Make think tanks great again: Navigating funding challenges and existential threats in a changing world

This blog is written by OTT Conference 2025 participant and speaker, Philip Khan, Founder and Director, Center for Advocacy and Global Growth, Geneva

Think tanks have long been instrumental in shaping public policy across the global landscape, offering research-driven insights and recommendations that bridge the gap between academic knowledge and practical policymaking. These organizations have traditionally served as intellectual hubs where complex societal challenges are analyzed through methodical research, resulting in evidence-based policy recommendations. However, the landscape within which think tanks operate has undergone dramatic transformation over the past decade. The model that has sustained think tanks for decades is now facing unprecedented challenges that threaten not only their funding streams but their very relevance and legitimacy in public discourse.

The global funding environment for think tanks has become increasingly precarious. The United States and Europe have already significantly reduced their foreign aid budgets in 2025, a trend that reflects broader shifts in national priorities and economic constraints. Beyond these immediate financial pressures, think tanks must contend with a rapidly changing information ecosystem characterized by the proliferation of disinformation, increasingly polarized public discourse, and the dominance of social media as primary information sources for many citizens. These developments raise fundamental questions about the future viability of traditional think tank models and their ability to influence policy outcomes in meaningful ways.

This essay examines the dual challenges of funding uncertainty and declining influence that think tanks face in today’s environment. It explores how these institutions might need to radically reimagine their operational models, funding sources, and strategic approaches to survive and maintain relevance in an increasingly complex and contested information landscape. While the challenges are significant, the most innovative institutions are already demonstrating that adaptation is not only possible but can lead to enhanced influence and sustainability.

The funding crisis: Immediate and medium-term challenges

Declining government support

The scale of recent government funding cuts represents an existential threat to think tanks worldwide. According to the Organisation for Economic Co-operation and Development (OECD), the average Official Development Assistance (ODA) from major donor countries decreased by 12.3% between 2023 and 2024 [1]. This decline appears modest compared to the dramatic reductions announced in early 2025: the United States cut foreign aid budgets by 92% [2], while the United Kingdom and France each reduced their budgets by roughly 40% [3]. These cuts reflect shifting national priorities, with resources being redirected toward domestic concerns and security measures.

The implications extend beyond immediate financial shortfalls. Many think tanks have built their research agendas and organisational structures around consistent government funding streams. As priorities shift, institutions must quickly pivot to new areas of focus—a transition that requires not only financial resources but also the development of new competencies and expert networks. This adaptation challenge is particularly acute for smaller think tanks with less diversified funding sources and more limited organisational flexibility.

European nations face additional constraints as defence spending requirements increase amid uncertainties about the practicalities of the NATO alliance. Defense expenditures in the EU are predicted to gradually increase by around $84 billion by 2027—rising from 1.8% of GDP in 2024 to 2.4% [4]. This shift has directly impacted research funding, with the European Union’s Horizon Europe program experiencing a 15% reduction in allocations for policy research initiatives in its 2025-2027 framework [5].

The broader impact of budgetary constraints

The 2024 On Think Tanks State of the Sector Report highlighted that funding inequality and sustainability are major challenges globally, with think tanks in low- and middle-income countries particularly vulnerable due to reliance on international donors [6]. Institutions with diversified funding models, including a mix of core, domestic, and project funding, are shown to be more resilient and better able to adapt to financial challenges. This suggests clear pathways for adaptation and sustainability.

The traditional sources and amounts of financing available to think tanks are in jeopardy, but this crisis is also spurring innovation in funding approaches and operational models that may ultimately strengthen the sector.

Existential threats to relevance and legitimacy

The transformed information ecosystem

Beyond financial challenges, think tanks face fundamental threats to their credibility and influence. The proliferation of disinformation has created an environment where expert analysis must compete with misleading content that is often more accessible and emotionally resonant. Trust in news media globally sits at only 40% as of 2024, while 59% of respondents expressed concern about their ability to distinguish between real and fake information online [7].

The fragmentation of audiences presents another challenge. 54% of Americans receive their news through algorithmically curated feeds, with the majority of social media consumers rarely encountering views that differ substantially from their own [8]. As people increasingly consume information within echo chambers that reinforce existing beliefs, the opportunity for think tanks to introduce nuanced policy perspectives across ideological divides diminishes. Yet this same fragmentation creates opportunities for specialised institutions to develop deep expertise and loyal constituencies within specific issue areas or communities.

Polarisation and the devaluation of evidence

In an era of polarised debates, think tanks that produce recommendations based on rigorous methodology may find themselves questioning whether their work is valued by broad sectors of society. Political polarisation has increased in 75% of democracies over the past decade, with severe polarisation—defined as the inability of opposing sides to agree on basic facts—present in 32% of democratic countries, up from 17% in 2014 [9].

In environments where political leaders display increasingly authoritarian tendencies, evidence-based research may be viewed with suspicion when it contradicts preferred political narratives. 2024 marked the 18th consecutive year of decline in global freedom, with 52 countries experiencing deterioration in political rights and civil liberties [10]. The fundamental question emerges: Is rigorously grounded technical analysis valued by political actors engaged in electoral campaigns? The evidence suggests it is valued less and less. However, this environment also creates demand for trusted sources of analysis among policymakers and stakeholders who recognize the value of objective research in navigating complex challenges.

The diminishing authority of expertise

These trends collectively contribute to the erosion of think tank influence and legitimacy over the past decade. Political polarization has become a significant operational challenge, with 36% of think tanks globally reporting that polarization affects their research and operations, rising to 40% in regions like Central Asia, Latin America & the Caribbean, and non-EU Europe & the Caucasus [11]. Perhaps most concerning, 36% of think tanks report challenges in collaboration with policy experts, suggesting that the traditional networks through which expertise flows into policy-making are under strain.

This erosion has practical consequences for how think tank research is received and utilised. When one in five think tanks reports difficulties in engaging across political lines, and more polarised environments are associated with reduced research independence, the distinctive value proposition of evidence-based analysis is diminished. Policymakers may still commission research, but they may do so selectively, focusing on work that confirms pre-existing positions rather than challenging assumptions or presenting inconvenient findings. Yet the same report indicates that institutions with strong methodological approaches and transparent funding sources maintain higher levels of credibility and influence, pointing toward adaptation strategies that can preserve and even enhance institutional authority.

Reimagining the think tank model: Emerging adaptations

Given these challenges, think tanks must fundamentally rethink their traditional funding and operational models. New approaches are needed that acknowledge both the changing funding landscape and the transformed information ecosystem. The most successful adaptations are already demonstrating that these challenges can become competitive advantages for institutions willing to innovate.

Specialisation and strategic partnerships

The most significant trend reshaping think tank operations is the concentration of funding among large private foundations and the resulting pressure toward specialisation. Philanthropic collaboratives have grown substantially since 2010, deploying between $2-3 billion in 2021 alone, with more than half created after 2010 [12]. These funding vehicles concentrate resources among fewer recipients, with the largest 60% of funds going to organisations receiving more than $25 million annually.

This concentration creates both opportunities and constraints. Research mapping philanthropic support of science reveals that philanthropic funding has grown to become comparable to federal research funding in volume and scope [13]. However, unlike government support, philanthropic funders tend to focus locally and demonstrate strong persistence in funding relationships—once established, grant-giving relationships tend to continue over time.

The Peterson Institute for International Economics (PIIE) exemplifies successful adaptation to this environment. PIIE actively engages leaders from business and finance while maintaining intellectual integrity. Its 2024 Annual Report lists major corporations like Airbus and McKinsey & Company alongside foundations in its highest tier of institutional benefactors (contributing $200,000 or more) [14]. This model allows PIIE to leverage private sector interest in global economic issues while maintaining research independence through transparent governance structures and clear firewalls between funding and research conclusions.

However, this specialisation strategy carries significant risks. The case of IZA (Institute of Labor Economics) in Bonn, Germany demonstrates the vulnerability of even prestigious institutions to sudden funding withdrawals. Despite maintaining a global network of 1,700 economists and a proven track record, IZA faced planned closure at the end of 2025 when the Deutsche Post Foundation withdrew funding over disagreements about reorienting research toward climate change priorities [15].

Enhancing impact through narrowing focus

The pressure for immediate policy relevance has led many think tanks to abandon long-term research in favor of targeted, time-sensitive analysis. This shift reflects donor preferences for short-term, goal-oriented grants [16]. While this approach can reduce capacity for innovation and long-term thinking, it also offers opportunities for increased policy uptake and impact.

The RAND Corporation demonstrates how strategic focus can enhance influence. Publishing nearly 2,000 publications annually, RAND emphasises objective, fact-based analysis designed specifically for government clients. RAND experts frequently provide congressional testimony on timely policy matters and deliver targeted analysis within constrained timeframes to address immediate customer needs. This approach prioritises relevance and timing over exhaustive analysis, often generating greater policy uptake.

Some institutions have embraced fully commercial models. The Economist Intelligence Unit (EIU) operates as the commercial research division of The Economist Group, providing subscription-based forecasting and economic analysis. For the fiscal year ending March 31, 2025, the EIU reported revenues of £44.2 million, driven by strong subscription growth and an impressive 91% client retention rate [17]. This demonstrates the viability of commercial models built on delivering measurable value to paying customers.

Embracing technological innovation

Digital transformation represents both a necessity and an opportunity for think tanks seeking to enhance efficiency while reducing costs. The Center for Strategic and International Studies (CSIS) has pioneered this approach through its Andreas C. Dracopoulos iDeas Lab, an in-house digital innovation incubator that enhances research with cutting-edge web technologies, design, and multimedia. The lab collaborates with policy experts to create high-impact digital projects, such as the “Global Forecast” series and interactive reports, making complex analysis more accessible to global audiences.

The integration of artificial intelligence offers particular promise for cost reduction and capability enhancement. MERICS (Germany) has developed a three-phase framework for AI integration in think tanks: assessing internal readiness, implementing specific use cases in research and communication, and developing collaborative organisational projects [18]. This systematic approach helps institutions navigate the technological transition while maintaining research quality.

The democratisation of AI resources through initiatives like the NSF’s National AI Research Resource (NAIRR) pilot program is particularly significant for smaller think tanks. By providing access to AI datasets, tools, and platforms for academic and public policy researchers, NAIRR levels the playing field for organisations without substantial corporate backing.

McKinsey’s research on data cost reduction shows that organisations can reduce annual data spending by 5-15% and reporting costs by up to 60% through optimised data architecture, process automation, and reduced external data acquisition [19]. These principles directly apply to think tanks managing significant data volumes, offering substantial cost savings that can be redirected toward research priorities.

Community-Based Funding Models

The most innovative adaptation involves developing direct relationships with engaged communities of supporters. Chatham House exemplifies this approach through its membership model open to individuals, corporations, and academic institutions. According to its 2022/2023 Annual Report, membership subscriptions provided £3.4 million in revenue, accounting for over 14% of the institution’s £23.7 million total income [20]. This creates both a durable revenue stream and a community of engaged supporters who feel invested in the institution’s success.

The German Council on Foreign Relations (DGAP) employs a research consortium model, financing operations through member contributions, project funds, and diverse sponsor support, including the German Federal Foreign Office, foundations, and major corporations like Deutsche Bank and Airbus. This diversified approach reduces dependence on any single funder while maintaining operational independence.

Smaller organisations have achieved remarkable success with community-based models. The Epis Think Tank covers 90% of its budget through membership fees, supplemented by targeted sponsorships [21]. This model creates closer bonds with the community while ensuring financial sustainability.

The Atlas Network has shifted toward competitive grants for partner organisations, providing $2,000 to $5,000 per project to create or strengthen local think tanks in more than 100 countries. This distributed approach builds global networks while maintaining local relevance and sustainability.

Crowdfunding research demonstrates that projects with institutional backing (public or think tank) are more successful and raise more funds, suggesting additional opportunities for community engagement and funding diversification [22].

Conclusion

The converging challenges of funding uncertainty and diminished influence create an inflection point for the global think tank community. The traditional model that has sustained these institutions for decades appears increasingly untenable in the face of geopolitical shifts, technological disruption, and changing information consumption patterns. Think tanks that wish to survive and thrive must be willing to fundamentally reconsider their operational models, funding sources, and methods of engagement.

The examples highlighted in this essay demonstrate that adaptation is not only necessary but achievable. Forward-thinking institutions are finding viable paths forward despite the challenging landscape, often emerging more resilient and influential than their traditional counterparts. These innovations suggest that the future of think tanks may be more diverse in terms of organisational models and funding approaches, with different institutions adopting strategies that reflect their particular strengths, constituencies, and areas of focus.

The most successful adaptations combine multiple strategies: building specialised expertise while diversifying funding sources, leveraging technology for efficiency while preserving analytical rigour, and engaging directly with stakeholder communities while maintaining independence from any single interest. This multifaceted approach requires significant organisational change, but the evidence suggests it can yield institutions that are both more sustainable and more influential than their predecessors.

The path forward requires both pragmatism and idealism. Think tanks must find ways to secure sustainable funding without compromising the intellectual integrity that gives their work value. They must communicate research findings effectively in a fragmented media environment without sacrificing analytical rigour. And they must demonstrate relevance to policymakers and the public without becoming mere echoes of prevailing opinions.

The stakes of this adaptation extend beyond institutional survival. In a world facing complex challenges, including climate change, technological disruption, and democratic backsliding, the need for evidence-based policy analysis remains acute. The question is not whether such analysis is needed, but rather how it can be sustained and effectively delivered in a transformed landscape. By reimagining their approaches to funding, research, and communication, think tanks have the potential to not only survive the current crisis but emerge as even more valuable contributors to addressing the defining challenges of our time.

The transformation will not be easy, but the early evidence suggests it is both necessary and achievable. Those institutions that embrace change while preserving their core mission of independent, rigorous analysis will likely find themselves better positioned than ever to influence policy outcomes and contribute to informed democratic discourse. The current crisis, while challenging, may ultimately catalyse innovations that make think tanks more effective, more sustainable, and more relevant than they have been in decades.

Source: https://onthinktanks.org/articles/make-think-tanks-great-again-navigating-funding-challenges-and-existential-threats-in-a-changing-world/

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