Module 3. Money: what you cost and what you charge

Guiding question

What does it really cost to run your organisation, what must a project earn to be worth taking, and how do you start building reserves from day one?

Before the live session

Work through this module before the session (about 35 minutes) and bring your questions to the live session.

What we cover

Three budgets, not one: the organisational budget (what you need in order to exist), the internal project budget (what the work really costs you) and the funder budget (what you present).
Direct and indirect costs: knowing your own indirect rate, whatever a funder will pay. Small and new organisations run higher rates — that is arithmetic, not mismanagement — and you need the number before you can negotiate a cap.
Reserves: why three to six months of operating costs is the target, and how a non-profit builds a surplus without tax surprises.
Contingency: inflation, exchange rates and multi-year projects. Funders rarely adjust a budget when things get harder; the budget you wrote is the protection you get.
Choosing projects: cost recovery, minimum margins and declining work that does not pay for itself. Grants versus service contracts, and asking funders about reporting requirements before you sign.
Diversifying income: moving from project-by-project funding towards something more predictable, without depending on a single donor or type of income.

In this module

Reading 1. Build a think tank: What will its business model be? (about 10 minutes)
Reading 2. Build a think tank: Who will fund it and who will support it? (about 10 minutes)
Reading 3. Fundraising and financial management (about 10 minutes)
Templates
Further reading
Live session
Task for the week
Quiz
Recording

Reading 1. Build a think tank: What will its business model be?

A business model describes how an organisation delivers value, who pays for it and how that money becomes research with the potential to influence policy. This section sets out the elements of a business model, compares the models of six think tanks in Latin America and Indonesia, and describes common types of think tanks. It frames the budget discussion: what you cost depends on the model you choose.

From Build a think tank: A guide for policy entrepreneurs (On Think Tanks), chapter The What? questions.

What will its business model be?

One of the first things you need to do is decide on the business model your think tank will follow. This decision should be based on what you want to achieve and how you want to work, but also on the context you are starting the think tank in and on the resources you have at your disposal.

A business model is ‘the way in which an organisation goes about achieving its goals… it defines the manner by which the think tank delivers value to stakeholders, entices funders to pay for value, and converts those payments to research with the potential to influence policy… It thus reflects management’s hypothesis about what stakeholders want, how they want it, and how a think tank can use its resources to best meet those needs, get paid for doing so, and achieve its mission. In sum, a think tank business model describes the interface of a policy research institute’s rationale and underpinning economic logic’ (Ralphs, 2016a).

When developing a business model, you need to make three choices: policy, asset and governance.

Policy choices are about the internal policies that an organisation establishes for its operations. These range from decisions about flying economy, not using printers, and holding virtual vs in-person meetings, to policies such as establishing funding limits from single sources and how to recruit and retain staff.
Assets are the tangible resources that an organisation invests in.
Governance is how the organisation will discuss and make strategic and day-to-day decisions (Casadesus-Masanell and Ricart, 2011).

Explore these choices further by considering the following elements:

Elements of a business model	Description
Value proposition	When producing and selling products and services, what value is offered to users?
Core business activities	What activities are carried out in order to create value propositions, and consequently to generate revenue for the organisation?
Leadership	What are the characteristics required of leadership?
Governance	How to set up governance?
Communications	How are the audiences defined considering the value proposition? What strategies and channels need to be developed to reach them?
Funding structure	Where does funding come from? How are the decisions regarding funding organised and managed?
Staffing	How to identify, attract and motivate staff members?
Financial management	How does the organisation deal with revenues and costs to ensure its sustainability?

Source: Adapted from Cahyo and Echt (2015)

When reflecting on your business model, one idea is to create a story about how the organisation will accomplish its mission.

Good business models can take many forms, but they share some key characteristics:

They are aligned and respond to the organisation’s goals.
They are self-reinforcing, meaning that there is internal consistency. All choices and decisions should complement each other and work towards the same goal.
They are robust. They continue to work overtime fending off risks and taking advantage of opportunities (Casadesus-Masanell and Ricart, 2011)

Remember that your business model can change if it no longer works for your organisation. See the case of Espacio Público in Box 16.

Box 16. Changing business models: The case of Espacio Público in Chile

Deciding on a business model is an important decision, one that will define how the organisation will organise and carry out its work. Business models respond to the objectives and goals of an organisation, its context and resources. Because of that, most business models are unique, and must be continually evaluated and evolving. But it is not a decision that is set in stone. If at any point the business model is not working you can make the decision to change it.

For example, Espacio Público, a think tank in Santiago de Chile, began operating in 2013 with two large core funders who provided 100% of their budget. The agreement with one of the funders was for three years and with the other funder the agreement was that they would reduce their funds every year. This encouraged Espacio Público to search for more project-based funding. By 2017 they had 20% core funding, 70% project based funding and 10% local funding.

But funding was just one of the changes they underwent. They also had to rearrange their board and their team of researchers to adapt to this project-based funding, which demands greater autonomy from the team. They reduced their team of researchers to ensure that it was composed of more senior researchers who could ‘stand before donors in their own right’ and not as assistants of someone else. In other words, as their funding model evolved, so too did their business model, in a complementary way.

Comparison of think tank business models

Research conducted by Leandro Echt and Ashari Cahyo Edi (2015) analyses the business models of six think tanks (three in Latin America and three in Indonesia) by focusing on the elements presented above. The study reveals that think tanks have different understandings of what ‘business model’ means. Some point to funding structure while others focus on the think tank’s mode of work or value proposition.

Similarities among the think tanks studied:

Most think tanks diversify their core business activities, rather than concentrating on a single activity. These activities are usually research, capacity building and policy advice.
Most think tanks make efforts to diversify their funding sources.
Most organisations understand their different audiences and have communications tools to target them.

Differences among the think tanks studied:

In terms of governance, some think tanks have heavy governance arrangements (with many internal and external bodies with specific functions) while the approach is much lighter in other organisations.
Regarding the value proposition, for some organisations research excellence is their main product, while for others it is their ability to engage with grassroots communities.

Not everyone has the right skills to develop the business model, so it may make sense engaging a professional team to support you at this stage. Having a well-drafted business model and business plan is key to gaining the confidence of future partners and funders.

Types of think tanks

The application of the different elements of a business model results in different types of think tanks. Stone’s (2005) classification, which relates to the think tank’s origin, is a good place to start. She identifies the following:

Independent civil society think tanks established as non-profit organisations.
Policy research institutes located in, or affiliated with, a university.
Governmentally created or state-sponsored think tanks.
Corporate-created or business-affiliated think tanks.
Political party (or candidate) think tanks.

These are just some examples of types of think tanks, and many nuances exist within each category. For instance, within independent civil society organisations, some behave like research consultancies (undertaking research on demand and even bidding on calls for proposals).

This model tends to exist where international cooperation has played a significant role or where the main research funder is the state, via requests for expert advice or evaluations. These think tanks engage in service contracts to carry out long- and short-term research projects, and because of this, their space to follow their own agendas may be somewhat limited (Mendizabal, 2013a).

Some think tanks try to combine research consultancy with more independent-type communication and outreach work. (Mendizabal, 2016)

Box 17. Types of Think tank across the world

According to the 2019 Think Tank State of the Sector, which analyses think tanks around the world, the majority of think tanks for which there is data available are non-profit organisations (67%), followed by university institutes or centres (16%), government organisations (10%), for-profit organisations (5%) and a small group of other (2%). This also varies by region. For instance, in China the percentage of government think tanks is 74% while in the US and Canada 97% are non-profit. The legal registration of your organisation will need to adapt to the context in which it will operate (see What is the context? for more on this discussion)

Another example of organisations that fall somewhat outside Stone’s categorisation are the for-profit think tanks we have come across in Eastern Europe, Latin America and Africa. Their context has made this the most logical business model: high upfront costs for civil society organisations, regulations that limit their free functioning or access to data, complicated tax laws for the non-profit sector, and other factors led them to opt for this model (Mendizabal, 2013c). Many figured that while governments may try to curtail civil society, they are unlikely to do the same with small and medium-sized businesses. forauss is a Swiss think tank that was set up as a grassroots organisation and reflects its origins through its extensive network of volunteers who take on policy challenges and undertake research in a very collaborative way. They are supported by a small group of young think tankers who manage these processes and fulfil core functions.

These are just some of the options that exist. Your organisation could resemble any one of these or even be different. In any case, it is important to bear in mind that the business model should work for your organisational aims and the context in which you operate and that you expect to influence.

Box 18. Think tank models in Zambia

As examples of the diverse types of think tanks that exist, we present a summary of different think tank models in Zambia (based on Mendizabal, 2013d and 2013e).

Academic think tank. These are the most traditional, and preferred by funders such as the African Capacity Building Foundation (ACBF). They follow an academic model and tend to be rather expensive (funding wise). ZIPAR (Zambia Institute for Policy Analysis and Research) is an example of this type. It had a slow and steady early start focussed on setting itself up: office, staff, systems, processes, partnerships, and so on, producing little or no outputs. This was made possible by core funding from ACBF. Up until 2013 it still had core funding from ACBF as well as from the government of Zambia, complemented by project funding from DFID and the Danish Embassy.

GO think tank. An interesting example is the Centre for Trade Policy and Development (CTPD), which was born from the secretariat of a network of NGOs, working on issues related to trade and development. This secretariat started by doing mostly capacity building work, but it slowly shifted towards policy analysis and influence. The network members then became a board or assembly for CTPD. The organisation receives funding from international NGOs (some of it core funding).

Faith-based think tank. The Jesuit Centre for Theological Reflection (JCTR) has an interesting and uncommon think tank model: it is a faith-based organisation. It has the key advantages of having an established narrative and constituency. JCRT uses the Christian narrative, stories and metaphors, to communicate its evidence. This resonates strongly with many specialised and general audiences in the country. They have also developed a product: the basic needs basket. This is circulated and used in government, international actors, trade unions, media businesses, etc. For more on religion and think tanks read these articles: Mendizabal (2012,) The church and think tanks and Mendizabal (2011), Is religion a ‘no no’ for think tanks?

Reading 2. Build a think tank: Who will fund it and who will support it?

This section covers the income sources available to new think tanks, why reserves matter, and who should do the fundraising. Boxes 33–35 show how three organisations moved from their first sources of funding to more diversified ones.

From Build a think tank: A guide for policy entrepreneurs (On Think Tanks), chapter The Who? questions.

The characteristics of a good funding model are covered in Reading 3.

Who will fund it?

Adequate funding will ultimately enable the success of your think tank. Most think tanks would agree that landing core funding is a once-in-a-lifetime opportunity. There are now only a handful of funders willing to provide it. Also, foreign funders are under more pressure to tone down the support for civil society, especially organisations trying to influence policy. In many African countries, for example, international agencies are being increasingly monitored and managed by stronger governments, turning already risk-averse funders even more conservative. This scenario is a risk for any organisation that aims to be creative and provide alternative policy suggestions (Mendizabal, 2015c). But there are many other options available for think tanks to consider:

Short- or medium-term project funding.
Research consultancy work.
Paid-for training and capacity development services.
Sponsorship of reports, events or capacity development initiatives.

Although global and regional funders are decreasing in number or reducing their support, there is a diversity of other funders at the national level, such as domestic governments, INGOs, and research networks. Overall, it could be said that the funding environment and incentives are challenges for a think tank. However, there are other fundraising methods you can pursue (Lah, 2021).

Here are some other income-generating ideas that you could consider (Mendizabal, 2015c):

Paid membership that provides access to member-only events, report launches and advice: Membership programmes can provide a source of income, as well as a good platform for other more profitable ideas, or even generate relationships that can turn into more important supporters. See how Bruegel and the Atlantic Council have set this up.
Renting out capacity: for example, the Busara Center for Behavioral Economics rents out its behavioural insights lab to organisations interested in research of this kind.
Renting out space: this is useful for organisations that have free office space, including space for events.
Hard copies of reports and books.
Paid-for courses.

A new think tank may have to be creative and seek out in-kind support. You could, for instance, benefit from free office space by requesting support from a university or a foundation. Some of your central costs, such as utilities, administrative, and accounting support, could also be covered by a host.

Therefore, while core funding is now less common, there are many ways to generate income. Do not limit yourself by thinking that you need to constantly search for core and long-term funding. This kind of funding is important, and you need to find it, but there are other ways. On the other hand, it is key to start building your network and your name before you can start approaching funders.

Box 31: The philanthropic sector in Africa

It is a challenge to tap into local philanthropists in countries in the global south. As economies are strengthened, the number of people that could become philanthropists should increase. But their number has not followed economic growth. Nonetheless, philanthropy is emerging as a force. For example, African philanthropist Mo Ibrahim has a foundation that has launched several initiatives. There is also the African Grant Makers Network. These institutions, and others that might develop, are a promising opportunity for think tanks to diversify their funding. But the road is long, and developing an active philanthropic sector requires patience and a concerted effort from different actors (Yeo, 2013).

Box 32. Think tanks and the private sector

With the reduced availability of accessing flexible and core funding, think tanks are devising new funding strategies, and engagement between think tanks and the private sector is growing across the world. Engaging with the private sector is one way to access new funds but it can be difficult to convince those actors of the value of funding research.

Other challenges of establishing relationships with businesses and corporations include maintaining a think tank’s self-determination and safeguarding its credibility. To overcome these challenges and take advantage of the opportunities these engagements offer, think tanks should research potential partners and identify how and why they can be attractive to them. For instance, they may offer public relations and legitimacy, strategic philanthropy, or advice and expertise (Baertl 2019).

Reserves

It is also important that your think tank has reserves that can cover expenses in times of unforeseen crisis, such as a shortfall in revenue or a worldwide crisis like COVID-19. In order to be resilient when your cash flow is under pressure, and to remain relevant when policymakers need your work, you should have around four to six months’ worth of cash reserves. This, of course, is difficult, as donors do not often provide funds that can be saved, so this surplus may have to come from other sources or from investments.

Who will do the fundraising?

This is an issue that concerns many mature think tanks facing funding challenges. Who will be responsible for funding?

In the beginning, it is useful to encourage all the leadership to assume responsibility for seeking and securing funds for the think tank. This includes the executive director, senior members of the team and even some board members.

It is always worth considering involving a fundraising or business development expert in your team. While some may see this as a luxury expense, the contribution of an expert to a think tank’s sustainability should not be underestimated.

You can make sure that you raise enough funds in different ways. Some from think tank directors recommend starting with contacts you and your team already have (e.g. from a university, from donors already known to you in previous positions), applying to calls from international donors and, especially, being open to combining different sources of funding. The below are some strategies based on the experiences of STIPRO, a think tank in Tanzania who received core funding for almost a decade and then had to find new and sustainable funding sources:

Involve all staff by creating an organisational fundraising culture and training all staff in the basics of fundraising.
Scan the donor environment to understand which donors may be interested in your work. After mapping them, you can approach them, let them know about your work, and develop a relationship with them.
Offer capacity development services to donors in the areas you specialise in. Providing training can be a good way to become known and to earn an income.
Maintain a good relationship with existing donors even when you are looking for new ones. Make sure that your reports are submitted on time and that you keep in touch.
Engage your board members, who may help in different ways, such as reaching out to their contacts or providing seminars to your staff on issues such as proposal writing or project management.
Increase your visibility through communications such as your website, blogs, news outlets, seminars, public debates, etc. This will help potential donors know who you are, what you do and what impact your work has.

Below we provide some examples of how think tank directors approached accessing funds when their think tanks started. One way is to start by reaching out to existing contacts and capitalising on any standing affiliations (e.g. to a university). Another way is to identify international organisations and foundations interested in your region or priority areas so that you can target them when you apply for grants. Another is to rely on funding from the funding sector. Although some think tanks prefer to avoid these funds, if the corporations that are willing to fund your work allow you to remain independent, it is a good way to increase your financial resources.

Box 33. Starting with established contacts: The experience of GPTT in Iran

Seyed Sadegh Emamian is the founder and former director of the Governance and Policy Think Tank (GPTT), established in Iran in 2012.

“First, we worked with our university affiliation because we were established as a university affiliated think tank, and it is a very well-respected university in Tehran. We capitalised on this reputation and we defined ourselves as a new institution that was an extension to the university.

We have had different stages of fundraising. In the beginning we capitalised from the reputation of the university. We gathered a group of talented graduates from the best universities and some young, talented policy researchers and the idea was interesting for some funders that had already funded universities and university institutions. We also were able to use the facilities that the university already had, like the building or staff who were already working there.

Once we started to function and the think tank itself had a basis of trust and respect, it was time to approach some funders and show them that this wasn’t just an idea but a real institution. We showed some interesting impact. In another stage of fundraising, we built up on the recognition that GPTT itself had.

At the moment, some of our funds come from the university, directly or indirectly, some come from policy projects and some come from funders and donors that are willing to fund.

Projects are usually from the public sector to work on policy issues. The government, the parliament, and some research institutions have funded us for several projects. And some grants that have come from private foundations.”

Box 34. From supply-driven to demand-driven funding: The experience of CADEP in Paraguay

Fernando Masi is the director and co-founder of CADEP. Read the full interview here.

“All funding came from international foundations and organisations. In the beginning, it was more supply driven: identifying foundations with interest in Latin America and their priority areas in coincidence with ours, elaborating and presenting proposals.

It became more demand driven from 2000 onwards: donors started launching calls for papers and setting the research agenda. In addition, getting private or public local funding for research in Paraguay was not a possibility in the 90s. Only very recently public funds for research have become available.”

Box 35. Combining different sources of funding: The case of CAPRI in Jamaica

Diana Thoburn is the director of research at CAPRI, a public policy think tank in Jamaica. Read the full interview here.

“Funding affects our very existence and everything we do – from the research that we conduct, to our staffing. As an independent think tank, we do not have a parent organisation that we rely on. The majority of our core funding is from large Jamaican corporations and a couple of non-Jamaican private businesses. That core funding primarily pays most of the organisation’s 12 employees. The university supports us with office space, overheads and two salaried positions. Most of our research funding comes from international development partners. The main ones we’ve worked with in the past few years are the UK Foreign, Commonwealth and Development Office (FCDO, formerly DFID,) UNICEF, the European Union, the Inter-American Development Bank and USAID, in response to themed calls for proposals. This means that, for the most part, our research agenda is not solely determined by us. While we are fortunate to be in a stable financial situation, our salaries are well below market rates which makes it difficult to hire and retain quality talent.”

Who will support it?

A good question to ask yourself is ‘who can support your think tank?’ This is not the same as asking who will fund it. Rather, who will be able to support the organisation with access to their networks, guidance, knowledge, and even office space?

Think about what you need to get started and who you can turn to for support. Board members and their networks are a good source for this. For example, in the case of On Think Tanks we are supported by Soapbox, Universidad del Pacífico, the University of Bath, our fellows and board members, to name just a few. Soapbox has provided us with invaluable guidance (and work) on the development of our website. The University of Bath has supported us with space for our annual conference and Universidad del Pacífico supports us with space and access to their research network. Our fellows are ambassadors to On Think Tanks and regularly submit articles. All of this enables us to have a lean operation that looks much bigger than it is.

Reading 3. Fundraising and financial management

This background note goes further into funding models: what makes one successful, the implications of core funding compared with grants and contracts, how to organise the fundraising function, and four avenues for changing a funding model. Table 6 works as a checklist for the live session.

From the School for Thinktankers background notes (On Think Tanks, 2025). Note 6: Fundraising and financial management.

Introduction

Funding is a key concern for every think tank, affecting its sustainability, the way people work, and the type of research that is conducted, as well as the potential for having sustained policy influence.

Even though there are plenty of capacity-building activities that focus on how to carry out effective fundraising, little has been done in terms of systematising the diverse range of existing funding models, along with their implications and consequences on think tanks’ performance, relevance, identity and sustainability. There is also increasing interest from think tanks in understanding how to develop or strengthen domestic support for their work or create new sources of income, often recognising that they rely too heavily on international cooperation or on conducting isolated projects under a consultancy model.

This section helps systematise aspects of different funding models and analyses their implications and consequences. More specifically, it seeks to:

Raise awareness on the different ways of generating and using funding and their respective implications for the organisation and its members; and
Share ideas and innovative practices for managing diverse funding models.

Funding models

What is a funding model?

Let us start with an exploration of what a funding model is. One useful definition holds that ‘it is a methodical and institutionalised approach to building a reliable revenue base to support an organisation’s core programmes and services’ (Kim, Perreault and Foster, 2011). The most important bits of this definition are probably the first two: a methodical and institutionalised approach.

This might seem obvious, but: How many think tanks have developed a sound and thoughtful (a methodical) funding strategy, which guides fundraising efforts and ensures that there is consistency between the sources of revenue, quality of research, and policy influence capacity? Are fundraising efforts often guided by strategic planning and long-term thinking? How internally driven are these efforts vis-à-vis responding to the external demands and opportunities?

Indeed, the second part of the definition, an institutionalised approach, highlights the connection between funding and the organisation’s mission, which is pursued through its programmes and services. This is where the concept of business model can become useful, since the think tank needs to clearly understand what it offers to core stakeholders (business model) to then determine who can support this effort (funding model).

What does success look like?

In line with the definition provided, a successful funding model is one that creates sustainable revenue in a way that enables the organisation to best pursue its mission. This idea can be broken up into five basic components so that one can assess the current degree of success:

Reliability: Funds that come and go ‘randomly’ can never help the organisation in the medium and long term. In this light, unusually high growth is no indication of having an efficient funding strategy, nor does some seasonality in revenues mean the opposite.
Diversification: Not surprisingly, putting all the eggs in one basket is not advisable. Diversifying does not only mean trying to have many donors, but also different types of donors, whose downturns should not be expected to coincide.
Acceptable conditions: Whatever administrative, contractual and/or programmatic conditions are attached to funds, they should enable the think tank to do its policy work to the best of its abilities.
Independence: A basic condition of a good funding model is for it to guarantee that a think tank remains independent to govern itself and define its policy research agenda: deciding how to run the organisation, which issues to pursue, etc.
Transparency: A growing concern related to funding models has to do with being able to track the origin of funds that think tanks receive and the main conditions attached to them.

Different funding models and their implications

Think tanks have found unique answers to the question of funding. Among the main sources of funds, the most recurrent ones are core funding and contracts (and grants). It is the specific combination of these sources and how they interact with a think tank’s work that ultimately defines a funding model.

It is also important to think about the implications of these funding models on three functions that most think tanks regard as essential to their mission: research, policy influence, and communications. The implications on financial stability should also be considered. Raising awareness on these implications is a first step to assess how appropriate the current funding model is for the way think tanks want to conduct research, communicate with key stakeholders, and influence policy. In fact, not making these links more explicit and avoiding deep organisational discussions about them deters a think tank from the possibility of re-thinking about the viability and soundness of its intended identity (mission, objectives, main attributes and values, etc.).

The following table (Table 4) sets out some of these considerations for two main funding models.

Table 4. Funding model implications
Funding model	Research agenda	Policy influence			Staff	Financial stability
Funding model	Research agenda	Allow to conduct relevant research?	Allow to take advantage of policy windows?	Cover communications expenses?	Staff	Financial stability
Core funding	Long-term, coherent research agenda. Core issues.	Conduct research on strategic and relevant issues.	Long-term policy influence.	Communications within organisational budget.	Allows hiring researchers and support staff on a permanent basis. Organisation can manage their workload with more stability and certainty. Researchers have more time to concentrate on research.	High in the short and medium term. Low if main donor/s drop/s out.
Grants and contracts	Demand-led and usually dispersed research agenda. Flexibility of issues, donor’s trends. Might limit the space a think tank has to develop ideas and research questions about an issue.	Trends among international donors are not always aligned with local demands and priorities. Government contracts increase the relevance of research, but carry the risk of legitimising decisions.	Can promptly develop a project that responds to an emerging issue on the policy agenda.	Communications left for each project to collect and manage.	Contractual flexibility and multiple tasks (research, fundraising, hiring staff). Less sense of belonging to the organisation.	Irregular revenue but generous fees allow for stability.

Source: Weyrauch and Garzón de la Roza (2015)

The fundraising function: How to organise it and why?

In most think tanks starting out, one is likely to find two scenarios regarding the fundraising function. In both, there is a group of policy researchers/entrepreneurs that set up the organisation, often around one or a couple of leaders. In one scenario, incoming projects are found and managed by the leader or main partners in the nascent think tank. The organisation’s funding fate is tied to their connections and initiative. In the other scenario, the same group is supported by an endowment or core grant from a single donor. In consequence, fundraising is restricted to managing the practicalities of the grant and the relationship with the donor more generally (based on Telgarsky, 2002).

Some organisations can preserve such schemes for several years without any strong incentive to change. As long as the think tank keeps its founders, partners or key members, approaching funders and deciding how to use funds can remain manageable for this small group. If the organisation grows substantially, however, the fundraising function will probably look different: more formal staffing arrangements, more substantial fixed costs related to facilities and administration (e.g. office space, accounting, and legal procedures), and greater costs for business development. Hence, the organisation increasingly spends time and resources collecting information, writing proposals and raising funds.

The following table compares the funding arrangements that are likely to emerge – centralised versus decentralised.

Table 5. Comparison of funding arrangements
Dimension	Centralised	Decentralised
Skills / professionalism	Higher	Lower
Cost	Higher	Lower
Administrative burden	On fundraising team	On senior researchers or programme leaders
Research consistency	Lower. The fundraising unit has some degree of autonomy to assign funding opportunities.	Higher. Researchers control their funds and their agenda.
Funding balance (across programmes / topics)	Higher	Lower (senior researchers who are more skilled as fundraisers or have better connections have more benefits: team and budget.)
Coordination with general units (Adm., Comms., etc.)	Higher and easier	Lower and more random

Source: Weyrauch and Garzón de la Roza (2015)

For an applied perspective on navigating these implications, explore this video:

Why re-think the funding model?

Even if uncertainty, tensions and questions regarding funding will always be a part of a think tank, it is important to re-think the funding model every once in a while. This entails first making the model clearer and explicit for members of the organisation as well as relevant stakeholders, and then reflecting on it. Here are some reasons for clarifying a funding model, and based on that, deciding what changes should be made:

Ensures that the organisation has a fairly logical and internally consistent approach to its operations and that this approach is clearly communicated to its stakeholders.
Provides an architecture for identifying key variables that can be combined in unique ways, hence a platform for innovation.
Develops and strengthens a vehicle for demonstrating the economic attractiveness of the organisation, thereby attracting donors and other resource providers (Zott and Amit, 2010).
Provides a guide to ongoing organisational operations, including parameters for determining the appropriateness of various strategic or tactical actions that management might be considering.
Facilitates necessary modifications as conditions change.

Exploring avenues of change

When looking for ideas to introduce changes in a funding model, it is better to respond to the challenges of the context (both external and organisational) and begin by exploring these four avenues of change:

Table 6. Questions and strategies of avenues of change
Avenue of change	Key questions	Strategies
Re-structure	Is the think tank able to support its core programs and services? What is the ratio between secured support and the work the think tank wants to do? Are the think tank’s main challenges linked to services or programs? Is the think tank savvy about its cost structure? How is the think tank investing in the institution?	Create/eliminate/merge areas Revisit staffing arrangements/more flexibility and higher ownership Strategic partnerships/alliances to focus on the think tank’s competitive advantages Work with volunteers/interns/board members Redistribute roles and responsibilities (share leadership) Think about cross-subsidies
Invest in fundraising	Is the think tank’s model centralised/decentralised or a hybrid? Should it change? Are roles and responsibilities clear and aligned with capacities and available time? Is fundraising capacity enough? Does the think tank need a specific expertise/profile? What stages of the fundraising cycle are most challenging for the organisation? Does the think tank have a funding strategy/plan? Does the think tank monitor and evaluate its fundraising efforts? Are there any crucial actors that currently are not involved in supporting fundraising?	Create a fundraising unit (centralised or decentralised?) Engage different internal stakeholders and areas (i.e., actively engage the board) Develop an ad hoc external committee Hire external expertise for strategic interventions Foster alignment between needs from researchers and fundraising objectives Be clear about fundraising roles and responsibilities Do not forget incentives (finder’s fees, consulting on the side, and allocating opportunities)
Develop income generation activities	Are areas/departments self-sustainable? Are they covered with the OH? What is the think tank really good at that others would be willing to pay for? Does the think tank need financial advice to carefully budget new types of activities? Is there a market for the think tank that it might not have detected? Does the think tank have staff with business stamina?	Develop a for profit/consulting firm Create a foundation/set up an endowment Sell services the think tank is good at (training, event organisation, communications, etc.) Rent space/assets Build carefully budgeted scenarios Seek advice from those with business experience Think about implications for the organisation’s image and reputation
Tap into local resources	What is the current situation in the country regarding foreign donors? How has the political environment evolved, and how does that affect existing and prospective sources? How do regulations affect taxation and private sector support? How entrepreneurial is the organisation in searching for new funding? How can the think tank develop a ‘start-up’ culture that helps it find new sources of funding?	Approach public agencies (policy design, implementation and evaluation) Engage private sector and philanthropists Build consortium of companies to support research on core issues Organise fundraising events

Also see this OTT talk on fundraising challenges and opportunities for think tanks.

Templates

Use these templates for the task. Bring your current organisational budget and one real project budget to the live session.

Organisational budget template
Internal project budget template
Funder-facing budget template

Live session

Wednesday 25 November, 15:00–17:00 CET
Facilitated by Fiorella Bianchi

Session link: https://meet.google.com/feg-syme-rso

Task for the week

Reflections on your organisational budget and one real internal project budget, with your indirect rate and a reserve target. If you already have them, review them against the templates and note what you would change.

Submit your task in Google Classroom within a week of the session (45–60 minutes). The facilitator will comment on it there.

Task due: 1 December

Quiz

When you finish the module, take the five-question quiz in Google Classroom (about 10 minutes). It is marked automatically.

Quiz due: 1 December

Recording

The recording and slides of the live session will be posted here after the session.