New America Foundation Underscores Moral Hazards of Fundraising

Ideas and Issues

New Orleans  The transactional nature of funding for nonprofits, even highly regarded A-list, Washington and New York City think tanks, that normally might be presumed to be sufficiently sanctified by their peers and immune to pressure within their circles, thanks to the current controversy around Google string pulling and the New America Foundation, are under a much needed microscope. The political and policy dangers that intersect in these transactions are constantly shadowed by moral hazard and worse, so the ham-handed handling of this controversy by New America is especially revealing and instructive in a cautionary way.

If anyone ever expected a free pass on these issues, it might have been New America. They tout their ability as a policy and opinion shop to look at our times and where we are going in a number of specialty areas from foreign policy to technology, and possibly anything else where they stumble on an open checkbook, it seems. They must have felt particularly bulletproof because one of their most popular programs is funding New America Foundation Fellows, many of them are top journalists at major papers and magazines and authors of important volumes. The fast majority of the current fellows are specifically named Eric and Wendy Schmidt Fellows through the support of Eric Schmidt, the executive chairman of the giant Google companies and until 2016, the chairmen of the board of the New America Foundation. News reports indicate that in the years of New America’s operation they have received $21 million from either Google or Schmidt’s personal foundation.

The controversy is easily stated. One of their fellows, Barry Lynn, who was running one of their programs called Open Markets was summarily dismissed and his entire 10-person staff and operation ejected as well. The action by Anne-Marie Slaughter, the CEO of New America, seems to have followed within days a complaint from Google’s Schmidt after he began aware that Lynn had posted something in a blog that spoke approvingly of the $2.7 billion fine levied on Google by the European Union regulators for what we would call monopolistic restraint of trade. Slaughter claims one action didn’t lead to another, but it seems it’s like the old Richard Pryor joke about “who are you going to believe, me or your lying eyes?”

I’m sure Slaughter is a fine scholar and obviously a super fundraiser, but her remarks, if anything, seem to confess to the conflict of interest rather than denying it. She claims Lynn was fired for repeated violations of New America’s “strong implicit norms.” Let’s stop there for a minute. There is no union representative in the country who couldn’t win reinstatement over an alleged breach of “implicit norms” of any kind. If these were so-called “norms,” why would a big-time nonprofit CEO making way over half-million a year have not made sure they were explicit and detailed in contracts, agreements, and rules of the road at New America, especially if these were “repeated violations?” On the management side, this would have been “once burned, twice learned,” if this were true.

And, the violation is equally unsettling. Slaughter claims the staff, fellows, whatever owe it to management to provide “a heads-up when you are doing something that could have an impact on the funding for your fellow directors.” Slaughter having already confessed to not being on top of her job as a manager, now is explicitly arguing for both the opportunity to engage in direct censorship and restraint of her staff’s policy work or implicitly asking her staff to self-censor their work, all with the expectation that they are as attuned to the financial impact and donor interests as she is as the chief organizational rainmaker. Wow! No wonder she has some of her current and past fellows circulating a petition to their board to draw a different line. Slaughter is all but saying to her people, if you mess with the money, better be moving towards the door. The way she continually indicts herself in this controversy, I have to wonder how she can survive as head of the institution or the institution can survive with her as its head?

Amazingly she demonstrates how much she has become a captive of the donors and lowered the wall of protection for her organization’s work in additional “oh, poor me” statements that fail to grasp her role or any accountability. She is quoted in the Times saying, “There are unavoidable tensions the minute you take corporate funding or foreign government funding. But the fact is that it’s very difficult to run a think tank these days with just foundation funding.” It is inescapable that she is rationalizing her role, rather than accepting responsibility or acknowledging her job as as head of the night’s watch on the wall for her people. She also seems not to understand that foundation and private donor funding also have the same “unavoidable tensions” and can be equally as transactional when the interests of the donor are unsatisfied. Eric Schmidt’s personal foundation is part of the forest she seems lost in, while trying to monetize every tree.

The head of another think tank in Washington, the Center for American Progress, which has faced similar criticism in the past, reminded her staff that “every institution’s ability to impact the national debate is based on trust.” For the New America Foundation that trust is gone when it comes to Google and the tech monopolies, probably forever. If they have shuttered the program, they need to return the money given by the donors, corporate or whatever. CAP’s Neera Tanden also cautions that nonprofits “never should come close to the line on these issues.”

Call it moral hazard, pay-to-play, or whatever, that line is never implicit. It has to be bright and shining. All of our work has to be with our eyes wide open and our guard constantly up.