Secret Think Tank Funding and Reputational Risk

Important note: Below, we present two 2013 case studies to illustrate a general argument about transparency and the media. The use of these case studies should not be taken to imply that Transparify regards either of the think tanks involved as particularly transparent or opaque.

Transparency can be a tough sell. Some think tanks worry that disclosing who funds them may provide ammunition to their critics. But do they ever worry about the potential reputational risks of non-disclosure?

Let’s briefly review two cases from the past year in which think tank funding data was cited critically by the US media.

Think Tank A and Kazakhstan. In 2013, a prominent research institution somewhat reluctantly released a list of foreign donors in response to a demand by 25 Republican senators. The list showed that the think tank had received funding from 15 foreign governments, including that of Kazakhstan; these did not fully match the names in a different list already on the institution’s website. Journalists claimed that a conference on Kazakhstan organized by the think tank and paid for by a company that had vast oil interests in the country was essentially a “love poem” to Kazakh president-for-life Nazarbayev.

Think Tank B and Taiwan. After the think tank’s staff had over several years published opinion pieces arguing that the US should sell sophisticated weapons systems to Taiwan, journalist Eli Clifton through a filing error acquired tax documents that showed that the institution had received a 550,000 dollar contribution from Taiwanese public funds in 2009, a financial relationship that the think tank had not previously publicly disclosed (and was not legally obliged to disclose). The article noted that if the institution “took direction” from the government of Taiwan or “honored requests” after receiving the funds, it would have broken the Foreign Agent Registration Act, which requires the agents representing the interests of a foreign country in the US to periodically disclose their relationship.

What can we learn from these episodes?

First, in both cases the availability of financial data enabled journalists to ask questions that were legitimate, important and should be publicly discussed in a democracy. Should respectable American institutions accept money from authoritarian governments? Is the need to solicit funding undermining the intellectual independence of policy wonks? Are foreign governments wielding hidden influence, maybe in breach of US law? Transparency is important because it enables all sides in public discussions to be informed by a common pool of data.

Second, the most damaging narratives revolve not around donor money as such but around integrity and intellectual independence. What think tanks do after they take the money is what generates most reputational risk. While the media could not present solid evidence of the two institutions compromising their independence or integrity after taking the money (how could they?), the think tanks were equally unable to present evidence that could conclusively refute such suspicions (how could they?).

Without hard evidence on either side, appearances become very important. And in terms of appearances, taking money behind closed doors is one of the worst things a think tank can do, as every subsequent step the institution takes can easily come to be seen and interpreted in the worst possible light.

To conclude, keeping donors secret is a bad reputational risk management strategy for think tanks. It may initially prevent tricky questions from being raised by critics, but when the donor relationship eventually does become public knowledge – as it very often does – initial secrecy substantially increases the potential for severe reputational damage.

Taking donors’ money behind closed doors may seem the easy option today, but in the long term, transparency pays greater dividends.