Enron Fall May Affect Think Tank Funding

The fall of energy trading giant Enron Corp., the largest corporate bankruptcy in United States history, revives long-standing questions about the ties between American big business and non-profit public policy research groups.

At the center of these questions is the assumption — routinely denied, but virtually universally accepted as truth — that corporations influence legislation and government policymaking through donations to influential think tanks and advocacy groups whose public policy work is known to be influential in various areas.

The question of whether Enron and its ousted Chief Executive Officer Kenneth Lay exercised such back-door policy influence through large donations to influential think tanks, will probably remain obscure, largely because those in the public policy realm routinely gloss over or sidestep such issues.

Enron’s failure, and most pointedly, the disappearance of the large patronage contributions the company doled out to think tanks and other policy organizations, raises another question: what effect will the bankruptcy have on overall corporate giving to think tanks, as well as upon the fundraising strategies of these institutions?

Although think tank executives deny that such giving influences their research findings, the fact that many rely on the generosity of corporate America, related corporate and family foundations, and top executives for a large percentage of their operating budgets, places this in doubt. In addition, many corporate executives sit on the boards of various top think tanks, which critics say must at least influence the direction and topics of those institutions’ research.

Kenneth Weinstein, vice president and director of the Washington office of the Hudson Institute, encapsulated the argument made by the funding directors and executives for several think tanks.

“Corporations give us money, but it doesn’t mean they buy research,” he told UPI. “We do not guarantee the results of our research to anybody, and stipulate this as a part of every gift we receive.”

In the case of Enron, over the past 10 years the company, and the Linda and Ken Lay Foundation, gained a reputation for not only extensive giving not only to politicians, but also to policy research institutions. Lay had particularly strong ties to the American Enterprise Institute, which focuses on economic research and policy, and Resources For the Future, which focuses on natural resources. He served on the board of directors for both organizations.

The fact that Lay and his company were so closely tied to a group like RFF, whose research supported the sale of carbon emission credits — from which Enron expected to profit heavily under the provisions of the Kyoto greenhouse gas reduction protocol — might be seen to demonstrate a key reason for much of the corporate giving to the think tanks.

Though a spokesperson for AEI declined to provide the exact amount of the donations, she did confirm that Lay and Enron had contributed to the think tank.

Jonathan Halperin, RFF’s director of communications, planning and strategy, told UPI that since 1990 Enron has given gifts ranging from $10,000 to $50,000, and that the Lay Family Foundation had endowed a research chair of $2 million. He also indicated that Lay remains a member of the group’s board.

“We are watching the situation very carefully,” Halperin said adding that the effect of the Enron situation on their relationship to other corporate interests is “among the questions that this situation certainly raises, and one that overall we have certainly looked at for year and will continue to look at.”

Beyond these two think tanks, Enron and the Lay Foundation gave large and small grants to other institutions, including one-time four figure gifts to the conservative Heritage Foundation and the libertarian Cato Institute, as well as $50,000 donation last year to Hudson.

A top official for one prominent, heavily funded think tank said that though there are implications for the industry as a whole, it is the groups with clear and unmistakable ties to business groups and other special interests that will face the real fallout of the Enron scandal.

“The places that are viewed as essentially lobbying shops for industry, they are going to be negatively impacted,” he told UPI. “Places that tend to be the fronts for industry on the conservative side, and for labor groups, are definitely going to be influenced by these events. The places that do economic policy are also going to be more affected by this, as they get a great deal of corporate interest.”

The executive said that part of the perception problem was that the think tank industry has been transformed in the last two decades from a primarily independent research-focused field to, in certain cases, a non-profit lobbying arm for industry, labor groups or individual parties on both sides of the political spectrum. He said that conservative Citizens for a Sound Economy and the labor-affiliated Economic Policy Institute were prime examples of this.

Cato executive vice president David Boaz holds a dissenting view. From the think tank perspective, he says, not much more can be done to investigate donors than his group, and others, already do.

“I don’t think the Enron situation will make much difference for corporate fundraising,” said Boaz. “It would be nice to be more certain where your contributions were coming from, but in this case nobody knew what was happening with Enron. It is not very easy to do any more detailed research and therefore it will not make much difference.”

Nancy Perkins, vice president of external affairs for the Brooking Institution, said that the Enron situation would have no impact on the institution’s fundraising activities, while she made certain to stress that the think tank had no financial ties to Enron.

“I feel very comfortable about how we represent ourselves to fund-raise,” she said. “We have refused funds and have given them back in instances when the donor views are different from when we began with them. We are pretty assiduous in the way we look at corporate interests.”

One long-time industry watcher said that while it was mostly conservative think tanks that got money from Enron, it should be noted that most of them were conservative in thought long before Enron was even in existence.

The source added that one of the potential outcomes of the Enron scandal would be that some corporations could pull back from political donations in general, though this was not likely to happen in most cases, because companies recognize that they have to remain involved at the regulatory level to ensure their interests.

This expert further posited that though problems and conflicting views about questionable companies may arise for think tanks, their need for money would almost always outweigh questions of impropriety.

“In the case of donations, they have to make a decision[about whether]the perception of receiving money would taint their public image, ” he said. “In most cases they figure they can further their mission past whatever taint there may be, and I think that will continue to be the case.”