Funding is one of the main concerns for think tanks. Especially since there are very few who have continuous endowments, funding is what induces the possibility for think tanks to publish qualitative research and generate policy recommendations.
Along with people, funds are a think tank’s main input, which makes fundraising one of the most important steps when starting a think tank, however, also one of the hardest.
*This video explains the fundraising cycle with tips and methods
- A Donor Market
- People and time
- Investments (money)
- Fundraising tools and know-hows
One funding source are clients, which are categorized by a binding contract/ partnership with two or more parties having a direct transaction of services, content or goods. In simple terms, they fund you in order to receive something in return; such as specific activities, content, or concrete outputs/ results . These donors are supporting you for a specific cause, so you need to sell a specific "product" that adds direct value to them; since you will be their client and they will be your boss.
- Depending on your position as a think tank, you have to watch out who your client is and if there will be any conflict of interests. So, do your research beforehand!
- Watch out with VAT, as you are doing business here.
- Governments are good clients, yet be careful with private companies as issues with services could arise. Private companies interest is in increasing their profit, so keep that in mind.
Another funding source are foundations, which are also categorized by a binding contract/ partnership with a particular transaction, but generally for a different cause. Foundations tend to give grants to actors/ projects for a specific ethical purpose, e.g. the greater good. However, foundations are an extremely diverse market with no general rules. They vary depending on what donor market you are approaching, in what field, and in what country. Governments, private foundations, philanthropic foundations, and international organizations all have funding opportunities with specific mandates on why and who to support.
- Have an overview of different foundation markets, by always keeping on the lookout, physically and virtually.
- Two ways to approach foundations are by having a unique and ethically good purpose for your project and then finding a foundation that could be interested in it OR choosing a donor and designing a project to fit their mandates.
- However, your think tank will be more motivated and excited for an idea that you developed out of passion and interest rather than out of force and need.
A different funding source are donors, which are categorized by giving donations without having a specific contract that includes a transaction for a particular activity. They donate because they believe in you and your actions as an organization. An example is crowdfunding, which Agora used to establish and start their think tank. They developed a two-year business plan and made a video pitching their think tank and spreading it online through their network and the network of foraus. As a result, they were able to go through with their business plan and have become a fully established think tank. The people donated because they believed in their idea and organization but there was no particular agenda attached to it.
- What worked for Agora in London might not work for your think tank. It is an option, but it should not be your only funding source.
The last funding source mentioned are sponsors, which are similar to clients, yet they only want visibility in return. In simple terms, they support your think tank, project, or event and in return you place their logo everywhere. Of course, this varies completely, some want to be more involved and some less.
- Before signing the contract/ partnership, know their price tag and be sure how involved they want to be.
- This source is often used for organising events rather than publications, as there could be a conflict of interest.
Subscription for a membership of your think tank is a great way to gain funds, for your core funding and additional costs. Membership fees and classifications can vary depending on the think tank and country it is located in. You can choose if members have a political power in your organisation, if there are different levels of members, or if they receive first-hand access to events and publications. The variations are endless.
- Make the membership as appealing as possible, so people actually subscribe
- Have a clear membership strategy that is easy to follow
- Do research on what the incentives people have on becoming a member, such as: networking opportunities, exclusive content and/or free access to events. Once you have that knowledge, you can form the levels and strategy around it, and thus charge for it!
Subscriptions to specific content can provide a standard service for a cost per week, month, year, etc. Examples would be a subscription to your think tanks newsletter that appears once a month or a weekly international foreign policy news update that you send out per mail, so the person can stay updated on current events. You could provide these subscriptions for a small cost. For example, all subscribers can get a newsletter, but only those who pay get to read the latest articles or the full article. There are many ways to receive a small amount of funds for subscriptions. Another way, is offering network services or access to online platforms/ products. You can also play with layers of subscription; some content being free and some costing.
A way to increase your funds is to possibly include free subscriptions to your services for your members. This way people are more likely inclined to become a member, which could come at a higher cost.
Asking for a small contribution from attendees at your events is also a possible way to increase your funds. For example, it can cost €2 for people to attend the high profile panel event that you are organising and be free for your members. However, be aware to not use this method at the start of your think tank, as people would not be very willing to attend or contribute.
Core Funding is often one of the main struggles of a think tank. It can be difficult to find funding for an actual organizational team, office space, and generally the core functions of a think tank. Especially, as foundations and clients often do not want to spend money without having any specific output, such as an activity or project. So here are some tips and ways to budget for your core team.
- When receiving money from donors (as mentioned above) or/and membership fees, the funds should directly be budgeted as core funding.
- There are also 3 other ways to manage your project budget, to extract funds for core funding:
- 1.Explicitly state a 10-20% overhead or infrastructure percentage in the project budget. You have to be aware that not every donor will allow it, but always give it a try.
- 2.Place labor percentage higher than the actual cost. For example, the project manager has a higher salary than they actually do. This could be a hidden overhead and is easily justifiable. It is a little sneaky, but you have to sell it somehow.
- 3.Include lines for labor or goods that are necessary for the project even though they would not directly be a part of it, but still linked. For example, money for a new laptop that would be used by a team member working on the project. This again is then used for the overhead budget.
- Ideally use all the ways listed above or chose specific ones that could work. You have to try your best, as you need to be able to pay your employees, work space, and to an extent publications.
Fundraising and searching for new funds is usually an on-going process for almost all think tanks, no matter what their fundraising model is. There are contentiously new opportunities for grants, projects, and other types of funds from different fronts: locally, regionally and internationally. Some of them are formulated as calls for applications, while others are simply potential donors for your think tanks to approach. Each approach can be followed through a systematized method. For instance, potential corporate donors or philanthropists can be found through monitoring and filtering mechanisms suited to the think tank’s needs.
However, not every opportunity is worth pursuing. Applying to anything that looks remotely related to a think tank’s work (or equally approaching anyone who gives donations) can never be a logical fundraising strategy. For this reason, it is highly important for your think tank to analyze distinct opportunities, so you can make reasonable choices, as not every opportunity would fit to your values and model. There can be a formalised criteria to choose from, which calls to apply for (or which donors to contact) or have informal discussions among your team (e.g. annual team meetings), but it needs to be done consistently. Generally speaking, your think tank should consider how potential contracts, grants or activities might affect your research agenda, team & managerial requirements; for example, if they would want to impose a specific type of communication and potentially influence their own policy agenda.
When you decide to apply for a particular call or to address a potential donor with a proposal, the next stage is to develop and implement the offer. This is very time-consuming, and even the most solid proposals do not assure success. Depending on the donor requirements, it can sometimes be avoided as few would request for a short concept paper before choosing specific concepts for a complete proposal. Nevertheless, it can be beneficial to have a short concept paper on hand, as in some cases these concepts can be further developed and refined for another proposal application, especially if there are several donors necessary for the project. However, no matter the extension of the submitted proposal, once the funds are received, it needs to determine your think tank's operations in carrying out the work. Even though some funders provide more flexibility than others, it is essential to write a proposal, which to an extent can actually be completely carried out.
Here are some tips to keep in mind during this stage:
- Have sufficient time available for the proposal
- Work in groups/ teams, it is usually better and less time consuming than individual work
- Remember to collect feedback and ideas from various colleagues and researchers with various expertise
- Follow every available guideline and ensure you fulfil every requirement
- Build on successful experiences from the past and learn from mistakes
- Essentially, only ask for funds you actually need – do not promise more than you can deliver for a given amount.
Subsequently, once you have received funds, you tend to get an assortment of reporting requirements linked to them. This tends to be extremely time consuming for think tanks as donors have increasingly higher demands regarding output. Therefore, it is decisive to consider and know the specific requirements from the beginning of the project, so those in charge of fundraising or the project are accordingly prepared.
The report is usually supposed to display some form of information regarding its outputs, process, results, and to an extent impact. So, the donors can monitor and evaluate what the think tank is carrying out or accomplishing with the funds (or not). A good tip would be to simplify this information from different outputs of reporting into one organized file or google drive, so when the moment comes to report, it is all in one place. This can ultimately support your organisational, operational and strategic decision making process in your next projects.
Before you can ask for funding, you need to have a clear mindset that you are not being a "beggar" or a "thief". You are making a deal with a donor, who is willing to give you funds because he believes in the positive outcome it will generate, whether it is financially or socially.
You should set a positive and confident mentality, when asking for funds. If you do not believe in your offer, how can the donor.
- You have something unique to offer
- You are proud of what you do
- You are partners
- You are not afraid to ask for support
- Everyone is a fundraiser (to an extent)
The donor markets available are:
- Governments - in your country or/and abroad
- Public Bodies (Universities, Federal Agencies)
- Private Donors
Ask yourself these following questions:
- Which donor markets suit our think tank?
- Which actors in the market suit our think tank?
- What/where are their networks? How do we approach them?
- 1.Establish and respect excluded markets (markets you do not want your think tank to be associated with).
- 2.Determine top 3 promising markets (e.g. finance, IT, and Platform markets)
- 3.Per Market: Establish a list of 50-100 corporations, then analyse and rank the top 5, identify the right contact person (through e.g. LinkedIn)
- 4.Make an Offer: it is better to send it through these business networks/ platforms, than through email (since they get drowned by emails)
- 1.Dependable: Funds that are random and non-dependable don't tend to help the think tank in the long term or in their sustainability.
- 2.Diverse: Funds should come from various sources, additionally various different kinds of sources in order to keep your funds unbiased and nonpartisan. However, be aware to not have the various funding cycles coincide as well as have too many sources as the administrative tasks and delivery will become a burden.
- 3.Acceptable conditions: Always be careful that the project conditions that come with the funding contract do not interfere or influence your policy work. Preferably, the donors and grantees should aim to refrain from extreme bureaucratic or restrictive conditions. Under some circumstances, e.g. working with large donors like the EU, it should not be shunned although it imposes high administrative efforts. Tip: ALWAYS pay attention to the small print in contracts.
- 4.Independent: The general condition for a good funding model is to always have a guarantee that your think tank stays independent to govern itself; e.g. deciding how to run the organisation, which issues to pursue, and so forth.
- 5.Transparent: Finally, an increased distress is related to sources and the ability to track the origin of funds that think tanks receive and the main conditions and requirements attached to them. So, always be transparent with your funds and expenses, and no problems should occur.
These criteria can be challenged and/or modified. However, they offer a fairly basic yet comprehensive set of guidelines to assess if an organisation’s funding model is actually problematic in terms of its broader strategy.
There are 2 sides in proposing an offer to the potential donor.
- 1.The Rational Part: This entails the qualitative information on the outcomes of funding your think tank or project. For instance, the figures you are doing with your think tank or funding a specific project.
- 2.The Emotional Part: This entails your motives, the external effect it will generate, and your personal incentives. It is an important point, since you are trying to connect with the human being who is deciding if they should fund your think tank/project. Tell a story (with images and/or videos),instead of just sending in numbers and information.
Every donor is different and needs to be approached with different tactics. A research by NPC (New Philanthropy Capital) in the UK, Money for Good UK, and by Hope Consulting in the US, suggests that donors can be segmented in order to better understand their motivations for funding, and hence receive more funding.
The research states that segmentation is useful since it can help think tanks to:
- Effectively communicate with their current donors and acknowledge their support;
- Concentrate their efforts on donors who would most likely fund them; and
- Determine the probability of being able to persuade donors to fund them and/or continuously stay loyal to them.
The study concluded, there are 7 different segments of Donors:
- 1.Engaged Champion - Invests time and gets friends & other people involved
- 2.Benefactor - Funds in order to lead a good example
- 3.Loyal Supporter - Funds because they care about the cause
- 4.Faith based Donors - Funds only if they represent their community & beliefs
- 5.Thoughtful Philanthropist - Funds and supports to make an impact
- 6.Ad Hoc Giver - Funds because he is asked to
The 7 type of donors do not all correlate well with think tanks.The motivation of every donor also varies accordingly. Some donors:
- Are driven by the cause: such as the thoughtful philanthropist, the loyal supporter, and the engaged champion
- Are driven by personal links, like a friend, former colleague, or university alumni: such as the benefactor
- Need to perceive the cause as a duty to society: such as the benefactor, and the good citizen
- Need to be seen as role models: such as the thoughtful philanthropist, and the engaged champion
- Require an impact, they are only interested in the outcome it could generate and would want it for the short run; such as the loyal supporter, engagement champion, and thoughtful philanthropist.
Therefore, to know what kind of donor you are approaching, you should:
- 1.Get to know the potential donor(s) as a human being and their organisation/company. Try to figure out what kind of donor they are by using your networking contacts, profiling them, and/or researching about their funding processes.
- 2.Inform the potential donor(s) about your organization.
- 3.Get them involved in your organisation (e.g. Newsletter, Events,...).
- 4.Prepare the potential donor(s).
Before your Pitch:
- If a specific foundation has an official application process, it would be better to start a conversation with people or a person in the foundation, before submitting your proposal. For example, writing an email to the contact person, introducing yourself and your organisation. This would help you make it more personal, and allows your organisation to stand out.
- Try to make it more personal by asking the contact person for a coffee, or inviting them to an event, as it always helps to put a name to a face. This way you can also ask questions regarding the application process, and give a more personal explanation and view into your organisation.
- When you meet them, listen to their advise and even more carefully to their needs.
- Sometimes you do not know who the contact person is, in that case ask around in your network if someone knows someone in the foundation, or if someone has collaborated with the foundation. Use your network to your advantage when fundraising; which is why networking and fundraising comes hand in hand. For more information on how to network, click here.
- When you pitch your idea, be confident and be convinced of your project/ idea. Show your enthusiasm for the project and your future collaboration.
- Try to engage them during your pitch.
- Design your pitch in an exciting and captivating way, in order for them to get excited about the project as well.
After receiving funds from a donor, it is highly important to reinforce the positive decisions of the donor for supporting your think tank.
Say Thank You - Always be humble and grateful, and very thankful towards the donor.
Proof of Usage - You should be able to prove to them that you have been using the money for what it was intended for, preferably with a documentation, e.g. an annual report and if asked, a financial statement.
Recognition - Most funders would want recognition. They would either want their logo to be present or/and shown on every product, project, or event the think tank produces/organizes with their funds (This is usually set and is included when signing a contract).
However, you should always ask your donors if they want to be mentioned in your annual report or publication, as not every donor would want to. Nevertheless, it is another opportunity for you to recognize them.
Show Impact - This is beneficial not just for the donor, but also for you to have a clear view of what your impact is or/and your project.
Communication - Stay in regular contact with them. Invite them to events you think would interest them, invite them out for dinner or drinks. Keep the communication flowing and stay up to date with them, so they continue funding you. It is always important to have good contacts in your network, especially since you would want to win the funder for a recurring donation.
Examples of communication tools that you should use on-going and systematically:
- For Companies: Send annual reports, organize formal and informal meetings, and send Newsletter
- Foundation: Send annual reports and stay in correspondence with the contact person, invite to Events
- Governments (in your country or/and abroad): Annual report
- Public Bodies: (Universities, Federal Agencies): Annual report and Presentation Meetings
- Private Donors: Send letters, phone calls, include in different digital platforms, send Newsletter, invite to Events, organize formal and informal meetings