agency. CIPPEC, an Argentinian think tank, also provides a good lesson to deal with funding from companies. In order to mitigate companies\u2019 influence, the grants it received from them are\u00a0directed to support research or policy advocacy that is issue based, not project based. For example, instead of funding a specific CSR project, grants from corporations have to be used\u00a0to support all CSR transparency and accountability research and communications.<\/p>\n

    The discussion at Gadjah Mada University was also enlightening. One aspect regarding the funding model that was discussed at the event was think tanks\u2019 approaches\u00a0to raising funds. Generally speaking, think tanks have two main options: centralised and decentralised fundraising. Each has its pros and cons, depending on the context within which the think tank operates. Ermy Prasetio, from\u00a0Article 33<\/a>,\u00a0explained\u00a0that in her organisation, responsibilities for\u00a0searching for funding are\u00a0assigned to each\u00a0research division. For instance, to respond to calls from donors asking for proposals in the area of good extractive governance, it is the job of the responsible for the extractive governance division\u00a0to write the grant proposal.<\/p>\n

    Think tanks at Indonesian state universities are also unique. As stated by Nurazizah, lecturer and researcher at the Department of Politics and Government, the department does not need to pay monthly salaries since all researchers and lecturers are member of the civil service. Because the university has a strong national and international reputation, fundraising is not an issue. Government agencies at the national and local levels, as well as donors, come to the university to offer it projects. Therefore, while other think tanks face scarcity and get absorbed with project based fundraising the research center under the Department faces the paradox of plenty.<\/p>\n

    While\u00a0the meetings in Yogyakarta focused on the\u00a0funding model the discussions at the KSI office in Jakarta concentrated on business models in general. We presented the preliminary findings of our study and discussed typical questions that think tanks asked themselves for each dimension of our approach and reflected on different responses that think tanks provide to these issues.<\/p>\n

    The meeting in Jakarta was also very helpful to pick-up many methodological recommendations form senior researchers. Dadi Darmadi, Director of Advocacy and Knowledge Management at\u00a0Syarif Hidayatullah Islamic State University<\/a>, hoped that the report can abstract the core lessons learned about business models from the six case studies that have been undertaken. Understanding the potential strength and weakness of each dimension can represent invaluable lessons for other think tanks, not only KSI grantees. The discussion at KSI offices in Jakarta was recorded and it is accessible\u00a0here<\/a>:<\/p>\n