Telecom Think Tanks Get Significant Support from Industry

Some groups rely more on corporate largesse than others, and some are more willing than others to name their benefactors. Corporate support can create a dilemma for advocacy groups, according to some sources. “Any group that claims to be a watchdog has to be free to choose how it spends its own money,” said Jane Kirtley, a professor of law, media and ethics at the University of Minnesota. “If you become too dependent on any one source, there is a risk that that source will start dictating what you do.”

Funding has little impact on conclusions the groups reach, officials said. “A lot of times people see that we have corporate funding and assume that because we get money from an industry that we are a mouthpiece for them,” said Center for Democracy and Technology spokesman Brock Meeks. “We have never said, ‘Okay, if you give us $50,000 we'll advocate a position for you.’ CDT has a reputation here in Washington for bringing people to the table to hammer out a policy that everyone can live with.” CDT data show that corporations funded about 40 percent of CDT’s 2007 budget.

Often, new organizations rely on corporate handouts to survive their first years, hoping to diversify their funding. The Technology Policy Institute, formerly iGrowth Global, took form in the fall of 2007 after TPI President Tom Lenard left the Progress and Freedom Foundation. TPI depends for all its funding on a short list of large corporations, including Verizon, Cisco Systems, AT&T, Comcast, Google, Yahoo!, VeriSign, and Verizon. “It’s all funding to the foundation. There’s no contract research,” Lenard said. “Our supporters know we're not consultants. We're a think tank.” Lenard he plans soon to diversify his foundation’s funding.

The Maryland-based Free State Foundation, a think tank focused on deregulation and free market policies, occupies a similar situation, said President Randolph May. May, another PFF veteran, founded the FSF in 2006. Its first year in operation, the body received nearly all its funding from telecommunications companies and trade groups, according to its 2006 IRS Form 990. T-Mobile, Cingular, AT&T, Cisco Systems, Verizon, and Time Warner donated $2,000 to $20,000 each. Comcast donated $20,000, and the National Cable and Telecommunications Association gave $25,000. “The foundation is largely corporate-funded, and I don’t make any bones about that,” May said. He accepts foundation support and individual contributions, he added. “I think the donors respect what I'm doing as a matter of principle and know that they can’t control the positions the foundation is going to take.”

Other groups’ corporate donor rosters run longer, with each contributor giving only a small sum. The Progress and Freedom Foundation website lists 20 corporate and trade association sponsors, including CBS, Clear Channel, Comcast, DirecTV, EMI Group, NBC, Sony BMG, Viacom, and The Walt Disney Company. Several new members are expected to join in 2008, according to PFF President Kenneth Ferree. Ferree said having so many corporate supporters inoculates a group against any obligation to particular backers. “Our preference is to have more member support at a lower level,” he said. “If a company gives you half a million dollars, they expect something in return. If they come in at a lower level, there’s not such an expectation.”

In 2006 the Media Access Project received donations from more than 20 corporations and trade groups, it said. Each gave between $1,000 and $5,000, it said on its web site. But gifts to the project from private foundations, ranged from $2,000 to $200,000, comprising 85 percent of MAP funding that year. The Center for Democracy and Technology received an equal amount of money last year from foundations and from corporations, it said. Microsoft, Intel, eBay, Google, Yahoo!, and Dell, among others, appear on the CDT donor list provided on the site, and 2007 telecommunications corporation donates to CDT exceeded $800,000 to CDT.

The Free State Foundation’s credibility has come into question due to similarities between its positions and those of some of its sponsors, May said. The foundation opposes open access regulations and consistently advocates a free- market approach to policy, May said. This is simply what he believes is best for industry, he added: “There needs to be less regulation in the communications market. I've been very consistent with that over the years, so the supporters of the foundation know where I'm coming from.” Sponsors value this consistency, he said.

Some groups avoid credibility issues by seeking money from foundations and individuals as well as corporations. Diversity in sponsorship is crucial to independence, said University of South Florida media ethics Professor Deni Elliott. “What becomes dangerous is when you have continuing support in a way that the advocacy group becomes dependent on it. That’s where the conflict of interest becomes unavoidable,” she said. “Transparency isn’t always enough. You can cheat very publicly, and that doesn’t make it right.”

The Media Institute and the Media Access Project get small donations from many corporations. Each group has over 20 corporate and trade association donors. Neither depends on a core group of sponsors for a preponderance of its income, according to an analysis of IRS documents and donor lists provided by the groups. MAP’s net neutrality stance often pits it against sponsors. “We have had frequent occasions when a corporate donor has said, ‘Look, we're really annoyed with you and we're not going to donate to you anymore.’ And that’s that,” MAP President Andrew Schwartzman said. “By soliciting donations in small amounts from competing corporations and trade associations, we minimize the problem of undue corporate influence.”

Most groups accept the risk inherent in disagreeing with a sponsor, Media Institute Vice President Richard Kaplar said. “Being an independent group rather than a trade association is a double-edged sword,” he said. “We don’t take lock-step industry positions on issues. There’s no guarantee that we're going to take positions that everybody likes, or that anybody likes, and so there’s no guaranteed source of funding.”

“Companies are rarely surprised if we take a position they don’t like,” said CDT’s Meeks. In January 2006, after a two-year investigation of advertising software distributor Zango (at the time known as 180solutions), the CDT filed a complaint with the FTC regarding the company’s distribution methods. In the following months, Zango tried to sponsor the CDT; the overture was rejected. After filing a December 2003 report questioning the value of the broadcast flag, Meeks said the CDT was informed by then-sponsor News Corp. that the company would withdraw funding unless the group backed the flag. CDT refused, and News Corp. has not donated to it since.

Credibility can assure success for an analysis group, particularly one cultivating the images of unbiased expert or public advocate. Groups taking money from telecommunications companies know the ethical challenge of seeming independent - - and reality, some said. “Ninety percent of the issue can be resolved through transparency,” said Kirtley. “I'm not so sure that true independence exists. The only thing you can do is be completely transparent about who your sponsors are.”

But some think tanks and advocacy groups are far from transparent on funding, we learned. For example, the American Enterprise Institute, known for a consistently anti- regulatory stance, would not reveal which corporations give it money. Although it covers a wide range of issues, from foreign policy to health, AEI is among the largest think tanks dealing with telecommunications policy, with 2007 revenue of $28.4 million. Six million dollars, or about 20 percent of AEI’s total annual income, came directly from large corporations according to the 2007 annual report. AEI in turn donates to the Brookings Institution, in recent years on the record as a foe of net neutrality. In 2006, according to Brookings’ annual report, it got $25,000 more from Microsoft, at least $50,000 from Verizon, and over $100,000 from AT&T.

Last year the Cato Institute got only 3 percent of its money from corporations, according to our analysis of the institute’s 2007 IRS Form 990. However, the institute still would not provide details about donations. Its annual report named Comcast, eBay, Microsoft, Time Warner, VeriSign, Verizon, and others as donors, not disclosing what each gave. However, that $500,000 was only about 3 percent of the year’s funding. As AEI does, Cato donates a portion of its own income to Brookings, according to Brookings’s 2007 annual report.

Free Press, which advocates open access and diversity in media ownership, does not accept any money from governments, corporations, or political parties, it said. “We want to represent the public interest, not any one corporation, and the only way to do that is not to accept any corporate money at all,” spokesman Craig Aaron said. Free Press receives the bulk of its money from foundations, according to its 2006 annual report and IRS Form 990.

Foundation funding can be no less problematic than money from companies, “since most foundations do have some sort of ideology associated with them,” he said. Free Press’s major sponsors include the Schumann Center for Media and Democracy, financier and media activist George Soros’s Open Society Institute, the Quixote Foundation and the Park Foundation, according to the organization’s 2006 IRS Form 990. These foundations donate to groups who say they work on promoting public awareness, free speech and democracy.

Public filings and statements show that telecom and Internet firms provide significant funding to many think tanks and advocacy groups, but those firms resist discussing why they dispense money and what they expect to get. Officials from Verizon, Google, Comcast, and Time Warner, all listed as donors to advocacy groups, among others, did not respond to questions about their gifts.

Kirtley acknowledged the difficulty of spurning corporate funding. “You've got to get your money from someplace,” she said. “Unless you're going to have a bake sale, you need to start looking into getting money from corporations.”