We Saw That Coming: The (Obvious) Problem of Corporate Funding at Brookings

In recent years, more corporate funding has poured into think tanks, creating possible conflicts of interest at institutions that rest their credibility on unbiased expertise. The line between public policy research and interest group advocacy can be a thin one when researchers are backed by funders with specific agendas, yet don’t fully disclose those sources or their level of involvement in the research.

This line appears to have been crossed by Brookings Institution fellow Robert Litan, who resigned under fire this week when he was accused of failing to disclose such a conflict of interest. Litan was co-writer of a study that was commissioned by the Capital Group, one of the world’s largest investment management firms. The study was critical of a U.S. Labor Department plan requiring brokerages to disclose to investors if they would benefit monetarily from investment advice offered to clients.

That plan is largely opposed by Wall Street, but its supporters in congress include Massachusetts Senator Elizabeth Warren, and it was she who called attention to Litan’s conflict of interest. Warren sent a letter to Brookings in which she asked for more information on the think tank’s policies regarding conflicts of interest, and pointed out that the report was “highly compensated and editorially compromised work on behalf of an industry player seeking a specific conclusion.” Litan’s study claimed that the plan could harm consumers. While he did disclose funding from the Capital Group, he failed to note in testimony to a U.S. Senate panel that the Capital Group had also provided editorial feedback on his work.

When queried by Reuters, Brookings President Strobe Talbott conceded that Litan had “made a mistake in not following Brookings regulations designed to uphold the independence of the institution.”

The Litan controversy shows how think tanks are just asking for trouble as they increasingly rely on funding from the corporate sector and donors who have specific agendas. Brookings is a leading example of this trend and the risks that come with it.  

A 2014 Washington Post story that examined Brookings’ funding found that the percentage of donations over $50,000 from corporations had more than quadrupled between 2003 and 2013. The same pattern was also true for the percentage of donations over $50,000 from foreign entities, which increased sixfold. The article also alleged that the integrity of some Brookings research might have been compromised. At the time, Talbott strongly rejected claims that conflicts of interest regarding funders tainted the institute’s work. But the Litan episode suggests that the Post was on to a real problem.

That problem may go deeper than any specific project. A look at the Brookings Institution board of trustees reveals a board largely composed of Wall Street players and elite corporate CEOs, which contrasts with the institution’s stated goals to “strengthen American democracy” and “foster the economic and social welfare, security and opportunity of all Americans.” Co-Chair David M. Rubenstein is co-founder and co-CEO of the Carlyle Group. Vice Chair Suzanne Nora is former vice chair of the Goldman Sachs Group. Other trustees include Paul Achleitner of Deutsche Bank AG, Klaus Kleinfeld of Alcoa, Inc., Philip Knight of Nike, Inc., James Rogers of Duke Energy, Abby Joseph Cohen of Goldman, Sachs & Co., and Peter Scher of JPMorgan Chase & Co.

Brookings is hardly alone among think tanks in staffing a board with leaders from corporations and Wall Street firms with big financial stakes in the outcomes of national policy debates. We’ve written in the past about the Peterson Institute for International Economics, which is heavily dependent on private sector firms with strong views on global economic policyviews often at odds with those held by a majority of U.S. workers. Likewise, the American Enterprise Institute draws considerable support from leaders in finance, and we’ve quipped in the past that its president, Arthur Brooks, probably wouldn’t last long if he decided one day that capital gains really should be taxed at the same rate as ordinary income.

Related: 

The situation at Brookings isn’t as bad as other places, but still raises questions about the independence of America’s most well-known think tank. Its 2014 annual report contains an honor roll of contributors that notes donations across various levels by a range of funders, including many private foundations. Donors of $2 million or more included the Bill & Melinda Gates Foundation, the William and Flora Hewlett Foundation, JPMorgan Chase & Co., David M. Rubenstein, and the Embassy of the State of Quatar. Donors of between $1 million and $2 million included the Ford Foundation, Philip Knight, the Rockefeller Foundation and United Arab Emirates. Donors between $500,000 and $1 million included Chevron, Exxon Mobil Corporation, Liberty Mutual Group, Qualcomm Inc., and the Walton Family Foundation.

The roll call of Wall Street and corporate heavyweights does not inherently mean that the Brookings Institution is compromised, but it does raise some question about how impartially it can consider the interests of “all Americans.” As we’ve pointed out in the past, even the strongest firewalls to protect think tank researchers from improper influence by donors doesn’t change the fact that all institutions are loathe to bite the hands that feed them.