Pulling Back the Curtain

Guest blogger Robert Brulle reports on his attempts to uncover the sponsors of think tanks engaged with the issue of climate change. 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.

Over the past forty years, there has been an enormous expansion of ideologically focused think tanks. These think tanks have become increasingly important in the development and advocacy of public policies on a range of issues. They have also increasingly been funded by undisclosed sources. So it is difficult to judge the validity of their assessments without full disclosure of their funders.

For example, my work has focused on think tanks engaged with the issue of climate change. What we see in this area is a group of think thanks that foster confusion about the science of climate change, and oppose action to address this issue. These think tanks have been bankrolled by funders known for their overall commitments to extreme free-market ideologies. Where funding can be traced, it has come from foundations driven by an encompassing ideological vision that posits government “interference” in markets as inherently illegitimate. Regulations and taxes are demonized, yet both are ingredients of proposals to reduce greenhouse gas emissions.

Despite thorough efforts, I could not find all of the sources of funding for organizations that mount climate-change denial efforts because the law allows secrecy. Many of the actors and organizations that have done so much to block U.S. actions to counter the global warming threat are able to operate in the shadows. Americans hear denial arguments funded on a grand scale by unknown wealthy manipulators.

This is a big problem for democracy. The U.S. constitution guarantees free speech, and the current Supreme Court enforces that right for corporations as well as individuals. In addition, current U.S. rules applying to “nonprofit” organizations make it easy for political activities to be supported on a huge scale in hidden ways. Nonprofit organizations not required to reveal their donors can simply collect funds and pass them to campaigns and think tanks. This hidden-funding system needs to change through the revision of nonprofit reporting laws. Without a free flow of accurate information, democratic politics and government accountability become impossible.

Powerful funders are supporting the campaign to deny scientific findings about global warming and raise public doubts about the roots and remedies of this massive global threat. So in this area, as well as many others, we have unaccountable funding flows to these think tanks from unknown sponsors trying to influence public policy in an enormous way, and that really runs counter to the whole notion of democracy and open debate.

Rating think tanks on their transparency is a first step in the right direction. This web site will allow citizens to see which think tanks are fully transparent about their funding sources, and those that hide behind a veil of secrecy. At the end of the Wizard of Oz, Dorthy’s dog Toto pulls back the curtain on the Wizard, who is manipulating the image of Oz. This exposes the true nature of power. I hope this web site will do the same.

Robert Brulle is Professor of Sociology and Environmental Science at Drexel University

Think Tanks Have Little to Fear from New IRS Rules

Guest blogger David Earley of the Brennan Center argues that think tanks need not worry about proposed new tax rules limiting political activity by nonprofits. 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.

In the wake of the Supreme Court’s 2010 Citizens United decision, political spending by social welfare groups has exploded.  These entities, organized under section 501(c)(4) of the tax code, spent 256 million dollars in the 2012 federal elections, even though they are supposed to be operated exclusively for social welfare rather than for political purposes. 

Due to legal loopholes, these organizations are not required to disclose their donors.  Consequently, individuals, corporations, and unions can anonymously funnel millions of dollars into elections without fear that their identities will be disclosed to the public. This deprives voters of information that would help them interpret the messages they receive before the election and allow them to make informed decisions at the ballot box.  And without full disclosure, the public cannot monitor for improper relationships between elected officials and their political benefactors, opening the door to corruption.

Recognizing this abuse of the tax code, the IRS recently proposed new rules to regulate political spending by 501(c)(4) organizations.  The rules replace the current, ineffective “facts and circumstances test” with bright-line standards, which benefits both nonprofits and the IRS by clarifying what constitutes political activity.  The IRS is also considering adding rules to significantly limit the amount of political spending that nonprofits can undertake.  Under current informal IRS guidance, nonprofits can spend up to 49% of their budgets on political activity without endangering their tax exempt status; new rules could greatly reduce this amount.  The IRS may also expand the restrictions to other nonprofit entities, such as 501(c)(6) trade associations and 501(c)(5) unions, which also engaged in significant political spending in recent elections.

The new standard for what constitutes political activity should also extend to 501(c)(3) charitable organizations. Because many think tanks are organized under section 501(c)(3), some in these organizations might think this is cause for concern.  However, since political activity by 501(c)(3)s is already prohibited entirely, it is unlikely that the new rules will have a significant impact on them – they already are forbidden from getting politically involved in elections.  So long as the IRS’s new rules properly define what constitutes political activity, 501(c)(3)s have little to fear.

The IRS should be applauded for moving to rein in political spending by nonprofit groups.  As the Brennan Center explained in its comments, “The nonprofit form was created to foster organizations that are devoted to the general welfare of their communities, not to furthering partisan political goals.  The proposed IRS rules are needed to help ensure that the nonprofit form is not abused by those who want to anonymously spend massive sums on elections.”

The proposed rules are not without their flaws.  For example, the proposed rules consider nonpartisan voter registration – an important type of social welfare work that should be exempt – to be political activity.  But these faults are a reason to refine the proposed rules, not to abolish them.  The IRS should implement new rules to protect the integrity of both our elections and the tax code.

David Earley is a Counsel at the Brennan Center for Justice at NYU School of Law, a law and policy institute that seeks to improve American systems of democracy and justice. The Brennan Center describes itself as “part think tank, part public interest law firm, part advocacy group, part communications hub”.

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.

A Rare Look at Italian Think Tanks

Guest blogger Anna Longhini provides a snapshot of the emerging think tank scene in Italy. 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.

Think tanks remain mysterious entities to most Italians.Conversely, in the Anglo-Saxon world there seems to be a much better understanding of what think tanks are, what they do, why they are relevant, and how they are funded. The first book on think tanks came out in Italy only in 2009; a chapter on Italian think tanks and the political system had been published in 2004. While foreign policy think tanks have a much longer tradition, some are comparatively new and take the form of “personal think tanks” linked to individual political leaders.This latter kind of dependency raises questions about the use of the term ‘think tank’ itself and creates some confusion within public opinion.

The two key players in the Italian foreign policy think tank landscape are the Istituto Affari Internazionali (IAI, since 1965) in Rome and the Istituto per gli Studi di Politica Internazionale (ISPI, since 1934) in Milan. A unique player is the Italian branch of the Aspen Institute, established in Italy in 1984 with a focus on transatlantic relations. Other, smaller think tanks mainly operate in Rome, Milan and Turin. All of these have less well defined activities, their main decisions are in the hands of their directors, and they are comparatively understaffed.

When I first started to research Italian think tanks, I found it hard to find financial information on their websites. When it comes to foreign policy think tanks receiving public money, we do have data on relevant national public funding in 2012 because some think tanks are listed among the so-called “EntiInternazionalistici”. This means they are under the control of the Ministry of Foreign Affairs, and as such are listed in a report released by the ministry that disclosed these relationships as part of a wider open government effort. At the same time, we know that major corporations fund some think tanks, but we do not know to what extent and on what terms. Is such private sector funding just a matter of generating visibility? Or do companies expect something in exchange? These questions remain unanswered.

Behind Italian think tanks there is a world composed of experts. These experts’knowledge on current international issues seems fresh and appealing when compared to that offered by often boring and far-from-reality academic professors. Their profile is rising within Europe, partly through (contested) international rankings, partly through events such as the recent European Think Tanks Summit. But they still remain almost unknown to the Italian public, partly due to historical factors, partly because Italian policymakers do not draw on them for policy advice.

Italian think tanks do not seem to recognize the importance of transparency. At the same time, in my experience, major Italian think tanks are willing to give details on their budgets when interviewed. So their current lack of transparency may be chiefly ascribed to low pressure to become more transparent about their funds and activities.

Anna Longhini is a PhD student at Scuola Normale Superiore in Florence, and a visiting PhD student at Royal Holloway University of London in spring 2014. Her current research interest is comparing foreign policy think tanks in Italy, Germany and the UK.

How We Rate Think Tanks’ Financial Transparency

Transparify rates the extent to which think tanks disclose who funds them, with how much, to do what work. While looking into think tank finances is not a new idea – a variety of other players have done so in the past and some continue to do so today – our initiative differs in two regards.

First, we exclusively look at what information think tanks disclose publicly through their websites. We do not contact institutions asking them to provide us with lists of their funders or similar funding data because we believe that transparency involves being transparent towards all interested stakeholders by default, rather than constituting a favour that an institution may choose to bestow upon request. In our view, if information is not accessible, it is not public. For example, a journalist may not have time to wait for think tank’s clarification of who funded its research on a given issue before her deadline expires and her piece goes to press.

Second, our scope is global. We rate think tanks across dozens of countries, applying the same rating criteria to all. A policy research institution based in a small and poor nation may not enjoy a high profile on the international stage, but within its home country, its findings and recommendations are more likely to remain unchallenged by other researchers and thus may have significant impact on policy formulation. Plus, our findings to date indicate that many well-funded think tanks in rich countries can learn a lot about transparency from some of their smaller peers in Africa, Asia and Latin America. We want to recognize excellence wherever it occurs.

So how does it work? Each think tank is assessed by two or more raters following a standard protocol. Working independently from each other, they award between zero and five stars according to the type and extent of financial information available on the think tank’s website.

Think tanks that score the maximum possible five stars enable stakeholders to see clearly and in detail who funds them, how much each donor contributed, and what projects or activities that money went towards (some great examples are listed here). Think tanks that do not provide any up-to-date information on where they get their money from receive zero stars. Most institutions we have looked at so far fall in between these two extremes.

We pre-tested this methodology in late 2013 and found that the results returned by different raters tend to be highly consistent. In the few cases in which raters do assign different scores, an experienced external adjudicator reviews their findings, revisits the institution’s website, and determines the final score.

Best of all, anyone can visit the website of any think tank we rate and compare the information provided there using our rating tool and criteria – so our findings will be easy to check up on.

By the way, in case you were wondering – we plan to release our final rating results before the end of this month.

How a Fake ‘Think Tank’ Deceived 97% of Journalists

Guest blogger Brendan Fischer recounts how a US public relations firm set up a ‘think tank’ to promote clients’ points of view in the media. 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.

American low-wage employers like restaurant chains may not want their brands associated with unpopular positions like opposition to the minimum wage, but lucky for them, they’ve got the Employment Policies Institute on their side.

EPI, which describes itself as “a non-profit research organization dedicated to studying public policy issues surrounding employment growth” and is often cited as a “think tank” by the media, has been one of the most prominent voices opposing the minimum wage in recent months. It produces or commissions reports purporting to show that workers don’t need higher pay. Its staff are quoted in the press providing respectable-sounding quotes opposing living wage laws.

But the Employment Policies Institute operates from the same office suite as Berman and Co., a public relations firm owned by Richard Berman that counts the restaurant and retail industries among its clients.

Berman – who is EPI’s President and Executive Director – specializes in helping corporate interests launder their messages through phony front groups. His clients have included the tobacco and fast food industries, and he has formed fronts like the Center for Consumer Freedom to fight against indoor smoking bans and nutrition labeling requirements. After Berman received funding from the Corn Refiners Association, the Center for Consumer Freedom launched a TV, radio, and print campaign defending corn syrup and attacking critics. Berman has talked about being in a "long-term war" with unions, and his shop also runs the "Center for Union Facts," which spends tens of millions on anti-union ad campaigns. 

EPI passes itself off as a “think tank,” but it is really just another weapon in Berman’s arsenal of astroturf, offering low-wage employers like restaurant chains a modicum of distance and a veneer of respectability for messages that just-so-happen to benefit their corporate bottom line.

EPI has just a handful of employees, and the expertise of its staff is grounded in public relations rather than academic research. Journalists, in an effort to create a perception of “balance,” regularly tap EPI’s research director, Michael Saltsman – who doesn’t have an advanced degree in research or economics – when they need a pithy quote to counter positions by academics, policy experts, or politicians. 

Yet, a Center for Media and Democracy analysis showed that journalists rarely identify EPI’s public relations ties. In 97 percent of the stories quoting EPI or Saltsman over the past three years, reporters provided readers with no information about EPI’s relationship with Berman and Co. In most cases, journalists described EPI as a “Washington DC nonprofit.” Occasionally, EPI was called “conservative” or “pro-business.” Only about 3 percent of the time did journalists note EPI’s connections to Berman and Co.

Failing to note EPI’s role as an arm of a public relations shop deceives readers into thinking they are hearing an independent perspective, warping the discourse and keeping the public in the dark.

Brendan Fischer is the General Counsel of the Center for Media and Democracy, a group that investigates and reports on the influence of corporations on public policy.