Adjusting to new realities in the funding landscape, both domestically and internationally, means that think tanks need to be innovative and adjust their business models accordingly. To help with this, the Think Tank Initiative (TTI) is supporting a select group of African think tanks to better understand the concepts underlying business models and how to apply these to their own organizations.
Think tanks in Africa are finding it harder than ever to secure long term and flexible forms of core funding. With the recent termination of core grants from the African Capacity Building Foundation, and continued reluctance on the part of some national governments to finance think tanks’ work, opportunities for flexible funding are scarce. There are other sources and types of funding available, however accessing these will require think tanks to innovate and adjust their business models. The current funding environment has led many think tanks to increase focus on organizational sustainability as many rely on a few sources of funding. They are more often presented with funding for short-term projects or consultancies, in part due to pressures that many funders are facing to demonstrate measurable results from their investments.
Business models matter
An effective business model lies at the heart of any successful organization and serves as a guide for how it goes about achieving its mission. For a think tank, a business model defines how the organization delivers value for the stakeholders it engages with or seeks to influence – be they government, civil society, or citizens – and how it intends to secure funding. Here are just a few ways that think tanks create value:
- Produce high quality research outputs
- Engage in evidence-informed public policy debates
- Convene multi-stakeholder dialogues around particular issues, or the monitoring and evaluation of public policies or plans.
To be able to do this work in a sustainable way, however, think tanks require a stable roster of research experts and secure funding over the long term. TTI is not the first to note the importance of thinking through business models for think tanks. See the post on Think Tank Business Models and on Business Models for Policy Research Institutions.
The benefits of action learning
African think tanks tackle different policy issues, in different ways, and from different funding support bases. This means that business models must be tailored to their unique context, but also be adaptable to changing needs and circumstances. Through an 18-month action learning process, TTI is supporting seven African-based think tanks (from its current cohort) as they work to become better positioned for long-term financial sustainability when TTI funding comes to an end in 2019. Given that there is no “one size fits all” solution, this approach encourages shared learning and reflection as each participating think tank takes steps towards organizational transformation by defining a robust, realistic and strategic business model.
In contrast to attending a training workshop, after which it may be challenging to put new skills or technical knowledge into practice, an action learning process provides a more intentional path. Participants identify a desired change, take action to bring about that change, and reflect on the action (what worked, what didn’t work, and how can the action be adjusted). While the change process may be unique to each organization, the action learning process creates space for organizations to share and learn from one another.
Early insights from the action learning process
An inception workshop hosted by REPOA in Dar es Salaam in October 2016 brought together a mix of senior managers, researchers, finance officers and communications staff from each organization. They met to share and discuss the nature of the changes that they wish to pursue, as well as begin the process of group reflection and peer learning. Each organization developed its own action plan, including intended outcomes and steps for documenting and evaluating progress.
The group used a model called the Value Wheel to guide the action learning process. This model provides a way to define, create, deliver and capture value for, with and to its key stakeholders in a consistent and coherent manner. Here are the five key areas of interest that emerged from this exercise:
- private sector engagement;
- Board engagement;
- strengthened communications and outreach;
- captured savings to seed an endowment fund; and
- an interest in strengthening capacities to write winning proposals.
Participants are exploring and sharing their experiences as they continue to strengthen these areas of their work. A strategic planning and financial management facilitator is providing support to participating organizations.
Throughout the action learning discussions so far, the following key points have arisen:
Relationships based on trust and shared purpose create value
Strong relationships – both external and internal to the organization – are central to a think tank’s ability to deliver value. Integrated thinking across all staff members ensures that everyone, from the Executive Director to the researchers, feels a sense of common purpose and co-ownership. In this case this was achieved by inviting the communications staff and finance officers to the research project design meetings with donors so that they could learn about and contribute to the research design process.
Charging true costs presents risks and opportunities
The inputs needed to embark on a research study include qualified researchers, access to IT infrastructure, transportation, facilities, and communications support. There are costs associated with each of these, which need to be accounted for as part of the overall costs of doing research. Finding efficiencies and creating cost value require a combination of reliable data about the overall costs and frugal decision-making. Robust data and credible information must be used for negotiating with funders who often aren’t willing to cover certain types of costs, such as overhead.
When applying for funding, think tanks should ensure that project budgets reflect all costs involved in producing and strategically disseminating quality research, and in retaining qualified staff over the longer term. This approach will help think tanks be in a better position to generate modest savings. In theory this makes sense but in practice this may lead to challenges. Since the start of the action learning process, one organization increased its rates to reflect the true cost of producing the research. Some funders accepted this, while others did not. This raises many questions like: how to make the case for higher rates? Do think tanks need to have rigourous internal audits to create efficiencies? When is it ok to accept a lower rate? Or, how to be able to say no while maintaining important relationships?
Next steps in the action learning process
Over the next year, the action learning process will continue to unfold with organizations receiving input from the expert facilitator, trying out new ideas and approaches, reflecting on what has worked and what hasn’t, and course correcting as they go. Quarterly webinars and a final face-to-face workshop will present spaces for the group to reflect on what they’ve learned, as well as to share with and learn from their peers.