Think tanks at risk for corruption

By CHRISTIAN BOURGE, UPI think tanks correspondent

(This is a corrected and updated version of a story that was published on Dec. 28, 2002. The 16th paragraph in the first version mistakenly identified the Economic Strategy Institute as the Economic Policy Institute. The incident described took place at the Economic Strategy Institute).

WASHINGTON (UPI) -- Steve Clemons, executive vice president of the New America Foundation, is on a crusade against what he views as a dangerous and growing phenomenon: special interests and corporate lobbyists using non-profit think tanks in their efforts to promote their pet policies.


Clemons says think tanks must address the problem before these practices damage the sector's reputation as a reliable source for sound and objective policy analysis.

"As lobbyists' tools of the trade, particularly their ability to court (political) favor with money, have become more and more transparent and regulated, (they have) discovered that think tanks -- also regulated in theory but less so in practice -- constitute a great vehicle to pursue their agendas," Clemons writes in a draft of a soon-to-be-published paper he presented at conference in Paris last month.


The paper, "The Corruption of Think Tanks: The Unintended Consequence of Regulating American Lobbyists," will be published in French by the French Institute for International Relations and the German Marshall Fund. It may also appear in English in the coming months in association with the AEI-Brookings Joint Center on Regulatory Studies.

Clemons told United Press International that the problem often takes on a somewhat benign form of "deep lobbying" when corporations, unions or other interest groups underwrite think tank luncheons, special events, or even simple policy briefings. Congressional staffs are invited to these events, which reflect the view of the funding entity.

He said that, even more damaging to the autonomy of think tanks, special interests also sometimes fund research or policy papers that promote a specific outcome or policy proposal that the funder has requested.

"To allow lobbyist influences to infiltrate the non-profit public policy sector without restraint threatens to undermine the legitimacy of the important role think tanks play in public policy," said Clemons. "The think tank sector is in no way immune to the suspicion and corruption that have recently stricken other segments of American society."

Although hard data is unavailable on how many congressional staffers actually attend lobbyist-backed think tank events, several mid- and high-level Senate and House staffers told UPI that they regularly receive invitations to luncheon briefings and dinner events from the likes of the Heritage Foundation, the Cato Institute, the American Enterprise Institute, and other large and small tanks.


This is not surprising given that one purpose of think tanks is to promote policy debate, but these sources also indicated that at least some of those events had some form of tacitly understood -- but not openly discussed -- backing from a corporate or other interest group.

Yet it is common for think tanks to get their funding from corporate and foundation sources, many of which have some sort of ideological bent. It is logical that such groups give to think tanks that best reflect their priorities. Also, under Internal Revenue Service rules think tanks are allowed to spend up to 5 percent of their annual resources on lobbying, so what if lobbyists give directly to tanks also?

Robert W. Hahn, director of the American Enterprise Institute-Brookings Joint Center for Regulatory Studies, said that although Clemons has identified a potential problem, the lack of hard data makes him question the extent of the influence of lobbyists on think tanks.

Nevertheless, he said that whatever problem may exist reflects an issue that faces all non-profits.

"I think it is a balancing act that Steve talks about insightfully in his paper," said Hahn. "But you are never going to solve the problem of potential conflicts as long as you have to get funds from somewhere."


Clemons agrees that running a non-profit policy organization is to some extent a Faustian bargain, but he said that an ethical bridge is crossed when think tanks allow themselves to become tools in the lobbying process without being transparent about it.

He cited several anecdotes and personal examples culled from his own experiences at the New America Foundation and in his previous positions at the Nixon Center, the Economic Strategy Institute and on Capitol Hill.

For example, in his paper he details an incident at a meeting in which he was involved at the Economic Strategy Institute -- a think tank that focuses on macroeconomic policy -- when he was an executive vice president there. He writes that during a staff discussion on a policy debate in which telecom companies had lined up on opposite sides of an issue, several people present suggested that ESI should weigh in on the side of the argument that would generate the most money for the think tank.

"This story is not unique," said Clemons, "it is commonplace."

Clyde V. Prestowitz, Jr., president of ESI, said the comments to which Clemons refers were made jokingly during a discussion over the implications of the 1996 Telecommunications Act.


"The stuff he (Clemons) is saying is simply untrue," Prestowitz said. He also said his think tank does not lobby for the interests of donors.

"In fact, the position we took on the Telecom Act was one for more competition in the local exchange areas," he said. "It was the Baby Bells that were lobbying heavily against competition and against unbundling (of services). We took the position where the money was not."

Citing his notes from the meeting, Clemons said that the idea was mentioned three different times, and not once as a joke.

Prestowitz said that like all think tanks, ESI claims to have an influence on policy matters, but that the organization has never presented itself as having competencies in lobbying and consulting, as Clemons claims in his paper.

One prominent Washington lobbyist and a former official in the Bush and Reagan Administrations told UPI that think tanks, especially smaller ones, are a prime target for lobbying efforts given limited IRS interest in reviewing their practices.

Analysts at the Cato Institute, the Heritage Foundation, the Center for Strategic and International Studies and others think tanks said that although they remain relatively well shielded from the money side of the operation, they have been asked by funding sources, including lobbyists, to do papers with predetermined outcomes supporting the source's position.


Two of the analysts said that while their think tanks refused, they knew that the companies and lobbyists had gone to other tanks and gotten what they wanted.

"There are think tanks, mostly very small, that have been transformed into lobbying shops, there is no doubt," a top official at one conservative think tank told UPI.

Clemons and other analysts said they believe that most tanks do not start out acting as shills for lobbyists, but that it is nearly impossible for small and financially strapped organizations to resist the money involved.

Several tank officials and analysts, who spoke to UPI on the condition of anonymity, said that the Alexis de Tocqueville Institution, a small Arlington, Va.- based think tank that promotes free-market principles, receives a significant portion of its funding from the Microsoft Corp. The sources said that the think tank essentially lobbies in favor of issues important to Microsoft through op-ed pieces and policy briefs by tank officials.

The de Tocqueville Institution was contacted several times to respond to these claims, but offered no comment by publication time. An examination of its Web site, however, showed that the think tank has taken policy positions that would clearly benefit the computer software giant.


Think tank analysts also told stories of being asked by a Microsoft lobbyist if it was possible to fund research that supported Microsoft's side in the government's anti-trust case against the firm.

Clemons, along with other think tank analysts, said that other small policy institutions, such as the Progress and Freedom Foundation and ESI, are known to do such lobbyist-funded work.

ESI's Prestowitz denies this. Jeffrey A. Eisenach, president and co-founder of the Progress and Freedom Foundation, a market-oriented think tank dedicated to technology policy, said that although his group receives all its funding from corporations and trade associations, it does not lobby on their behalf.

"I don't think our work supports corporate interests. Our work supports a set of market oriented issues and sometime those issues align with corporate interests and sometimes they don't," said Eisenach.

He noted that unlike Clemons' New America Foundation, PFF posts its entire donor list on its Web site. New America posts a list of only its largest donors, all of which are foundations.

Eisenach also said that although the questions about funding ties raised by Clemons are important ones, there are factors beyond funding sources that demonstrate a think tank's credibility and are at least equally important. These include its consistency of principle, the credibility of its scholars, and the substance of the work it produces.


Larger free market-oriented think tanks like the American Enterprise Institute, which have clear ties to corporate America, are tougher to get a handle on, say officials at other tanks. This is partly because they are large enough that they do not need to risk taking a policy stance solely for financial gain.

In addition, their core conservative belief that markets and free enterprise are positive economic forces typically intersects with the policy goals of corporate America. Some in the think tank world believe this circumstance drives much of their funding.

"AEI is a tough question," said one tank official. "AEI has really cornered the market on industry and regulation research. They address serious questions with typically sound study and research, but always with that (market-oriented) slant. This is a subtle niche that simply corrupts a lot of small shops."

Although AEI has a policy of not discussing its specific funding sources, Karlyn Bowman, a resident fellow who watches think tanks, said that the institute's driving principles of free-enterprise and limited regulation date back to its founding in the early 1940s. She said she believes that this could account for some of the tank's funding sources.

"The philosophy is so well known and has been for so long," said Bowman. "Perhaps that induces some corporations to give to us, perhaps it turns some (who are more inclined toward regulation) away from us."


What can be done about the problem? Clemons said the major think tanks in Washington need to get together and develop "best practices" policies as a way to self- regulate and avoid any potential problems that could blow up and taint the industry.

"I actually think it is going to get worse across the board," said Clemons, noting that there has been a general decline in giving by foundations and corporations to non-profits.

In addition, he cited the recent ban on so-called soft money political donations to political parties as another potential source of revenue that could develop into a funding conflict problem.

Hahn agreed that the development of best practices for the think tank industry could be a good means to address the issue, but warned that disclosure rules for think tanks would have unintended consequences, like those that developed in the wake of lobbyist restrictions.

"In general I think that transparency is a laudable goal, a good idea even, but I am not sure how far we want to go," said Hahn. "(But) if this is a big enough problem as Steve presents with his anecdotes, then I think people will have to take steps to start eliminating it."


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