Think Tanks Explained: How They Shape Policy (and Pay the Bills)

Everything you've always wanted to know about think tanks but were afraid to ask

Think tanks can feel like mysterious institutions—often talked about but rarely understood. In this episode of The Missing Middle, Sabrina Maddeaux and Mike Moffatt unpack what think tanks really do, how they’re funded, and the challenges they face in staying independent.

They explore career paths inside these organizations, the influence think tanks have on public policy, and why the U.S. landscape is so much bigger (and better funded) than Canada’s. If you’ve ever wondered who’s behind the research that shapes our cities, housing policies, and communities, this conversation pulls back the curtain.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

Spotify

Podbean

Below is an AI-generated transcript of the Missing Middle podcast, which has been lightly edited.

Mike Moffatt: So, Sabrina, I'm going to get very Gen X right now, because that's what I do. You can tell I'm kind of dressed like Weird Al today, going full Gen X. And I'm going to talk about one of my favourite television sitcom tropes, which is having a character where nobody is quite sure what they do for a living. I think the most classic example of this is Chandler from Friends. Again, another sort of Gen X reference. Maybe if you're an older millennial, you might think your version is Barney Stinson from How I Met Your Mother, but it's a classic sitcom character trope. And while I don't have Barney's collection of suits or Chandler's sarcasm, I often feel like my friends and family have trouble figuring out, like, what exactly is it that I do for a living? You know, something involving universities and podcasts. They might even know the term think tank, but I don't think they have a really good sense of what I do all day or what a think tank even is. So, as somebody who actually inhabits the real world and might be the most normal character on the sitcom we have here at MMI, do you think the general public knows what a think tank is or what we even do all day?

Sabrina Maddeaux: Absolutely not. I should say, I think most people or a lot of people, have heard of the term think tank. So they're broadly aware that this thing exists, but it's like some mysterious mythical beast that they don't have any more details about. And probably a lot of misconceptions in some cases. And I always figured that was the case. But also, since starting the podcast and trying to explain to people the Missing Middle Initiative and even the Smart Prosperity Institute, and how it all fits together, it gets complicated fast, and most people just kind of glaze over. And yeah, there's definitely a lack of awareness there. So, since you're the resident expert on this, obviously, I'm going to give you the opportunity to educate your friends and family, along with our audience, on what exactly a think tank is and what does it do?

Mike Moffatt: Yeah, so roughly speaking, it's an organization that does public policy research on a particular topic and communicates that research to a variety of audiences. So policymakers, politicians, but also the media, the general public and so on. And think tanks are usually organized around an idea or a mandate, something that they're trying to accomplish, something that they can articulate about what it is and why it exists. So at MMI, our mandate is to help young urban middle-class Canadians.

And I think it's helpful to divide think tanks into two categories. The first is academic think tanks. So these are think tanks associated with the university or college. MMI is associated with the University of Ottawa.

I've worked at three others: Smart Prosperity, which you mentioned, which is also University of Ottawa, Moet Center - which no longer exists, RIP - at the University of Toronto and the Lawrence Center at Ivey Business School at Western. So I've been doing this for a while.

And then you have non-academic think tanks like C.D. Howe, the Fraser Institute and so on. They don't have a direct linkage to a particular institution, though they might have a lot of professors and PhD working for them or affiliated with them. I've worked at one of those; Canada 2020. And in fact, I'm still on the advisory board there.

So, they come in a variety of different flavours, but they're all around how you research applied public policy and then turn that knowledge into actual policy to help governments.

Sabrina Maddeaux: So let's stick with academic think tanks for now. What's the business model behind running one of those?

Mike Moffatt: Yeah. So, that's always been like how the dollars and cents work.

So, the value proposition of an academic think tank is that it brings together academic researchers who do really important work, but it's not always that accessible. It's in academic journals, and it's written in a way that regular people don't necessarily understand. But we can bring together that research along with the needs of industry, government, organized labour and so on, to help design public policy.

So, I'll give you an example of this. A classic case in Canada was around child benefit cheques that both the Harper and Trudeau governments did a number of policies in this area. So the academic research is all around that this is a cost-effective way of reducing poverty, and that it has all these positive outcomes.

That's where the academic side comes in. The role of the think tank is basically to take that really academic work and design policy around that. So it gets into all of these applied questions of how often the cheques should come out? How should those cheques be related to other financial programs? How should those cheques get clawed back as a family's income rises? How do you make sure that people actually get the benefits that they're entitled to? So, all of these kinds of wonky things.

I almost think of it like the difference between physics and engineering, where the academics are the physicists who do all the theoretical work. And then us at the think tanks, we actually have to design the thing. And we have to think about all these real-world considerations. Going, ‘Okay, we're designing a phone, and maybe your toddler's going to spill juice on it, and how's the phone going to deal with that?’

Now, academic think tanks are run as not-for-profits. So they're not money-making exercises, but they also have to cover the cost. So they're not operating at a loss. I think one of the big misconceptions is that they're not typically subsidized by the college or university. The think tank has to pay for the salaries and benefits of everybody who works there, all the equipment they use and so on. As well as overhead to the university to compensate the university for the cost they incur to keep us around.

So, for instance, the people who work here might have to use the university library. So we give the university a chunk of change to make sure that the library can keep running.

So we're typical in that fashion where we have to pay for every single resource we use, including the salaries of everybody on the team, myself included, and pay overhead to the university. And there are no complaints there. The University of Ottawa treats us exceptionally well. They're great partners. But that's how it works.

So basically, we operate as a not-for-profit, and we have to pay for everything and we need to make sure that we have enough revenue coming in to cover those costs.

Sabrina Maddeaux: Speaking of paying for everything, I'm sure the obvious question on everyone's mind is where does all this money come from? So Mike, where does the money come from for an academic think tank?

Mike Moffatt: Yeah, and once again, I'm going to break things down into two different groups of think tanks or funding models for academic think tanks. So one is the endowment model, where you have some very wealthy benefactor who provides a think tank with a seven or eight-figure sum of money. And then every year, the think tank spends like five to 10 percent of that endowment on a variety of activities. So, basically, they're sitting on a giant pool of money that's invested in stocks, bonds or whatever. And then they take the profits from those investments, and that funds the activity.

The Lawrence Center, where I was briefly interim director, that's how it ran. The center was created through a very generous donation from Jack Lawrence and his family about 25 years ago. And that funded most of the center's annual activities.

But that model is the exception, not the norm. Most think tanks operate like the Missing Middle. We don't have an endowment. We exist on a combination of grants, project-based funding and so on. This can come from a variety of sources like charitable foundations, governments, corporations, what have you.

For MMI, our budget is under a million dollars. So, you know, we're a fairly small organization. Half of that comes from charitable foundations. Actually, over half comes from charitable foundations like the Clean Economy Fund. Our biggest single funder, the Neptis Foundation, which generally funds this podcast and other initiatives. So big shout-out to our friends at the Neptis Foundation who make all of this possible.

Sabrina Maddeaux: Now, what's the single biggest misconception people have about think tank funding?

Mike Moffatt: Well, I'd go back to that, that people think that we're funded by the university or college, that we're basically being subsidized. It's not true. If anything, we generate revenue that we give to the university. We are a revenue center for the university, not a cost center.

But I think the biggest misconception that people have is that there's a way to fund these things without potential challenges and conflicts. Like, there's some pool of money out there that we can draw from that doesn't come with challenges, right? Any pool of money we get, any kind of funding we get, there's always the danger of being pushed into something that could either be a conflict of interest or appear as a conflict of interest. And it makes it one of the most challenging environments to deal in with fundraising. There are no non-controversial funders. There's none.

I think people get this wrong. Where Progressives will often say, ‘Well, obviously, you shouldn't take money from corporations and you shouldn't take that kind of money. You should just be taking foundation money.’ OK, yeah, but foundations are funded by like the 0.0001%, right? So that creates potential challenges. Or, if based on an endowment model, that creates problems there.

Whereas conservatives might say, ‘Well, you shouldn't take money from government because that might make you beholden to government.’ It's like, OK, let's take that off the table. Then funding comes from corporations that might want to dictate the research a little bit.

So, you're always having to be on guard, where you're protecting your independence, because there is no way to operate a think tank without issues of where you get your funding from and who you are answering to. It's probably the biggest challenge we deal with.

Sabrina Maddeaux: Yeah, that's pretty tricky. So if all sources of funding are potentially problematic, how do you think tanks ensure they're not getting, quote unquote, bought by their funders?

Mike Moffatt: Yeah, and this is such a challenge. And there are basically three ways I think they can do it, or three ways that I think about it. The first is who you are and what you do and make it clear to the world who you are and what you do.

So, set a sandbox for yourself, going, ‘OK, this is how we see the world. These are the policy issues that we deal with,’ and don't go outside of that sandbox. Because if you set a clear vision on what an organization is about, the problem they're trying to solve, and so on, then a potential funder - we call them supporting partners - a potential supporting partner isn't going to come to you in the first place, right?

A supporting partner isn't going to come to us and say, ‘Hey, I want you to work on some issue around capital gains changes for billionaires.’ It's not what we do. It's not within our sandbox. So we don't have to worry about those things because we know who we are, we know what we do, and potential partners know that. So that creates a set of alignment from the outset.

The second is, don't be overly reliant on a single source of funding. I mean, this is so important, and this is one area that think tanks can get themselves into trouble. If you have one big funder who's funding the majority of the activities, it gets really hard to say ‘no.’

So, we believe in a diversified funding model, and that's not just diversified in the sense of having more than one or two funders, but also different sources. Right?

So, we work with government, we work with corporations, we work with foundations and so on. We see that as being important. And that creates kind of a natural balance where we have to stay on the straight and narrow, because if we start moving too far in the direction of the interests of one supporting partner, our other supporting partners are going to be like, ‘what the heck are you doing?’ We work with both environmental groups and people who build homes and that forces us to be on the straight and narrow. And I think that is so, so important.

And the third thing, and I think the most important thing you have to do, is set expectations very early. When we talk to a potential supporting partner, whether they're coming to us or we're going to them, we make it very clear that we retain full editorial control of all the products we release, all the research we do, and so on. We put very strong language in all of our communications on this. And it scares off funders. It scares off supporting partners. But my view is if they're going to be scared off, I want them to be scared off at the front end. I want them to go away before we start working with them, rather than getting halfway through a project or we're about to release a project and the supporting partner goes, ‘Oh, we're not, we're not comfortable with it.’ Sorry, it's what you signed up for.

So, at the end of the day, I think it's making sure that you have alignment with your supporting partners, that you all have similar visions. And you make it clear where the lines in the sand are.

We should recognize, at the end of the day, if you want to get rich by being buddy - buddy with corporations, this isn't the place to do it. Like you would make so much more money in other types of government relations jobs. And I don't want to suggest for a moment that we're suffering here, or we make a low incomes - we're searchable on the sunshine list, so you know exactly what's going on with us.

You know, if you're looking to be rich selling out to corporations or endowments or whatever, this is not the place to do it. The money isn't there. So this is the kind of place you go to for the love of the work, not to get rich. And that certainly helps as well.

Sabrina Maddeaux: So if you're a young Canadian, thinking a think tank sounds like it could be an interesting place to work. Where do you start? Like, what do jobs for young people look like at think tanks? How do you get hired by one? Can you actually make a good salary doing this type of work?

Mike Moffatt: You can absolutely make a good living doing this work. You can pay the bills. And I think the most important thing is that you can do something that really matters.

Like, the really coolest thing about this job is that when you work on some piece of public policy research and then governments actually do it, right? So, we saw that when we did a lot of work on eliminating the GST on purpose-built rentals, and then the government went and did that. I had in previous jobs, I'd worked on the child benefit cheques and governments went ahead and did some of those reforms. So, that's really fulfilling to see.

The challenge is that the Canadian ecosystem for think tanks is small. So there's not a lot of jobs out there. It is very relational. So it's getting to know the research, getting to know the people who do it. But there are various pathways where a lot of the people that we've hired have worked for a government before - they might come from an academic background, they do a few years in federal, provincial, municipal, government, what have you, and then go, ‘Ah, I'd rather be on the outside.’

So it's that kind of thing. Often we're not we're not somebody's first job, but we can often be somebody's second job. So I do think it's a great place for young people. There aren’t that many jobs in the ecosystem, because it's so small, and I wish we had a lot more. I truly do, because I do think it creates so many great opportunities for people in their 20s and 30s.

Sabrina Maddeaux: For sure. Now, one of the complaints that our producer, Meredith, often has is that the vast majority of great think tank work she sees comes from the US rather than Canada. Do you think they're really that much better at this than us? And if so, why would that be?

Mike Moffatt: Yeah, they are. And that pains me to say as a proud Canadian. They are, and it all actually comes down to money. Now, you would expect the Americans, being 10 times bigger than us, would have 10 times the resources in their think tanks, but it's actually probably closer to 100 times, if not 1000 times. Like, I think if you took,

Sabbrina Maddeaux: Wow.

Mike Moffatt: Yeah, it's massive.

So if you look at the Brookings Institution, one of the big US think tanks, I suspect they are bigger in terms of sheer headcount, and revenue and expenses than like all the Canadian think tanks put together. Or, maybe the 20 or 30 biggest Canadian think tanks put together. It's that kind of scale.

We just don't have that culture here. We don't have those wealthy benefactors who see the value in think tank work. Our corporations in general have - it's not been something that they've been interested in.

The foundations have been a little bit. But you know, because foundations are interested in certain topics, that does tend to bias the system towards certain topics.

Canada has a lot of really great foundations, when it comes to the environment, for instance. So we kind of punch above our weight when it comes to environmental think tanks, in part, because we have so many great environmental foundations.

Not quite to the same extent, but we do have some foundations that are focused on poverty reduction. And that helps fund think tanks devoted to that. But, the kind of work that we do, or other kinds of socially important work, if the corporations, the wealthy benefactors, and the foundations aren't interested in it, then there's really not an ecosystem for it.

So yes, the Americans are better than us at it. But it's just a sheer resource difference that drives that. And I suppose a cultural difference because the lack of a think tank culture means that we're just not getting that revenue that they see in the United States.

Sabrina Maddeaux: That makes sense. It all comes down to money at the end of the day.

Thank you, everyone, for watching and listening and to our producer Meredith Martin.

Mike Moffatt: If you have any thoughts or questions about working at a think tank, please send us an email to [email protected]

Sabrina Maddeaux: And we'll see you next time.

This podcast is funded by the Neptis Foundation

Brought to you by the Missing Middle Initiative