Industry Analysis of U.S. Nonprofit NewsBy: Douglas Ridley

Winter 2015

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Table of ContentsScope….……………………………………………………………………………………………………….3-4Industry Overview……………………………………………………………………………………….4-7Measures of Success………………………………………………..…………………………………….8Industry SWOT Analysis…………………………….……………………………………………………9Competitive Analysis

Case Study: NPR--------------------------------------------------------9-17Case Study: Chicago Public Media--------------------------------18-

19Case Study: New America Foundation---------------------------20-

30Case Study: Sapling Foundation (TED) --------------------------31-

33Industry Trends……………………………………………………………………………………………34Works Cited……………………………………………………………………………………………35-36

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ScopeThis analysis will look at the nonprofit news industry in the United States, with a particular

focus on web-based news startups. Most of the data related to this niche industry referenced in

the analysis comes from the Pew Research Center’s June 2013 report, Nonprofit Journalism: A

Growing but Fragile Part of the U.S. News System. In the report, the Pew Research Center was

able to identify 172 online nonprofit news organizations launched since 1987 that are currently

active in the United States. The report, which will henceforth be referred to as “the Pew

Research Study,” represents one of the most comprehensive studies of the industry to date.

In order to build on this research, I have included case studies of four nonprofit news

organizations. The organizations were selected based on two criteria. First, I wanted to include

organizations involved in a variety of nonprofit activities. And second, I wanted to showcase

organizations that have managed to successfully innovate in an industry facing an uncertain

future. National Public Radio (NPR) is perhaps the most recognized name in public radio. I will

take a look at how the organization is able to respond to market disruptions while providing

direction to a network of 850 radio stations and managing 18 foreign bureaus. To further

examine the role of local affiliates in the NPR business model, I will include a brief case study of

Chicago Public Media, one of NPR’s most successful member organizations.

At a time when public radio is striving to remain relevant, organizations like The Sapling

Foundation (TED) and the New America Foundation are creating new business models and

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bridging the gap between informing audiences online and engaging them in real life. Through

case studies, I will highlight how The Sapling Foundation (TED) has leveraged the benefits of its

nonprofit status and expanded its operations internationally by freeing up the TEDx brand. The

New America Foundation (NAF) case study provides insight into the world of think tanks, the

nonprofit research institutions tasked with conducting research to educate elected officials and

members of the public on a range of policy issues. The analysis will look at the NAF business

model and address recent concerns about foreign governments’ use of think tanks to buy

influence in the U.S. federal government.

In addition to looking at specific organizations, the analysis will also look at the social,

economic, and technological trends shaping the industry today. Finally, the analysis will

conclude by looking at the trends that are likely to shape the industry over the next five to ten

years.

The nonprofit sector is unique in the sense that its success is defined more by its social impact

than its bottom line. The amount of money nonprofits bring in or the number of staff on payroll

do not necessarily determine how effective they are in fulfilling their stated missions, although

it is difficult to overemphasize the extent to which an organization’s funding sources influences

its editorial process. Factors like editorial freedom and community engagement will be

regarded in this analysis as essential elements in evaluating the health of nonprofit

organizations and the nonprofit news industry as a whole.

Industry OverviewChallenges Facing the Industry

The survey contained in the Pew Research Study included responses from 93 online nonprofit

news organizations. The questions covered a wide range of topics related to the organizations’

experiences operating within the nonprofit sector. The picture that respondents painted was of

a promising, yet unstable industry. New organizations were entering the market every day,

encouraged by an abundance of startup grants from private foundations, only later to find few

long-term prospects for supporting themselves financially. Most of these organizations were

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started through large institutional grants issued by private foundations, and nearly three-

quarters (72%) found that their grants would not be renewed (Mitchell, Jurkowitz, Holcomb,

Enda, & Anderson, 2013).

When the grant money ran out, these organizations were forced to look to other sources of

revenue, including a mix of subscription fees, membership fees, fundraising events, and

corporate sponsorships. These sources were generally not enough to fill the void left by

institutional grants. The inherent unreliability of grants is a structural problem that the

nonprofit news industry and nonprofit sector have long faced. In recent years, foundations have

begun requiring that grant applicants provide plans outlining how their organizations will

become independent of grants. Meanwhile, the IRS has continued to pressure these outlets not

to seek alternative means of revenue. If an organization makes too much money off of

subscriptions or advertising, they are in danger of losing their nonprofit status. This reality is

just one in a series of Catch-22s facing the industry.

Another challenge is that government agencies and private foundations fund nonprofits for

spending the highest possible proportion of their funding on activities directly related to their

mission statement (Mitchell et al., 2013). A policy that rewards organizations for keeping

administrative costs low in order to focus on programs makes sense on paper. In practice

however, the policy pressures organizations not to spend the time or resources needed to build

a sustainable business model. The Pew Research Study reflects that reality. Nearly two-thirds of

nonprofits (62%) cited “finding the time to focus on the business side of the operation” as a

major challenge in their organizations (Mitchell et al., 2013). These conflicting expectations

have resulted in an inability to produce a sustainable business model for the industry.

Most Nonprofit Publications Operate through a Sponsor

Legal and financial uncertainty in the market has led more than three-quarters (78%) of online

nonprofit publications to forego registering for nonprofit status altogether, in favor of receiving

nonprofit benefits and securing funding by operating through a sponsor (Mitchell et al., 2013).

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Sponsor organizations range from universities, to think tanks, to registered nonprofits. While

this route is an attractive option for startups, the Pew Research Study’s survey results show that

sponsored publications were worse off than their independent counterparts in several

important ways. Operating through a sponsor meant that these publications were more reliant

on a single source of funding, less likely to grow over time, and tended to work with smaller

budgets (Mitchell et al., 2013). In addition to limiting publications financially, publishing

through a sponsor organization also gives the sponsor significant influence over a publications’

editorial process and content.

Reasons for Optimism

Despite low wages, unreliable fundraising, and intense competition for grants, there is a

prevailing sense of optimism among nonprofit news organizations about what the future holds.

81% of respondents reported that they were “very” (26%) or “somewhat” (55%) confident they

would be financially solvent five years down the road (Mitchell et al., 2013). Indeed, there are

reasons for optimism. The majority of organizations reported having reserves of cash on hand

that experts say are sufficient for the nonprofit sector (Mitchell et al., 2013). and more than

three-quarters (79%) of publications experienced growing audiences over the last year (Mitchell

et al., 2013). There is still more room to grow. The nonprofit news industry emerged to fill the

gaps in employment and news coverage resulting from the decline of the newspaper industry.

For-Profit Media Creates Gaps in Coverage

One of the areas most affected by this decline has been foreign reporting. U.S. News

Companies have been gradually closing down foreign bureaus for years.

Major International Bureaus Closed (1998-2011)

1. Baltimore Sun

2. Boston Globe

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3. Chicago Tribune

4. Miami Herald

5. New York Post

6. San Francisco Chronicle

7. Washington Times

Source: American Journalism Review

http://ajrarchive.org/article.asp?id=4996

This is largely due to the fact that producing international coverage is expensive. Travel costs,

living accommodations, insurance, and legal support for journalists arrested abroad, added up

to what the networks saw as an expense that could be avoided. They soon began to replace

these bureaus by paying for prepackaged content from independent journalists or repackaging

stories from organizations like the Associated Press. Contracting with independent reporters

released networks from any responsibility for, or long-term commitment to, journalists. Going

without health insurance, legal support, or job security has made investigative and foreign

reporting a more uncertain and dangerous prospect.

The for-profit business model exerts a strong influence over what stories are published, and

perhaps more importantly, what stories are not published. In the news industry, stories

covering public affairs, government accountability, and international news are referred to as

“broccoli,” because they are vital to the health of public discourse and an unpopular choice of

media. In an environment that relies on advertising revenue from viewership, it does not make

business sense to publish these stories. The single most popular and profitable type of news is

pop culture news (Mitchell et al., 2013), which requires little to no research and can be written

from one’s desk.

Nonprofit News Attempts to Fill Coverage Gaps

Survey results from the Pew Research Study show that online nonprofit news organizations

focus overwhelmingly on topics that are not covered in the mainstream media. 21% of these

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organizations focus on investigative reporting, 17% focus on government, and 13% focus on

public and foreign affairs (Mitchell et al., 2013). Arts and Culture, which includes pop culture

news, accounts for just 3% of stories published by these organizations (Mitchell et al., 2013).

Nonprofit news outlets also overwhelmingly serve local populations. More than two-thirds

(67%) of outlets focus on state (38%) or metro-level (29%) issues (Mitchell et al., 2013).

Furthermore, nonprofit startups covering hyperlocal issues have emerged to shine a spotlight

on challenges facing small communities and metropolitan neighborhoods. Organizations

focusing on hyperlocal issues accounted for 8% of outlets surveyed (Mitchell et al., 2013).

Measures of SuccessNonprofit organizations operate along a different set of criteria than for-profit businesses. Listed below are some of the criteria through which a nonprofit organization’s health can be evaluated.

1. Access to Capital

2. Diversity of Revenue Streams

Grants alone are generally not enough to support an organization’s operating expenses long term. Therefore, accessing more reliable streams of revenue is a priority for most organizations in the industry. Having a variety of revenue sources means that an organization is not as threatened by the loss of any single funder.

3. Rainy Day Fund

Nonprofits should ideally be able to fund their operations for a year without any revenue.

4. Program Expenditures

Government agencies and private foundations reward nonprofit organizations that spend as little as possible on overhead and administration.

5. Business Experience

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Nonprofit managers face a dilemma in deciding whether or not to hire more people with business experience and focus their efforts on building a sustainable business model, because these activities are at odds with the wishes of public and private donors.

6. Editorial FocusAn organization’s editorial focus determines where they can apply for grants, as well as the potential for partnerships. Editorial focus can be defined along geographic and political lines. Additionally, funding may be contingent on the type of issues upon which a publication focuses. Unlike venture capital funding, many grants are issued for specific research projects and cannot be used to cover general business expenses.

Industry SWOT AnalysisStrengths

- 501(C)(3) nonprofit IRS status allows individuals to make tax-deductible donations

- Most private foundations exclusively fund nonprofit organizations- Nonprofits cannot be bought out by larger entities like corporations can

(hostile takeover) - Surplus of experienced journalists and editors looking for work

Weaknesses - Funders pressure nonprofit organizations not to spend money on

important administrative and fundraising tasks- Majority of large institutional grants are nonrecurring - Lack of business experience in the field

Opportunities - Collaboration on investigative reports and content sharing lowers costs- Membership dues are treated as tax-deductible donations

Threats- IRS discouraging outlets from diversifying revenue streams

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- The stability of operating through a sponsor organization threatens editorial freedom

Competitive AnalysisCase Study: NPRLiterature ReviewThe graphics illustrating NPR’s commitment to different media platforms comes from MVM consulting’s 2012 Survey of Stations. 136 public radio stations participated in the survey. 103 of these stations were NPR members. Michael Marcott conducted the survey, in coordination with the University Of Nevada School Of Journalism. IntroductionMost people know National Public Radio (NPR) as the organization behind All Things Considered and Morning Edition. While these programs are some of the most popular radio news broadcasts in the country, NPR’s most important asset is its network of member organizations. According to NPR figures, more than one-third (39%) of the networks’ operating revenues between fiscal year 2012 and fiscal year 2014 came from station dues and fees. The organization, with a net worth of nearly $251 million dollars as of September 2014 (according to the 2014 BDO International Audit of NPR) boasts a membership of 264 organizations and 850 independent radio stations. Internationally, NPR manages 18 foreign bureaus.Nielson DataProgram Weekly Audience All Things Considered 11.8 Million (Spring 2012)Morning Edition 12.3 Million (Spring 2014)All NPR Stations 34.4 Million (Spring 2014)

Source: Nielson Data – All Things Considered & Morning Edition FiguresSource: NPR Fact Sheet – All NPR StationsTo understand NPR, you first have to understand that it is a highly decentralized network. Member organizations are independently owned and retain complete control over their content, management decisions, and organizational structure. The benefit of this decentralized network is that it

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allows stations to experiment with a variety of business models and share best practices with other stations. For this system to work, there must be frequent communications between stations and a willingness to share best practices. A station is not likely to share helpful information with another if they assume the organizations are in competition. Existing under the umbrella of NPR does not necessarily mean that all member organizations are united. Organizations attach themselves to NPR if they believe that the benefits of membership (access to national programs, use of the NPR brand) outweigh the costs. In other words, their relationship is to NPR, not its affiliates.From the perspective of NPR management, there is a significant drawback to this structure. Overseeing a network of autonomous stations means that the NPR Board of Directors is unable to implement a national strategy. This frustration can be seen in the quick turnover among senior executives at NPR. The network has had five CEOs in the last eight years (Perry, 2014).Although NPR receives federal funding, this funding accounts for only a small fraction of its total revenue. In 2013, NPR brought in $173.6 million dollars. Federal funding accounted for a mere $310,000 or .002% of revenue. The largest source of revenue by far was station fees and membership dues, which accounted for 39% of total revenue. Meanwhile, corporate sponsorship comprised roughly a quarter (25.3%) of revenue, and endowments (including federal money) made up 16.4%. Individual donations were the smallest source of funding, making up just 4% of total revenue. In 2013, the organization faced a $3.7 million dollar deficit.

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Adapting to Changes in the MarketNPR has effectively responded to changes in the way people consume media by aggressively expanding their online presence and focusing their efforts on developing mobile applications for streaming content. Despite NPR’s incredible success across a range of measures, from targeting younger listeners through podcasts (Mutter, 2013), to growing their membership base, the question of whether NPR can balance their budget and build a business model that can sustain itself long term remains.

Wi-Fi Connectivity in New Car Models There is also a question of technological disruption. The decline of the video rental industry at the hand of streaming services like Netflix, Hulu, and Amazon are illustrative of consumer demand for on-demand and streaming content. The introduction of dashboard entertainment systems in new car models will allow drivers to access online content, including online radio. This development will affect NPR because their weekday listenership peaks during morning and evening commutes.

Last year, John McFarland, General Motor’s Director of Global Marketing and Innovation announced that the company would be introducing 4G LTE WI-Fi connectivity into 30 models, starting in 2015. The technology would allow drivers and passengers to stream content to as many as seven devices (Edgerton, 2014).

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Figure 1-3

Shows the number of unique listeners tuning into NPR Stations throughout the work week. Peak listening times are during morning

Figure 1-1

Note: NPR Operating Budget grew to $183 Million Dollars in FY 2014

Figure 1-2

Online Radio has grown dramatically in popularity over the last decade. In 2004, just 8% of the population (Age 12+) listened to online radio each week. In 2014, online radio reached 36% of this population each week.

Source: Triton Media Group and Edison Research

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The main reason that automakers have been hesitant to introduce new systems into their cars up to this point is that the systems quickly become outdated. Google and Apple are currently working on developing technologies to address this problem. Both companies are set to release their own Wi-Fi connected dashboard entertainment systems in 2015. Unlike past systems, Apple Carplay and Android Auto are able to automatically update because they run through a smartphone rather than the dashboard system. Operating through smartphones will also allow drivers to access the full range of mobile applications (Fuerst, 2014).

This will be a major boon for podcasts, which cost nothing to broadcast and produce the same audio quality as terrestrial radio, without the static or loss of signal. In short, online radio will almost certainly disrupt the public radio market and may replace AM/FM frequencies, similarly to how digital television has replaced analog TV, though this may be ten or twenty years in the future. Broadcast radio is still the most popular way of accessing radio. The most significant barrier to the growth of online radio is the cost of bandwidth, which has been falling for years and shows no sign of letting up.

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Figure 1-3

Shows the number of unique listeners tuning into NPR Stations throughout the work week. Peak listening times are during morning

Figure 1-4

From a long-term perspective, NPR can take one of two paths. Either it can choose to remain in traditional broadcast public radio, or it can fully embrace new technologies and adapt to changing consumer preferences. While NPR can continue to pursue new platforms while remaining in traditional broadcasting, it will make increasingly less sense to do so, as more affordable ways to produce high quality audio programs emerge. If NPR chooses to stay in traditional radio, they will need to invest in new partnerships (consolidating a shrinking industry) and shift their focus from producing general news to producing investigative journalism that is tailored to the interest of private foundations and other potential sponsors. Partnerships offer a number of benefits, including: deeper ties to communities, more widespread distribution of content, combination of organizational competencies and perhaps most importantly, cost sharing. There is much room for improvement in building partnerships. An MVM Consulting Survey found that of 244 radio stations surveyed, 45% reported no contact with NPR Regional Bureau Chiefs and another 36% reported infrequent contact (Marcotte, 2013). Contact was only slightly more frequent with the NPR News Desk in Washington. News organizations with

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Figure 1-5

larger budgets tended to have more frequent contact with NPR (Marcotte, 2013). These figures are not necessarily a bad sign for NPR, as not all partnerships are worth pursuing. The high rate of “no contact” between NPR and public news sources suggests a high probability of missed opportunities.

Reporting on issues that private foundations care about is likely to yield more consistent funding. Staying in public radio also means relative safety from technological disruption as research and development moves to new technologies. Such an approach would also mean focusing the organization’s efforts on an industry which will likely shrink over the long term.The second option is to embrace new technological trends and adapt to new consumer preferences. There is much more potential for growth on this path, though there is also more potential for failure. From NPR’s actions over the last couple of years, it looks like they have taken the second option, while trying to preserve traditional terrestrial radio. NPR has aggressively expanded online. And where most online news organizations transposed the look and feel of a newspaper to online platforms, NPR designed their website and mobile application from the ground up, utilizing the most up-to-date web design techniques, while sticking to their area of expertise: audio storytelling. MVM Consulting’s survey shows that a large portion (32%) of NPR affiliates are not satisfied with their online presence. That dissatisfaction has created real growth in NPR’s online presence.

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Figure 1-8

Figure 1-6 Figure 1-7

The real growth in web traffic has occurred on mobile platforms though. Kinsey Wilson, the former Executive Vice President and Chief Content Officer of NPR acknowledged this reality in his remarks at the 2014 Public Media Summit in Washington, D.C., saying that “In 2009, just 2 percent of our (NPR’s) web traffic was on mobile devices. Today, it is 50 percent.” NPR has taken notice of this trend and has begun developing the NPR One mobile application. The app offers a stream of suggested content, based on what listeners “like” and what they choose to skip (Fuerst, 2014). Essentially, NPR is attempting to build a Pandora for news. A personalized listening experience is not necessarily good for local affiliates, which are a vital source of revenue for NPR. Using an algorithm that determines listener preferences has the potential to grow audiences for programs that are already popular like Chicago Public Media’s “This American Life” or WBUR’s “On Point,” while limiting local programs’ chance of being discovered.Market PositionNPR has been remarkably successful in adapting to new ways of consuming media by aggressively expanding into online and mobile platforms, while sticking to their core competency of long-form storytelling. The challenges that NPR must face long-term include: aligning the interests of NPR and its

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Figure 1-9

local affiliates, empowering the NPR board of directors to implement national strategy, consolidating local affiliates’ web presence into a central location, transitioning from traditional broadcast radio to online radio, and building a sustainable business model.

NPR SWOT AnalysisStrengths

- Podcast reaches younger audiences and drives radio listenership - Multiple access points for content (ITunes, mobile apps)

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- Established brand known for high-quality radio journalism - Stations have made great strides over the past decade in seeking major gifts

(defined as $1,000 or more). Major grants rose in inflation-adjusted dollars from just $3.8-million in 1999 to $55.3-million in 2012 according to Corporation for Public Broadcasting (CPB) figures

Weaknesses- Difficult online donations process (85% of visitors to the NPR website

who click on donate buttons do not complete the process- Division of local and national content

o Individual stations are not large enough to support daily original content, which consumers have come to expect

- Decentralized Organizational Structure o Difficult for NPR Board to formulate strategy and make changes

to the organization as a whole- Built-in tension among NPR, program producers, and local stations

Opportunities

- NPR is in a position to corner the market for online audio news by aggressively developing mobile applications

- Produce a searchable database of content featuring content across affiliate stations that allows for streaming content on mobile platforms

- Move to broadcasting content online and begin phasing out radio broadcasts altogether (Wi-Fi connected car dashboard systems set to replace FM radio)

- Allow listeners to easily make automatic monthly donations

Threats- A potential third party aggregator emerging to stream NPR content - Digital disruption could eventually eat into the listener-based revenue that NPR and local

stations now earn from underwriting (Perry, 2014)

Case Study: Chicago Public Media Introduction

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WBEZ, the original version of what is now Chicago Public Media, was established as an extension service of the Chicago Board of Education in April 1943. At that time, the station broadcast educational programming in Chicago public schools. The organization partnered with National Public Radio in 1970 and became independent in 1990. Today, CPM owns seven media brands including WBEZ 91.5, Vocalo, This American Life, Sound Opinions, Wait Wait… Don’t Tell Me, Chicago Amplified, and the Off-Air Series. The registered 501(c) (3) not-for-profit organization has a combined network of 60,000 members and 1,000 volunteers in the greater Chicago area.

Community engagement is a major focus of Chicago Public Media. The organization’s editorial priorities are established by a community advisory council. Additionally, the network has made efforts to not only cover local issues, but to relocate correspondents to a number of Chicago neighborhoods on a long-term basis, so that they can build trust with local community groups and become familiarized with communities before reporting on local issues.

Media Brands

WBEZ 95.1

WBEZ is Chicago Public Media’s (CPM) flagship program. The show features the best of CPM’s locally produced content, in addition to picking up broadcasts from national and international producers including NPR, BBC, Public Radio International (PRI), the Public Radio Exchange (PRX), and American Public Media. Chicago Public Media’s seven broadcasts attracts a total audience of some 500,000 listeners each week, according to Corporation for Public Broadcasting (CPB) figures.

Vocalo 89.5

Vocalo is Chicago Public Media’s attempt at connecting with the younger (18-24) age demographic. The station has also made significant strides in reaching out to historically underrepresented African-American and Latino communities in Chicago. Vocalo recently started broadcasting all-day Spanish language programming on Sundays.

This American Life

This American Life boasts an audience of 2.2 million weekly listeners on 587 radio stations across the country. It is also the most popular podcast in the United States, with approximately one million online downloads each week (Channick, 2014).The program owes its success to its unique form of storytelling. Paul Tough, one of the program’s founders says what they are doing is “applying the tools of journalism to everyday lives” He also notes that “the journalism we do tends to use a lot of techniques of fiction: scenes and characters and narrative trends.” Podcasts are a more flexible way of delivering media than public radio. There is no expectation that podcasts are produced on a regular schedule. Similarly, podcasts are not expected to have

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a consistent length. These factors allow producers to put more effort into each program, and this priority on quality over quantity has paid off.

The podcast’s success has allowed This American Life to become more independent. In May 2014, Ira Glass announced his intention to end the program’s seventeen year long relationship with Public Radio International (PRI) and begin self-promoting the podcast and distributing it through the online Public Radio Exchange (Channick, 2014). The Chicago Tribune’s Robert Channick describes the move as “a potentially game-changing win for PRX, which competes against traditional public radio distributors including PRI, NPR, and American Public Media.”

Chicago Public Media has been looking to expand their podcast offerings, noting that “many next-generation listeners do not have a consistent terrestrial radio as a part of their life.” In the pursuit of this goal, This American Life started producing its first spinoff show in 2014.

Relationship with NPR

National Public Radio uses the term “member organization” loosely. Any radio station that purchases a license to air NPR programs is considered a member organization. In the past, NPR has tried to become less dependent on funding from the Corporation for Public Broadcasting (Neary, 2014). As a result, the CPB shifted its funding from NPR to local radio stations. Many of those stations used CPB grants to purchase NPR program licenses. NPR sells programming to CPM, distributes some of its content to CPM for a fee, and offers occasional offers promotional deals on the sale of its programs to CPM.

Innovation Chicago Public Media has pursued two interesting innovations. The first is Vocalo’s attempt to produce user-generated content through an online community that now numbers more than 7,000 local community members. The second is WBEZ 95.1’s “curiouscity” initiative. CPM described the initiative as “an experiment in news gathering” in its 2014 Annual Local Content and Services Report. The idea behind curiouscity is simple. By including its audience at the beginning of the editorial process, the station can find out what topics their listeners are interested in before investing time and resources in a project. The WBEZ 95.1 website allows users to submit questions and vote for the questions they would like WBEZ to investigate. .

Case Study: New America FoundationIntroduction

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The New America Foundation is a relatively new addition to the U.S. think tank community. The foundation was registered as a 501(c)(3) nonprofit organization in 1999. Though the think tank is a self-proclaimed nonpartisan research institute, its ideological foundation is widely attributed to founder Ted Halstead’s 2002 book “The Radical Center: The Future of American Politics.” In the book, Halstead argues that mainstream political thought in the U.S. is somewhere in between the Democratic and Republican party platforms and insists that both parties must shift to the center in order to remain relevant in American politics. As a result, the foundation is often characterized as a “centrist” institute.

The New America Foundation has found a niche among Washington think tanks. Its content focuses almost exclusively on potential responses to future policy questions, particularly in regard to developing technologies. The foundation manages three initiatives focusing on this area: The Open Technology Institute, X-Lab, and Future Tense. Family issues are another major focus. Their economic growth program is called the “asset growth program” and studies how public and private institutions can help grow household wealth.

Many of the institute’s efforts are geared towards rebuilding the traditional “American Dream” of owning a home, going to college, and getting a stable job that allows for a dignified retirement. It would be a mistake however, to assume that the foundation is stuck in the past. The New America Foundation also seeks to address the changing definition of family and has launched an initiative that seeks to build a new social contract.

Governance The foundations’ organizational structure speaks to an environment of increasing competition among think tanks and decreasing public funding. While the Board of Directors has final say in management decisions, they are not the only group influencing the direction of the foundation. Financial contributors have significant influence over research design and editorial focus. Contributors donating over $25,000 dollars annually are invited to private gatherings, where they have access to the New America leadership.

Research Design For the purpose of this analysis, I will use data compiled by the Center for Global Development (CGD) to provide a broad overview of the think tank landscape and to see how well the New America Foundation is doing, both in terms of building its audience, and in terms of establishing credibility in the academic community, relative to its competitors.

Think tanks strive to influence lawmakers and members of the public on matters of policy. Evaluating think tanks’ effectiveness at changing perceptions is difficult for several reasons. Below are a few of the difficulties inherent in testing perception shifts among think tanks’ two main stakeholder groups: Elected Officials

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- Most policy discussions between think tank fellows and elected officials are informal, and therefore, not made publicly available

- Politicians are not likely to admit that their ideas are influenced by think tanks- People are subtly influenced by countless sources and are often not aware of the origin

of their ideas and beliefs The Public

- The majority of people consume the news through newspapers, radio stations, and television. They are more likely to encounter excerpts from think tank proposals through these mediums than from a think tank publication

- Conducting a scientific survey of public perceptions is time consuming and expensive- Think tanks cannot accurately measure the size of their audience, because many readers

consume information through social media without “following” or “liking” that content

For these reasons, the Center for Global Development (CGD) chose to evaluate think tanks’ pubic profile by using quantitative metrics including: social media followers, web traffic, incoming links, media mentions, and scholarly citations. The CGD also looked at how efficiently think tanks used their funding to build public profile.

The data included in this case study comes from the Center for Global Development’s June 2013 report, entitled Measuring Think Tank Performance: An Index of Public Profile by Julia Clark and David Roodman. The report prefaces its rankings with a detailed explanation of research design. Below, I have outlined the relative merits of the three most common research methods mentioned in the study, including quantitative metrics, qualitative assessments, and expert rankings (Clark, Roodman, 2013).

Quantitative MetricsQuantitative metrics are relatively easy to collect, and therefore, can be used to measure the progress of an organization over time. An added benefit is that this method gives researchers a straightforward way to compare organizations. Furthermore, different metrics can be used to determine how effective an organization is in the areas that are prioritized. For example, think tanks like the Heritage Foundation or Cato Institute are much more concerned with changing public perception than organizations like the Peterson Institute for International Economics, or International Food Policy Research Institute, which are overwhelmingly concerned with building credibility in the academic community and influencing policy makers.

Qualitative AssessmentsQualitative assessments allow for a more in-depth analysis of an organization. This depth naturally requires more research and is generally used to study a single organization or

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compare a small group of organizations. This method is often used to evaluate the quality of an institute’s work, including specific research projects and initiatives.

Expert Rankings

Expert rankings provide a level of institutional knowledge that other methods do not. The benefit of institutional knowledge is that researchers have perspective on what factors are most important in their industry. The drawback is that expert rankings are highly subjective, particularly in a small community like the Washington, D.C. think tank community, where most of the experts involved in rankings either work with the think tanks directly or are affiliated with them in some way, and therefore, have a vested interest in seeing that their organization does well.

Figure 2-1 Aggregate Scores for U.S. Think Tanks

Figure 2-2 Expense Adjusted Scores for U.S. Think Tanks

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Media Priorities

Figure 2-3. Social Media Fans/$ Million of Annual Spending

Figure 2-4. Web Traffic/$ Million of Annual Spending

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Incoming Links/$ Million of Annual Spendi

Figure 2-5 Media Mentions/$ Million of Annual Spending

Figure 2-6 Scholarly Citations/$ Million of Annual Spending

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ResultsOut of a total of 18 major U.S. think tanks evaluated, the New America Foundation ranks:

7th in Media Mentions 9th in Web Traffic 11th in Social Media Fans 12th in Public Profile 13th in Incoming Links 15th in Public Profile

*Note: All Rankings are expense adjusted

Legal and Ethical ConcernsIn September 2014, The New York Times published an article entitled Foreign Powers Buy Influence at Think Tanks. The findings contained in the report were damning. The article’s authors argued that think tanks in the nation’s capital were quickly becoming lobbying firms representing the interest of foreign governments.

Many of the funding agreements were explicit regarding donor expectations of think tanks. “For $5 million, Norway’s Partner in Washington would push top officials at the White House, at the Treasury Department and in Congress to double spending on a United States foreign aid program” (Lipton, Williams, Confessore, p. 1). Norwegian funding has also pushed think tanks

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to advocate in Washington for enhancing Norway’s role in NATO, promoted its plans to expand oil drilling in the Arctic and pushed its climate change agenda (Lipton et al., 2014). The Norwegian Peacebuilding Resource Centre (NOREF) produced a report for internal use in the Norwegian Ministry of Foreign Affairs (MFA) entitled From Contributor to Partner? Norway’s role in foreign policy research and implementation in the United States. [sic] The 32-page report outlined Norway’s investment in U.S. think tanks and proposed ways that the MFA and Norwegian Embassy in Washington could more effectively influence U.S. policy on the international stage.

Below, I have included excerpts from the report that give some clarity in regard to the motives behind funding of U.S. think tanks.

Access to Government Officials

“The U.S. institutions (think tanks) are important to the MFA because they can give the ministry access to experts and events in U.S. foreign policy making.” (Bjorgaas, 2012, p. 28).

“Funding of think tanks does also, in some instances, provide better access to Congress and the administration in Washington. In the U.S. capital there seems to be a clear link between the size of financial contributions and the level of access a contributor can achieve” (Bjorgaas, 2012, p. 3).

“The revolving door between think tanks and the U.S. administration is notorious and helps solidify the close relationship, albeit claiming their independence, think tanks have with government… many officials go back to work at places such as Brookings and CSIS after their stints in government end. This creates important informal networks” (Bjorgaas, 2012, p. 9).

Influence on U.S. Policy

“In some cases, the MFA’s contribution seems to assure the production of policy-advocating research.” (Bjorgaas, 2012, p. 3).

“There are many examples of how U.S. foreign policy think tanks have directly formulated American Foreign Policy. Presidential candidates are especially susceptible to such advice and often exchange ideas with policy experts and test them out on the campaign trail” (Bjorgaas, 2012, p. 9)

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“The most celebrated case occurred after the 1980 election, when the Reagan administration adopted the Heritage Foundation’s publication ‘Mandate for Change’ as a blueprint for governing.” (Bjorgaas, 2012, p. 9)

Influence on International Policy

“The global agenda-setting role of U.S. think tanks enables Norway to use them as partners in promoting certain global policies and priorities” (Bjorgaas, 2012, p. 4).

“The objective of the MFA’s contributions to foreign policy research in the United States is to advance the priorities of Norwegian foreign policy. The think tanks and research institutions supported are not providing consultancy services. They are carrying out research and policy implementing activities in areas of special concern to the MFA” (Bjorgaas, 2012, p. 28).

Many countries around the world fund U.S. think tanks with implicit, as well as explicit, agreements concerning the type of work these institutions publish. I focus on Norway for two reasons. The first is that Norway’s unusually open database of government documents provides insight into the world of influence buying in Washington, D.C. The second is that the Norwegian government is a major contributor to the New America Foundation. The most recent financial disclosures (2014-2015) on the New America Foundation website lists the Norwegian Ministry of Foreign Affairs’ contributions to the think tank at between $100,000 and $249,999 U.S. Dollars.

The agreements between foreign governments and U.S. think tanks are almost certainly illegal under the Foreign Agents Registration Act, which “requires groups that are paid by foreign governments with the intention of influencing public policy to register as foreign agents with the Justice Department” (Lipton et al., 2014, p. 5). Perhaps more importantly, these agreements undermine the purpose of these institutions to produce independent, objective analysis that educates civil servants, elected officials, and the public on critical national and international policy issues.

A Think Tank’s MandateThe New York Times report cited increasing competition between think tanks due to their proliferation, coupled with decreasing federal contributions as the primary reason for think tanks’ growing reliance on funding from foreign governments (Lipton et al., 2014). The seemingly obvious solution to preventing foreign lobbying in these institutions is to provide more government funding to think tanks. Before adopting strategies to strengthen think tanks, we might first consider what the purpose of these institutions is in the first place.

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Think tanks have a dual mandate to serve both government officials and the public. They serve government by hosting forums where businesspeople and lawmakers can discuss mutually beneficial ways to approach public policy. At the same time, these organizations have a responsibility to inform the public on potential solutions to national problems, which the news often fails to cover. The scope of what think tanks do, in practice, extends beyond these mandates. Think tanks, like lobbying firms, have grown to fill the lack of institutional knowledge and policy expertise in the U.S. Congress.

Think tanks have their own ideological foundations. Elected officials understand this when they go to these institutions for advice. The problem occurs when the think tanks’ proposals are influenced by their funding. Representatives are often not aware of how an institute’s funding sources impact the advice they receive. Strongly worded policies declaring a think tank’s commitment to editorial independence do not change the natural human tendency to self-censor when the funding that their organization needs to survive is threatened. The only way to ensure complete editorial independence is to sever the co-dependent relationship between organizations advocating for policies, and organizations that have a vested interest in the outcome of those policies. In practice, this would mean a long-term commitment by the federal government to fully fund think tanks.

Recommendation for Reform There is also the question of whether or not think tanks are the organizations best suited to advise lawmakers. Legislative Branch Agencies like the Congressional Research Service (CRS) and Congressional Budget Office (CBO) were set up with a responsibility to produce politically neutral policy information for members of Congress. Of course, the job of an elected representative is inherently political. Knowing what policies are politically palatable is just as important to a Member of Congress as understanding what policies will benefit their districts.

Think tanks might better serve their stakeholders by searching for areas of political agreement on issues. Below, I have outlined a process which could, if implemented effectively, streamline the policy making process.

1. Think tanks are offered a long-term financial commitment from the federal government to fully fund their research in exchange for the think tanks’ agreeing to spend every other month researching policies being debated in Congress

2. The Think tanks that agree to this deal begin work on a common issue or set of issues, which are defined by congressional leadership

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3. A neutral institute specializing in surveys, i.e., the Pew Research Center begins national polling on the basic concepts that might go into a policy

4. Working from this data, conservative think tanks begin crafting what a “conservative approach” to the issue would look like. Liberal think tanks would, at the same time, be working on the “liberal approach” to the issue

5. Representatives from all participating think tanks would convene to find areas of political agreement and draft a joint proposal

6. The Congressional Research Service (CRS) and Congressional Budget Office (CBO) would study the proposal and provide feedback

7. Think tank representatives would once again convene and make changes to the proposal as needed

8. The committee would present a final product to congressional leadership

Benefits to the Process Overall

1. Using a neutral think tank to conduct surveys would limit confirmation bias in survey design

2. Including legislative branch agencies like the CRS and CBO would help think tanks to craft proposals that work within the federal budget and are likely to yield long-term economic benefits

3. Research would be geared to issues that are currently being debated within

the Congress

Benefits to Think Tanks

1. Think tanks would have a steady stream of revenue and could spend more time on research and less time on fundraising

2. A dialogue between think tanks might lead to cooperation in other areas such as collaboration between think tank fellows

Benefits to the Government

1. Members of Congress would have an accessible series of proposals shown to enjoy broad public support

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2. Congress could utilize the combined institutional knowledge and policy expertise of liberal and conservative think tank fellows

Benefits to the Public

1. The government would have a better understanding of the public’s priorities

Case Study: Sapling Foundation (TED)Literature Review The media’s coverage of TED has focused almost exclusively on the speakers it hosts. Much of the information that exists online about the organization

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itself was produced and distributed by TED. The analysis below builds off of a report by Rosemari Ochoa entitled TED: A case study on how complimentary on- and off-line approaches can build community and cultivate platforms for innovation and creativity.

IntroductionOf the organizations featured in these case studies, TED is arguably the most innovative in terms of its business model. By operating under the auspices of the Sapling Foundation, TED has managed to leverage the benefits of the foundation’s nonprofit status, while operating much like a for-profit business. TED makes money by selling conference tickets (regularly costing upwards of $7,000), charging membership dues (costing between $4,250 and $150,000 per person), advertising, and attracting corporate sponsorship (TED, 2015). The Sapling Foundation’s nonprofit status means that these purchases are legally considered tax-deductible donations. Creating the TED Brand TED began as an exclusive networking conference for wealthy businesspeople and has since transformed into a platform for disseminating information to a mass audience, free of charge. This dramatic transformation occurred over a few short years, through a series of controversial decisions by founder Chris Anderson. The first (YEAR) decision was to make presentations at TED’s three annual conferences (which attendees paid thousands of dollars to attend) publicly available by posting them online via TED Talks (Ochoa, 2011).Many in the business worried that making these talks widely accessible would decrease conference attendance. The result of this decision to raise the conference’s profile by making it accessible to anyone only served to heighten its prestige and drive ticket sales to conferences. Anderson then proceeded to open up the TED brand by allowing anyone to independently organize their own TEDx conference. Local organizers would receive advice on putting together conferences, financial support, and full license to the TEDx brand. The only requirements were that they produce two talks for the TED website and that presentations fit within basic TED guidelines (Ochoa, 2011). These decisions have put TED in a unique position. The organization has been able to maintain a highly exclusive conference attracting world-renowned speakers, while delivering these events to a mass audience.

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Financing Digital ContentThe trend not just at TED, but across the publishing industry, has been towards relying on advertising revenues. Well-known organizations like the New York Times and the Economist that have tried to support themselves through subscriptions or online paywalls have struggled. People are simply not willing to pay for information in an environment defined by information overload.TED has an innovative approach to advertising. They understand that their audience is used to long-form content and receptive to new ideas. Rather than interrupting content with advertising, they chose to make ads into part of the content that people actually want to see. TED puts all advertising at the end of their videos so that their audience will only engage with content that genuinely interests them (Ochoa, 2011). This design choice puts pressure on sponsors to make advertisements that are relevant and engaging. As a result, advertisers gain the full attention of their audience, which is a rare commodity in advertising. TED publicizes an ethics code barring weapons manufacturers, ammunition companies, and cigarette companies as sponsors, as well as any company that tries to ‘greenwash’ their image. Unfortunately, these rules only apply to Tedx events (Ochoa, 2011). The TED conference boasts a host of major sponsors including Google, AOL, General Electric, Goldman Sachs, the Cola-Cola Company, and Johnson & Johnson among others. They also benefit from contributions by nonprofit organizations including the Confra Institute, Fetzer Institute, and Harrish Foundation (Ochoa, 2011). Information regarding private donations is not made public.Scaling the BusinessIn addition to building the TED brand, the decision to open up TED’s brand and make conferences accessible online also had practical benefits to the organization. In short, they allowed TEDx to expand into operating in more than 133 countries in just five years (Ronn, 2014). The relative autonomy granted to TEDx organizers freed TED from micromanaging TEDx conferences. The sheer number of conferences would make this a near impossible task. Currently, a TEDx conference is happening nearly every day somewhere in the world (Ochoa, 2011). This organizational methodology also served an important public service, entrusting local people to address local issues, rather than relying on outside ‘experts’ to fix problems they have no personal experience with or stake in.

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SWOT AnalysisStrengths

- Replicability of the TEDx conference - Strong fundraising base - Variety of Speakers attract attendees to TED conference for

networking

Weaknesses - The number of TEDx conferences and events happening each year

makes it unfeasible to closely vet speakers. This has the potential to hurt the TED brand

Opportunities - A competition where individuals would present ideas worth sharing to

TED. Three winners would be selected each year to speak at each of the three TED conferences

Threats

Market Position TED has created a unique value proposition: offering in-depth, easy to understand, and interruption-free presentation on “ideas worth sharing” by some of the foremost authorities in a wide variety of fields to a mass audience. The conference benefits from the variety of speakers it hosts. Many of the conference attendees, who are still primarily there for networking opportunities, are keen on forming relationships outside of their specific field of work. Succeeding in business means bringing together a variety of skills; a reality that many conferences fail to recognize when they focus narrowly on programming, marketing, policy, or any other specialization.The size of TED’s audience allows the conference to attract major sponsors such as the aforementioned: Google, AOL, Goldman Sachs, and Johnson & Jonson, among others.

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The organization has managed to maintain the exclusiveness of the TED Global Conference, and drive ticket sales and membership applications, while leveraging the foundation’s nonprofit status to make these purchases significantly cheaper to its customers. Meanwhile, it has achieved grassroots appeal through TEDx, bolstering its brand, reaching out to new demographics, and expanding into new markets with little direct involvement from TED.

Industry TrendsTechnological

1. Transition from Terrestrial Radio to Online Radio 2. Customizable News Feeds will become more widely used

Economic

1. The IRS will lessen restrictions on nonprofit journalism

Social

1. Audience generated content will become increasingly common 2. Independent publications will consolidate into regional networks

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