CGD’s Decision to Walk the Transparency Walk

Guest bloggers Katie Douglas Martel and Todd Moss from the Center for Global Development explain why they decided to publish how their think tank is funded. The views expressed in this blog are those of the authors alone, and may not reflect the views of Transparify.

We at the Center for Global Development (CGD) believe strongly that transparency and accountability can foster better development outcomes. That’s why our policy research and ideas include open government contracting, biometric identification systems, extractive revenue management, illicit financial flows, as well as more general work on the benefits of openness.

Our transparency work led to a logical question: If it’s is good for development, what about development think tanks? What’s more, we were receiving a lot of very good questions from our supporters and networks about where our money comes from and where we apply it. So, spurred in part by our friends at Transparify and frank discussions about think tank strategy by Enrique Mendizabal’s On Think Tanks blog and Andrew Selee’s book What Should Think Tanks Do?, we decided it was time to up our game on our own financial transparency.

Thus, we launched CGD’s How We’re Funded in March 2014. This web page, currently in a Beta version (improvements coming!), lists all grants and donations we received in 2013 and so far in 2014 above $100,000 or roughly anything more than 1% of our annual budget. We will also continue our practice of disclosing the membership of the Center’s Partners Council (corporate and individual contributors who give $2,500 and above) and CGD Society ($150-$2,500). Donations received from these groups are also aggregated in the Funding table.

How We’re Funded goes beyond what’s traditionally disclosed in US tax forms and annual reports. A benefit of our approach is that we are able to show how multi-year grants are allocated over time, as opposed to simply showing the year in which a grant was awarded and providing a potentially misleading view of our revenue streams. (The tax data can inadvertently and falsely suggest volatility.)

We also have another agenda here:we hope that our move towards transparency and posting How We’re Funded will encourage other nonprofits to do the same. By aiming to raise the standards for the whole field, we hope to bolster the credibility of think tanks as independent voices.

CGD conducts research with the aim of shaping rich countries’ and development actors’ policies that affect poor people in the developing world. Katie Douglas Martel is Deputy Director of Institutional Advancement, and Todd Moss is Chief Operating Officer and a Senior Fellow.

Arguments for Aid Transparency Equally Apply to Think Tanks

Guest blogger Nicole Valentinuzzi of Publish What You Fund explores common space shared by the aid transparency movement and efforts to make think tank funding more transparent. Transparify does not edit the content of guest blogs; the views expressed in this blog are those of the author alone, and may not reflect the views of Transparify.

Every year, Publish What You Fund produces an Aid Transparency Index (ATI) to rank the world’s biggest donors according to how transparent they are about the aid they give. The ATI has become the industry standard, assessing the state of aid transparency among the world’s major donors, while encouraging progress and holding them to account.

It is a fantastically useful tool for monitoring the progress made by donors with implementing their own commitments to make aid transparent. The ATI can work as both a carrot and a stick.

For example, in many cases, donors working to improve their aid transparency are keen to have their efforts reflected in the ATI. The deadline for collecting data for last year’s Index was 31st July, so donors had until the end of that month to make one final attempt at improving their ATI ranking – and several of them did, with a flurry of activity and phone calls in the final days of July.

Year-on-year, donors can improve either by making the information they already publish comprehensive for all their activities, or by publishing information items for the first time. This is fundamentally what makes for a good index - incentivizing those being measured to change their behaviour.

The good news in our field is that all the world’s largest donors have signed up to the International Aid Transparency Initiative (IATI), the only internationally-agreed standard for publishing aid data. As part of this commitment, they have said they will publish all their aid information to IATI by the end of 2015. (Our Aid Transparency Index also measures this commitment.)

This and other lessons learned by the aid transparency movement can also be applied to think tank transparency.

 So why do we bother?

Well, put simply, there is too little readily available information about aid, and this undermines the efforts of both sides, those who give and those who receive it. Knowing what is being spent where, by whom, and with what results is the basic foundation for increasing aid effectiveness.

Once all of the world’s largest donors are publishing to IATI, we’ll be able to track the money right down the development chain. Being able to follow the money from a donor all the way to the specific project it funds will make it possible to also track donor funds to individual think tanks in developing countries.

 Aid transparency is important because without it:

• Donor governments don’t know what other donors are spending or planning to spend, leading to the duplication of efforts in some areas and under-funding in others. Without aid transparency, donors cannot coordinate to achieve the maximum impact with their scarce resources.        
• Recipient governments struggle to know how much aid is invested in their country, let alone where and how it is spent.
• Civil society, including NGOs, legislators and citizens, who have the right to know what aid is coming into the country and what it’s being spent on, remain in the dark.

These arguments for aid transparency can equally be applied to think tank transparency, where it is just as important to be able to follow the money.

Nicole Valentinuzzi is the communications manager of Publish What You Fund, a not-for-profit organisation that campaigns for aid transparency. The campaign was originally launched in 2008 by a coalition of governance, aid effectiveness and access to information organisations.

When Think Tanking Hurts the Poor: Egypt and Beyond

Two decades ago, the Egyptian Center for Economic Studies think tank was formed with a ten million dollar endowment by USAID. According to the Washington Post, the think tank, which “gathered captains of industry in a small circle”, then advocated for a privatization program that eventually led to the sell-off of state assets worth 104 billion dollars. Apparently, less than ten percent of that value went into state coffers – the rest was lost to high-level corruption involving senior officials closely tied to the think tank. In total, the Washington Post reported, the losses to the Egyptian taxpayer of that privatization program exceeded the total amount of aid provided by the US to Egypt over the course of six decades.

While it would be facile to pin the blame for this sorry saga on a single think tank, it does highlight that some donor-funded think tanks can punch far above their weight when it comes to influencing political and economic decisions with massive implications for economic development and poverty reduction efforts. 

Throughout the developing world, donor-funded think tanks are now weighing in on domestic political debates on issues as diverse as democratic reforms, foreign affairs, military doctrine, economic governance and social policy. Having worked for a think tank in an emerging economy ourselves, we at Transparify strongly believe that think tanks can play a positive role in enriching national debates and decision-making, especially where there is limited capacity for policy analysis by other players. However, as long as most think tanks remain opaque, it will remain impossible for stakeholders in these debates to separate the wheat from the chaff.

Many think tanks in developing countries are predominantly or even exclusively dependent on foreign donors to carry out their work. Far from requiring these think tanks to be transparent, some donors – notably USAID – on occasions actively abet opacity by their non-profit grantees. Such opacity is not helpful at a time when developing countries are increasingly suspicious of donor-funded think tanks, a suspicion that often extends to all NGOs receiving support from abroad. For example, India is reportedly considering further restricting foreign funding for think tanks and other non-profits.

Policy decisions matter hugely, and developing country think tanks can play an important role in informing and improving them. Donors wishing to improve the quality and integrity of policy-making inside developing countries should do two things. First, donors themselves should disclose which think tanks they fund, with how much, and for what work. Second, they should require think tanks to be fully transparent about all the funding they receive before even considering their applications for grants. Financial transparency is not a panacea, but it is an important step on the road to making policies work better for the poor.

This blog is an abridged version of a longer piece written by Transparify that was originally posted on the website of Publish What You Fund, a not-for-profit organisation that campaigns for aid transparency.