Local
Economic downturn ensnares area think tanks
By: Bill Myers
Examiner Staff Writer
December 29, 2008
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The Council of Foundations estimates that endowments, the key funding source for think tanks, lost more than $200 billion in assets in the last few months of 2008.
“The [think tank] funding streams are very dependent on foundations in particular,” said R. Kent Weaver, a Georgetown professor and Brookings Institution scholar who studies think tanks. “It’s a big hit.”
Think tanks employ thousands of people and generate tens of millions for the local economy. The grand old names — such as the Brookings Institution and American Enterprise Institute — have been around for generations. They were founded to offer outside advice to the public and policymakers.
As the political parties trade control of the White House and Congress, think tanks serve as way stations for policy intellectuals waiting for their ideological soul mates to return to power.
Since the 1970s, the number of think tanks in the Washington area has grown exponentially, from only a dozen or so groups to 340 today. Once regarded as ivory towers — “universities without students” — many have moved to the front lines of ideological combat, churning out position papers and sponsoring forums to publicize pet positions. The higher profile of think tanks has intensified competition for dollars and staff, and has brought closer scrutiny.
“Think tanks were fairly sleepy places in the 1970s,” said American Enterprise Institute fellow Karlyn Bowman. “There’s a new kind of sophistication in people seeing more accountability for the money they’re giving.”
The economic downturn hasn’t helped.
“Their giving has been reduced because [donor] portfolios are lower,” said Terrence Scanlon, president and chief executive officer of the Capital Research Center, a right-leaning think tank that monitors left-leaning advocacy groups. “I hear all over town, ‘It’s tough.’ ”
The Center for Strategic and International Studies, which had a $29 million budget last year, has imposed a hiring freeze and is trying to cut costs by up to 15 percent, think tank scholars said.
The Media Research Center, a small group in Northern Virginia that looks for liberal bias in the media, has laid off staff, a spokeswoman said.
The Brookings Institute’s endowment has lost nearly a quarter of its value in the last few months, senior scholars there say.
The Heritage Foundation will raise enough to meet its $61 million 2008 budget, Vice President John von Kannon said, but the group is now in get-lean mode: Starting next year, the foundation will review its income and expenses every month.
“We’ll be more like a business,” von Kannon said. Scanlon hasn’t cut staff, but he says he has added a new ritual to close out the week.
“On Fridays, I’m checking each thermostat,” he said. “It’s going down for the weekend.”
The economy squeeze comes just as a new administration presents enormous opportunities across the ideological spectrum.
“You see how much money was donated to the political campaigns. Now, what is it that people who have all that money are going to do to influence the new administration?” asked Stacy Palmer, editor of the Chronicle of Philanthropy. “One of the ways is with ideas.”
Left-leaning think tanks — especially those with close ties to Barack Obama, such as the Center for a New American Security or the Center for American Progress — find themselves suddenly in, and donors want to be part of the winning team, Palmer said.
Right-wing and libertarian groups aim to form a bulwark against the new administration.
“You’ve got a Republican administration nationalizing banks. You’ve got a Democratic administration saying, ‘They’re not going to do enough,’ ” Cato Institute Vice President David Boaz said. “Cato’s ideas are needed more than ever.”
Palmer said she expected think tanks to get a brief respite from the cutbacks in the first part of the year because of the impending battle of ideas.
“Everyone knows that the first 100 days really matter, and so everyone wants to seize on that,” Palmer said. “And donors will want to get their influence out and get their money steered to think tanks.”
Pietro Nivola, a senior fellow at Brookings, said a half-dozen or more of his colleagues are expected to join the Obama administration. The exodus will allow Brookings to reduce payroll without the ugly public relations of a layoff or hiring freeze.
But Weaver, also of Brookings, said that may be a false comfort.
“You’re losing personnel, but you have certain obligations to donors,” Weaver said. “Very rarely do donors give money and say, ‘Go do good things with it.’ Now, there’s grants for X project on X topic, and there are expectations that there will be deliverables on it.
“That can create some tensions with foundations if there are commitments made to produce things if you now no longer have the personnel to deliver.”
The University of Pennsylvania’s James McGann studies think tanks. He said that the industry has been through this before. The economy went bad in the 1980s, and think tanks were hobbled. But that experience might help shield some think tanks from today’s financial stringencies, McGann said.
“In the ’80s, when people really took a hit and then realized that they had to do something about it, both donors and think tanks began to manage their portfolios differently in order to insulate themselves from fluctuations in the market,” McGann said.
Now most think tanks and donors budget based on three-year cycles, instead of year to year.
Still, that’s no ironclad defense against a souring economy. So what’s a deep thinker to do?
“Be cautious,” Weaver said. “We don’t know how long and how deep [the downturn] will be.”
