[Editor’s note: This post is part of a series that will look at think tank funding models. It is based on an online course that had been delivered to think tanks in CEE and Nepal under the Think Tank Fund´s support, led by Vanesa Weyrauch and Tomás Garzón de la Roza]
A funding model is not only related to how needed funds are secured but also to how the organisation decides to spend them. In fact, the way money is used in a think tank (or any organisation) is not ‘the end of the road’, but rather an ongoing exercise that feeds back into its funding model and its overall business strategy – just as collecting funds is not only an initial step but a permanent (and sometimes stressful and challenging) commitment. Like in a household, money can be used in different ways and produce different results: some families spend more money in holidays while others choose to have a more comfortable living space even if that prevents them from saving money for traveling during the summer. In order to make these priorities work (e.g. more space, nicer holidays) financial and other resources should be allocated consistently according to them.
Think tanks usually have their own set of priorities. Although all need to have credible and skilled researchers, some choose to develop them in-house and retain them as long as possible while others prioritise bringing experienced people with an established reputation (e.g. gained in academia) for specific projects as consultants or colleagues on a project basis. All think tanks are also required to communicate with a series of actors or stakeholders, but only some invest themselves fully in developing a ‘household name’ that resonates even beyond strictly political or donor circles. All think tanks need to keep track of how their work is regarded and eventually used or discarded in policy circles, but certain think tanks spend more money and/or time in developing and maintaining monitoring systems in order to have a more systematised grasp of their real policy influence. Some of these priorities require one-off expenses while others imply higher fixed costs, with its related risks and implications. Some can create economies of scale and some cannot. Some prefer being very flexible in terms of size, profile of collaborators and working agenda while others perceive their main staff and their long term research agenda as constitutional of their identity. In sum, these dichotomies reflect different strategies and imply diverse priorities in allocating funds, including their related administrative burdens.
An organisation’s ability to choose how to spend money is directly related to its funding sources, since it is clear that some funding comes is restricted (or earmarked) while other funds are freely allocated by the grantee. Hence, allocating funds is not just about your own priorities but about what is allowed by the conditions to which they are subject. There will be different funding schemes that can enable or hinder investments in the institution. At the same time, organisational priorities feed back into fund-raising efforts, which further enable the institution to pursue the choices it makes.
Finally, it is not only important to consider how funds that are being raised can significantly contribute support an organization’s core programmes and services. This is directly linked with how funds can be and are in the end allocated as a reflection of what the organisation is and/or wants to become. This is recognised as an increasing challenge for think tanks, even many affluent ones. Securing money might not be a problem right now. The challenge might be how to stay loyal to the organisation´s mission and key objectives as opportunities from the offer side arise. Balancing internal needs with external wants will always be a tension to deal with. However, not all organisations conduct sincere and transparent discussions about how this tension is dealt with. The problem frequently arises when the funds are being spent in a way that responds less and less to the needs and interests of the think tank´s members (or groups of these). Having more frequent and transparent ways of sharing and analysing this type of information with main internal stakeholders can play an effective role in terms of allocating funds in more strategic, innovative and integrated ways.