Compromised? The Problem of Corporate Funding for Think Tanks

photo: turtix/shutterstock

photo: turtix/shutterstock

The reputation of think tanks took another hit this week, when the New York Times reported that Anne-Marie Slaughter, president of the New America Foundation, ousted a project from the organization that was critical of Google.

The story, as described by Times reporter Ken Vogel, is that the Open Markets project at New America—which is run by Barry Lynn and challenges monopolization and the “extreme consolidation of economic power”—was asked to leave the think tank after Eric Schmidt complained to Slaughter about its work. Lynn has been a leading critic of the growing clout of Google and other business giants. The Times reported that Slaughter told him that the “time has come for Open Markets and New America to part ways” in late June, just days after Lynn praised a $2.7 billion antitrust penalty imposed on Google by the European Union. It was that June 27 statement that reportedly triggered Schmidt’s complaint. But this wasn’t the first time that Lynn had found himself in hot water at New America. He said he also felt pressure to alter the program of an event he organized last year that featured Democratic Senator Elizabeth Warren, a leading critic of corporate power. 

When I spoke to Barry Lynn yesterday, he repeated these same details while stressing his deep admiration for New America, where he worked for 15 years. “I didn’t want this to happen,” he said. “I feel really bad about it.”

Lynn told me that at the June meeting with Slaughter, he was given two months—until September 1—to leave New America with his staff of six people. The team is now camped out at a WeWork shared office space in Washington. 

Over the past two months, Lynn and New America had been working on the details of his exit that would include a statement presenting the move as a mutually agreed-upon spinoff of Open Markets. But Lynn told me that he felt it was important that the real story be known, which is how the New York Times article came about. 

On Twitter, Anne-Marie Slaughter called that Times story “absolutely false.” Google also denied the story. In a longer statement, Slaughter said Lynn was booted because “his repeated refusal to adhere to New America’s standards of openness and institutional collegiality meant that we could no longer work together as part of the same institution.” 

A source close to the situation told me that Slaughter’s issue with Lynn was that he operated too independently, failing to abide by internal protocols to give advance notice of public statements that might affect the institution or programs within it. In this telling, Lynn’s June 27 statement on the EU antitrust penalty was the final straw in an increasingly difficult relationship.
The New America Foundation released emails by Slaughter to Lynn in which she voices these complaints and stresses that their relationship broke down for reasons that have nothing to do with Google. But one of those emails also makes it pretty clear that a problem with Lynn’s behavior was that he was jeopardizing NAF’s funding from Google.

From my own experience working at a think tank, I can testify to the tensions that can develop when senior staff are seen acting too independently or in ways that alienate key funders or allies. More broadly, CEOs of all institutions hate being blindsided by public statements that piss off important stakeholders. That Slaughter and Lynn could have a falling out along these lines is plausible. Indeed, the two competing explanations of what happened at NAF—a management conflict vs. keeping a funder happy—are more compatible than they might seem. 

Lynn told me that he had hoped to continue working at the organization for years to come. One reason he liked New America so much from its earliest days is because scholars “always had freedom.” Statements of the kind that he made on June 27—criticizing powerful institutions or people—were hardly unusual at NAF. Just 10 days earlier, on June 16, Open Markets had condemned Amazon’s purchase of Whole Foods. Over its history, New America’s ideologically eclectic mix of fellows and project staff have regularly caused controversy with their positions—including with their colleagues, NAF board members and donors. Various funders have ceased backing the organization in the past. Lynn rejected the idea that his failure to follow process was the reason he was asked to leave New America. 

Rather, Lynn described this as “a pretty simple story” of a powerful donor trying to muffle a dissenting voice. Quite apart from the disruption to his project team and its activities, he said it was a deeply troubling episode because “it’s important that there are safe spaces for work that challenges concentrated economic power.” 

Even if you do buy Anne-Marie Slaughter’s version of events, it casts her and New America in a negative light. Barry Lynn is widely regarded as a catalyzing force in putting monopolization on the national agenda. Open Markets is exactly the kind of project that a top think tank should host. Who cares if Lynn wasn’t so collegial? The guy knows how to move an agenda and is working on one of the most important issues of the day. The fact that he was ticking off Google shows that he’s been doing something right. Instead of ousting Open Markets, NAF should have supported Lynn in expanding it. And if that meant losing funding from Google and Schmidt’s family foundation, so be it. 

It’s a fact of life that every nonprofit CEO has to keep their funders happy. It’s naive to expect otherwise, or to imagine that anyone who raises money can be a purist. But if you’re in the ideas business, standing by your thinkers when they annoy your funders is all-important. It’s essential to an institution’s reputation and to staff morale. Slaughter made the wrong call, here. Again, even if you accept her version of events, she should have known that the optics of getting rid of the Open Markets team would be terrible. You don’t oust critics of Google from a think tank that gets money from Google—no matter how much you don’t like working with them. Slaughter should have realized that she was stuck with Open Markets and made the best of things.  
The larger takeaway, here, is that too many think tanks like New America rely on funders from the world of business and finance that have active public policy interests at the federal and state level. Eric Schmidt was a very early supporter of New America, even before Google went public. You can see why that relationship might continue, even after Schmidt stepped down from the board. But it shouldn’t have, given Google’s growth over time and the many ways that its agenda overlaps with regulatory issues in play in Washington. Any organization that takes money from a corporation while working on policy matters that affect that corporation's bottom line has a conflict. Period. 
Of course, such conflicts have become common in the think tank world—which is why I started this article by saying that such organizations have been dealt “another” blow to their reputations. The New York Times has reported on alleged conflicts at the Brookings Institution, which is heavily supported by corporate donors. And a range of other think tanks have taken fire over the years for accepting money from interested funders. 
More broadly, amid a second Gilded Age, the nonprofit policy world has become increasingly awash with money from hands-on living donors with a range of agendas. Look at the boards of nearly any think tank or advocacy organization with a budget over $20 million and you’ll find wealthy donors and top business executives. In fact, few policy groups can get to scale without such supporters—since the resources of legacy foundations are limited. Two decades ago, such grantmakers were dominant funders of policy work. Not anymore. Now, it’s the far upper class and business elite that are increasingly writing the checks. That's a problem. 

While policy groups avow that their scholars and experts have full independence and can’t be swayed by donors, it’s unrealistic to imagine that there can ever be an impenetrable firewall between funders, especially those who sit on the board, and staff activities. 

This latest episode of a think tank getting in trouble because of corporate funding should serve as a wake-up call that this sector needs stronger governance rules. Board members and funders should be carefully vetted to avoid conflicts of interest around an institution’s work. As a practical matter, this is likely to mean that many policy groups will have to downsize and rely more on legacy foundations for their funding. But a think tank that’s smaller and less conflicted will ultimately be stronger and more reputable. 

When Ted Halstead started New America in the late 1990s, he imagined a relatively small shop that would be known for its provocative ideas and unpredictable positioning. Subsequently, the institution became a much larger platform for a wide range of policy entrepreneurs, and sustaining this has involved funding sources that create conflicts. (Brookings and other, bigger, think tanks have this problem on a larger scale.)

New America should rethink its programming and funding to get closer to its original vision. And Slaughter should announce tomorrow that the organization will no longer take money from Google. 

Size isn’t the main thing that matters in the think tank world. Credibility is infinitely more important.