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From Think Tanks & Civil Societies: Catalysts for Ideas and Actions, James G. McGann and R. Kent Weaver, editors. Transaction Publishers, New Brunswick, New Jersey: 2000 (Chapter 3, pp. 67-85).

The Heritage Foundation

by Edwin J. Feulner, Ph.D.

During his first term President Reagan called The Heritage Foundation "that feisty new kid on the conservative block." Less than a decade old at the time and still operating from a row of townhouses on the fringes of Washington's Capitol Hill, The Heritage Foundation would come into its own during the Reagan era. During the Bush and Clinton administrations, Heritage would defy the political oddsmakers by expanding its influence and outdistancing its competition in Washington's "war of ideas." By the mid-1990s, The Heritage Foundation was no longer defying the old Washington establishment; it had become a pillar of the new one.

Throughout Heritage's existence, we have sought to be a leadership institution that is instrumental in building a more effective conservative movement. I helped found Heritage and have led the organization since becoming its fourth president in 1977. In the intervening 20 years, Heritage has become one of the leading policy research organizations in the world and, through its results, has set a new standard by which other think tanks are measured.

But it was not always so for Heritage, which incorporated in late 1973 and opened its doors with a handful of employees in 1974, just months before President Nixon resigned. Initial operating funds for the fledgling organization were provided by Colorado brewer Joseph Coors. At the time of Heritage's founding, Washington conservatives - who had never fully recovered from Barry Goldwater's defeat in the 1964 presidential election - could rightly joke among themselves about holding a convention in a telephone booth. Some American intellectuals were predicting that state socialism, in one form or another, would ultimately become the global economic norm, and that America's best days as a global power lay behind it.

Meanwhile, the Nixon administration was busy overseeing America's withdrawal from Asia, proclaiming that "we are all Keynesians now," and rushing to create one new regulatory agency after another - the Environmental Protection Agency, Consumer Product Safety Commission, Occupational Safety and Health Administration - all of which seemed to confirm the gloomy perception that conservatism was destined to remain an insignificant force for change in Washington.

Given this perception and the events that appeared to confirm it, founding a think tank at that time to fill this void in the conservative movement probably appeared to many observers to be a barren venture. But we were younger then, driven mostly by our passionate beliefs and not by the mountains of empirical evidence we now possess. After a slow start, Heritage in the late 1970s began a period of steady growth that has continued until the present, enabling us to significantly expand our research program, launch a new conservative journal, Policy Review, establish the Resource Bank to coordinate and leverage the conservative movement's scattered but abundant resources, and develop the unique marketing capabilities that still set Heritage apart from other policy research groups. As James A. Smith, author of The Idea Brokers, put it, "Heritage is the salesman and promoter of ideas par excellence."

By 1980, The Heritage Foundation staff had grown to 40 and its annual operating expenses had quadrupled to $5.3 million. Much of the Washington political establishment still dismissed conservatism and considered the term "conservative think tank" an oxymoron. But that would soon change as Heritage's ideas began to gain a more respectful audience.

Heritage's proposal for creating urban "enterprise zones," for example, first published in a 1979 study, soon found bipartisan champions in Rep. Jack Kemp, a Buffalo Republican, and Rep. Robert Garcia, a Democrat from New York City. Heritage's work on national security, taxes, welfare, and foreign policy also attracted early notice.

The tactic of "mainstreaming" conservative ideas was greatly accelerated in late 1980, when Heritage provided the incoming Reagan administration with Mandate for Leadership. This was a 1,093-page policy manual described by United Press International as "a blueprint for grabbing the government by its frayed New Deal lapels and shaking out 48 years of liberal policy."

By 1985, midway through the Reagan era, the Heritage budget had increased to $11.5 million, our staff had grown to 100, and the entire Heritage operation had moved to a modern eight-story office complex and conference center two blocks from the Capitol. Vice President George Bush presided at the ribbon-cutting ceremony for the new Heritage building. At this time we also established our Asian Studies Center. And Heritage's growing impact on national policy prompted The New Republic to describe Heritage as "the most important think tank in the nation's capital ... certainly better at what it does than anyone else."

Though the Reagan "revolution" eventually lost momentum, Heritage continued to grow. By 1995, our total operating expenses exceeded $25 million, and our staff now numbered 150. The Soviet Union had collapsed, and a conservative Congress was moving to implement a "Contract with America." And the President of the United States, a self-described "New Democrat," declared in his State of the Union message that the era of big government was over.

The Heritage Foundation has always been about change. From the Mandate for Leadership series (additional volumes were released in 1984, 1988, and 1996) to the 1989 monograph "National Health System for America" proposing free-market reforms, Heritage has tried to steer Washington toward public policies rooted in conservative principles.

In March 1982, for example, Heritage published a landmark study proposing an end to the Cold War doctrine of "mutually assured destruction" as a means of discouraging nuclear war. We proposed instead a new strategy of defending Americans against missile attack. A year later, almost to the day, President Reagan announced his Strategic Defense Initiative, which bore a striking resemblance to the Heritage plan.

In 1982, Heritage published an important monograph by social scientist Charles Murray, who would later expand it into Losing Ground, one of the most influential books ever written on social-welfare policy. Heritage's Stuart Butler and Anna Kondratas in 1987 took Murray's arguments a step further. In Out of the Poverty Trap, they offered a vision for reforming the welfare system. That vision, bolstered by the subsequent work of Robert Rector, another Heritage policy analyst, would provide the framework for the historic 1996 welfare reforms.

In 1995, Heritage published a monograph proposing a top-to-bottom overhaul of America's Depression-era agriculture policies. Much of official Washington, aware of the power of the "farm lobby," scoffed. Yet, 18 months later, the historic Freedom to Farm Act was signed into law, enabling farmers for the first time in more than 60 years to grow for the world marketplace rather than for federal planners in Washington.

Limited government. Individual liberty. Free enterprise. A strong national defense. Traditional American values. These are the concepts that have informed Heritage research in the past and will continue to do so in the years ahead. We will continue to press for tax and entitlement reform, for expanded free trade, for a military built for today's global environment rather than a bygone era, for less government intervention in our personal and business lives, for a society in which all Americans have the opportunity to succeed, for a reinvigorated federal system in which state and local governments reclaim their authority and accept their responsibilities, and for an educated citizenry who exert an informed influence on the affairs of community and nation.

Funding
The availability of funding is, of course, a challenge that every CEO at every institution faces. After years of grappling with it, I have promulgated Feulner's 13th Law of Fundraising: "It is much more difficult to raise the marginal million from 18 to 19 than it is from 5 to 6." This is a generalization that reflects the shape of our own growth curve. From our founding in 1973 through 1980, our income grew at an average annual rate of more than 300 percent. From 1980 through 1990, we saw 14 percent annual growth. And from 1990 through 1997, it was 10 percent.

The progressive difficulty of increasing income can be explained by the progressive difficulty of expanding one's donor base. From an initial pool of prospective donors, an institution is most likely to raise money from those who know it best and have the longest and closest association with it. As prospective donors in this pool become actual donors, it grows increasingly difficult to bring in new donors from outside that initial circle, especially considering the likelihood that support from prospective donors outside the circle is also being solicited by other institutions.

The Heritage fund-raising model is quite different from that of the American Enterprise Institute, the Brookings Institution, or any of our other sister organizations in Washington and elsewhere. Heritage has a 20-year history now of working with a broad membership base throughout the United States. More than 200,000 people, who contribute more than 45 percent of our total annual income, support Heritage. We strive to maintain a broad base of support to keep Heritage from becoming heavily dependent upon — and thus beholden to — a few large contributors.

The importance of this was made clear to us some years ago when a corporate CEO, taking exception to our policy in favor of free trade, ripped up a check for a six-figure donation. Such short-term losses are significant, of course, but by accepting them, we strengthen the allegiance of our more numerous smaller donors. We know from years of hearing from those donors that their support for Heritage is often motivated by dissatisfaction with Congress, whom they regard as too easily swayed from principled positions by contributors pushing a vested interest. Heritage is able to maintain a broad donor base in large part because we have demonstrated over the years that we do not cut corners on principle to win the favor of large donors.

Because so many of our supporters are dissatisfied with the operations of government, their confidence in Heritage is further boosted by our policy of refusing to seek or accept money from government sources. Although this boost is a consequence of our policy, our primary reason for adopting it was philosophical. From its founding, Heritage has held that the federal government is too large and spends too much money on activities that are not its proper function. We could not coherently defend this view if we accepted government funding, so we simply don't do it. This policy also has a credibility component, which hinges on the fact that we often publish studies that criticize government policies. If we accepted money from the institutions whose policies we criticize, our donors might justifiably question our objectivity. In refusing government funding, we also gain greater financial stability, because we cannot be hurt by government cutbacks in nonprofit funding, as some organizations have been hurt.

Measured as a percentage of total income, contributions to Heritage from individual donors have remained relatively high, averaging about 47 percent during the last two decades, and fluctuating plus or minus 5 percentage points. Income from other sources, however, shows some interesting trends over the same two decades. Income from corporations, for example, peaked in 1985 at 21 percent of total income. Subsequently, it has dropped to about 4 percent of today's total. Support from other foundations has also declined since 1978, while investment income has grown dramatically, from 6 percent in 1990, to about 24 percent today.

This growth in investment income can be explained in part by recent changes in accounting rules that require investments to be recorded at market value rather than at cost. But it also reflects a deliberate policy on our part. Heritage has set a goal of building a permanent fund that will ultimately yield about 30 percent of our annual operating expenses. This will provide a cushion during economic downturns, when contributions can be expected to ebb.

By the same token, however, we have resolved never to derive more than about 30 percent of our income from investments. We achieved our growth over the past 25 years by maintaining an aggressive, competitive edge, and by holding ourselves fully accountable to our supporters. In contrast to this, some nonprofit organizations that have grown "fat and happy" as they increasingly operate on income from endowments. From such examples, we have concluded that as endowments go, more isn't necessarily better. We believe that we can best achieve our long-term goals if we continue to depend on a broad base of supporters for a large portion of our income.

Some might perceive this to be a risky strategy, but that isn't the case. On the contrary, funding sources for think tanks, at least in the United States, are more plentiful now than ever before. As think tanks have become better known to philanthropists and to the general public, the opportunities for solicitations have grown almost faster than they can be acted upon. With new grant-making foundations being created in the United States all the time, it is important for those of us in the policy arena to convince the leaders and trustees of these foundations that our work — like that of hospitals, museums, artistic organizations, and educational institutions — is worthy of their support.

A few U.S. think tanks, notably the Russell Sage Foundation and the Carnegie Endowment for International Peace, were founded with a substantial grant from a single individual. This type of endowment grant from an individual, either while living or in his estate, is rare today. My colleagues at Heritage, however, have developed an extensive program to encourage individuals to provide funding for Heritage in their wills, as they do other institutions such as churches and colleges. Bequests represent an increasing share of Heritage's annual income, and we expect this growth to continue. Indeed, there is a clear trend among public policy organizations to develop programs for this group of deferred givers.

Another major trend in the United States is the increasing demand for public policy research. This includes not only privately funded think tanks like Heritage and the kindred organizations mentioned earlier, but also government-sponsored organizations, church-related groups, and institutions with formal ties to various universities, such as the Hoover Institution at Stanford University. The amount of advice available to the policy-making community is growing very rapidly. Members of that community, however, know the old adage that free advice is often worth what you pay for it. The challenge, then, is to find ways to persuade the busy policy-maker that your recommendations are better than those from competing sources, which include not just other think tanks but also newspaper editorial pages, the official party line in legislative bodies, and the viewpoints of bureaucrats, business, or labor lobbyists.

Staffing
The Heritage Foundation takes an aggressive, entrepreneurial approach to its mission. This is reflected not only in our emphasis on marketing and our pioneering use of shorter policy papers for busy policy-makers, but also in our approach to management. Everyone at Heritage works from a common policy perspective. We have no prima donnas thinking their own deep thoughts in shuttered cloisters. We do not provide a haven for out-of-work conservatives who want to tread water until jobs open in the next right-of-center government in the United States. Instead, we seek out and equip those conservative thinkers who are highly motivated to wage, and win, battles in the never-ending war of ideas.

While Heritage does have a small number of Distinguished Senior Fellows — including several former Cabinet members who serve full-time on our staff — an axiom at Heritage is "We don't buy credibility, we build it." Reflecting this axiom, our typical policy analyst is not a senior person whose expertise and ideas are already well known to policy-makers. Rather, he is a bright young M.A. or Ph.D. with a proven ability to think and write clearly, and who is committed to providing sound analysis in a particular area of public policy.

We prefer younger analysts who aren't well known to policy-makers because we have found them to be more adept as team players. Time and again, we have seen the Heritage mission better served by analysts with an inclination for spirited teamwork than by those with a prominent reputation.

From a management perspective, however, this requires us to strike a balance, because team-spirited analysts, no less than other human beings, thrive on individual recognition for their achievements. Consequently, when a member of the Heritage team earns recognition, we don't hesitate to throw the light full on him. We encourage all of our staff to distinguish themselves as individuals. In the long run, this engenders a mutual source of pride for the organization and its analysts: Individuals take pride in belonging to the Heritage team, and Heritage takes pride in team members who distinguish themselves as individuals.

As Heritage has matured, the profile of our typical policy analyst has also changed. Ten years ago, the typical analyst was in his mid to late 20s and stayed with us typically for two to three years before getting a better offer and joining a congressman or senator's staff or an executive branch department, major corporation, or university. Today, our policy analysts are older, with an average age of 34 and a median age of 31. They stay with us longer and are among Washington's most highly regarded experts in their fields. More than three-fourths of our analysts hold advanced degrees, and several have earned Ph.D.s. Prior to coming to Heritage, most worked on Capitol Hill or in other parts of the government, with the rest coming from universities or other public policy organizations or universities.

Unlike other think tanks, Heritage rarely employs adjunct analysts. Because we generally work on issues that are not quickly resolved, our needs are best met by a close team of permanent analysts who devise and carry out strategies for the short and long terms. Occasionally, however, an adjunct analyst fills a particular need very nicely. When we were building our Center for Data Analysis, for example, we brought in adjunct analysts to develop our statistically matched database. When we do hire adjunct analysts, we prefer that they work full-time so that their time and attention aren't divided between two employers.

Our preference for younger analysts at the hiring stage does not translate into a limit on a person's tenure at Heritage. Some of our analysts have been with us for many years, growing with us as an institution turning out exemplary work. Occasionally, however, the skills and long-range interests of an analyst diverge from the foundation's objectives. This typically happens when the issues an analyst specializes in move to the periphery of policy debates and thus move off of our active agenda. In those cases, we have to make tough decisions that are in the interests of both the foundation and the individual. We have on several occasions parted ways with people who are extremely talented and have a fine reputation, but whose expertise no longer coincides with our aims. Invariably, these individuals go on to be more helpful to the interests of the conservative movement in another organization than they would be if they remained at Heritage. Our willingness to face these tough decisions is one reason that Heritage has evolved successfully in a changing Washington and national environment.

Perhaps more often, an analyst will leave Heritage for his own reasons, usually to avail himself of an opportunity to advance his career beyond what he can achieve at Heritage. Although we regret the loss, we celebrate their success and wish them well.

To give an indication of the rate of turnover we experience, in 1990, we had six senior research staff. In 1998, two are still with us, and four have departed - two to the private sector, one to another think tank, and one to the Executive Branch. Of nine non-senior research staff who were with us in 1990, two remain, and seven have left. Five took jobs in the private sector, one joined a congressional staff, and one went to another think tank.

At some point, an individual will decide — assuming that he and Heritage are happy with his performance — that he will make a career at Heritage. From a management perspective, this raises a question about the role of a career policy analyst: In what manner will such individuals advance in their careers? For example, we have had analysts who are excellent researchers and spokesmen for Heritage and for the conservative cause. A problem we sometimes face at Heritage is that of ambitious, young analysts who view management as the only path to advancement in pay and prestige. Often, however, they are under-qualified to fill a management position. The challenge, then, is to devise a promotion, pay, and incentive structure that allows analysts to pursue long and fulfilling careers in policy research, and at the same time advance the goals of Heritage as an institution.

The personnel benefits package at Heritage is typical for a corporation in terms of health care, pension programs, etc. Less typical is our policy of encouraging members of our staff to earn advanced degrees in fields related to their areas of expertise and provide tuition subsidies toward that end. In 1997, seven members of the professional staff took advantage of this program. This includes not only policy analysts, but also professionals who work in public relations, government relations, and other specialized areas.

Organization and Agenda-Setting
Heritage is organized in a top-down fashion with a CEO, COO, and eight vice presidents, each responsible for a specific functional area such as public relations, administration and finance, domestic policy research, foreign policy research, and educational affairs. The vice presidents, COO and CEO make up what we call the Senior Management team, which meets at least twice a week to discuss both internal issues and external challenges. In addition, this same group meets once each month outside the Heritage building for a half-day session to make sure we are not letting the "urgent overwhelm the important." This is a challenge that bears closely on The Heritage Foundation's reason for being. We exist to fill the idea vacuum that is created when, as often happens, the urgent does overwhelm the important among Washington's policy-makers. When they engage in too little mid- and long-term thinking and planning, we aim to fill the gap.

Although our organization chart is hierarchical, we keep the "machine" working smoothly through frequent interdepartmental meetings, issue management groups, and other internal forums. We find that interplay between these different forums stimulates creative thinking and open discussions at all levels, and defines Heritage's agenda-setting process as both "top down" and collegial.

Two distinctly different yet equally important issues illustrate this description. Last year I became personally involved in developing a "Conservative Statement of Principles on China." This document was signed by the presidents of America's leading conservative think tanks and public policy organizations, and several of the movement's foremost policy experts, and was delivered to Congress and the media. This was an important document. It defined what a "conservative" foreign policy toward China and Asia should be, and thus educated lawmakers who vote on issues such as China's trading status as a Most Favored Nation.

Similarly, the landmark federal welfare reform enacted in 1996 was shaped by the expertise of Heritage analyst Robert Rector. It was Rector's commitment to welfare reform, his confidence in our ability to move this debate in our direction, and his sheer determination that made this a successful agenda item for Heritage that year.

I'm often asked how, in setting our agenda and mapping out strategies, we settle conflicts among staff. The happy answer is that at Heritage, different points of view among staff rarely end in a toe-to-toe standoff. I don't attribute this to good luck, however, but to an institutional attitude that we consciously strive to maintain. In the larger debates over public policy in America, conservative groups and organizations often set different and sometimes conflicting agendas: Libertarians are at odds on many questions with Burkean conservatives; cultural conservatives sometimes think economic conservatives have misplaced their priorities; and so on. Heritage actively seeks to dismantle fences and build coalitions among such disparate groups. But — and this is the answer to the question about internal staff conflicts — the coalition-building begins inside our walls, among members of our staff. We make it clear to anyone who seeks a job at Heritage that conservatives are a varied lot, and our ultimate success depends on unity, not division. Consequently, we don't apply any philosophical litmus tests for prospective employees — except, of course, that they be dedicated to building and promoting a free society. We simply make it clear from the outset that at Heritage we settle our differences, or we agree to disagree, but we ultimately pull together and work toward common ends. Visitors are often surprised by the varied collection of conservatives they encounter working harmoniously at Heritage. But our view is that if we are going to urge other conservatives to work together, then we had better be prepared to show them how it can be done.

To illustrate, we saw significant differences of opinion among our staff on the question of whether to support continued MFN status for China. Some thought that continuation offered the best hope for decreasing human rights abuses in China. Others thought the United States should express its disapproval of those abuses by revoking MFN status. Discussion of these differences was not hierarchical. We encouraged free-flowing debate among individuals at all levels — and the discussion was often animated. On some issues, and this was one of them, the question is even discussed by our Board of Trustees. By giving everyone a voice in a genuine, substantive debate, the ultimate resolution is seen by participants as the result of honest deliberation, not a "top-down" fiat that isn't open to dispute. Consequently, the "losers" in such debates come away knowing that they lost "fair and square" and were not pawns in a political game.

That we generally succeed at this is indicated by a comment made to me recently by one of our newer colleagues, who came to Heritage from a major university. "I have never been in an institution," he said, "with as little internal politics as there is at Heritage. This is good, because it lets me focus on the important politics down the street in the Capitol, rather than the petty internal office politics of a mid-sized bureaucratic organization."

The Importance of Marketing
How do you measure impact? We have asked ourselves this question since day one, and we still have no clear answers. We may not be "for profit," but neither are we "for loss." When the different ingredients go into the political meat grinder and the legislative sausage comes out, how do we know which pieces of it are ours? We often cannot answer with precision.

With this as a given, we decided early on that we would take advantage of every opportunity that presented itself to get our views out in the arena - even if that meant being called a "marketing machine." While this term may be used pejoratively by some, it is also used as a term of endearment by policy-makers who have benefited from taking our ideas seriously, and is one that other think tanks have eschewed to their disadvantage. Now, virtually all U.S. think tanks seek to "market" their ideas to the policy- and opinion-making communities.

Among the first to note Heritage's marketing capabilities was A. N. Yakovlev, who in 1985 was hand-picked by the Secretary General of the Soviet Communist Party, Mikhail Gorbachev to become the U.S.S.R.'s chief propagandist. Shortly before his appointment as Chief of the Department of Propaganda of the Central Committee of the Soviet Communist Party, Yakovlev published a book called From Truman to Reagan (Ot Trumena do Reygana). In it he wrote that one organization in the world "has no equals in either the purposefulness or sophistication" of what he called its "propaganda" apparatus. That organization was The Heritage Foundation.

Considering the source, we took this as a tribute. Many others have expressed the same opinion over the years. For example, the liberal media watchdog organization Fairness and Accuracy in Reporting said in 1996 that Heritage still runs "the most effective media operation in American politics."

The importance of this was explained by historian James A. Smith, who is recognized as America's leading authority on public-policy think tanks. Smith's 1991 book The Idea Brokers remains the most authoritative treatment of think tanks. It was in this book that Smith first described how The Heritage Foundation had changed the way think tanks operate. In a chapter appropriately called "The Marketplace of Ideas," Smith wrote that "Heritage chose early on to serve a particular clientele, primarily members of Congress and their staffs, but ... [also] reshaped the broader market in which all research organizations now compete." Over the past 15 years, Smith wrote, "marketing and promotion have done more to change the think tanks' definition of their role (and the public's perception of them) than has any other phenomenon. The metaphors of science and disinterested research that informed the creation and development of the first think tanks, naive as they sometimes were, have now given way to the metaphor of the market and its corollaries of promotion, advocacy, and intellectual combat."

In this new world of ideas, "Heritage is the salesman and promoter of ideas par excellence," Smith wrote. Heritage's aim, he noted, "is self-consciously to shape and influence the debate." Indeed, "The market metaphor - so fundamental a part of The Heritage Foundation's ethos - now holds sway among institutions across the political spectrum, all of which feel increasingly crowded by competition for public attention and funding."

In August 1997, Smith told The Philadelphia Inquirer that Heritage changed everything when it introduced marketing to the think tank world. "We inhabited a world that was academic, book-oriented, and with a perspective on policy that was well beyond the electoral process or even the policy cycle," he said. Heritage's marketing of Mandate for Leadership, the use of Mandate as a measure of Heritage's influence during the Reagan era, and the success of the Heritage agenda "was something we had never seen before. The book was very skillfully marketed. The press campaign was much more than anything we had ever been able to manage. That was the moment we became aware of a new way of operating in this new policy marketplace." Until Heritage redefined the mission of a think tank, Smith said, "We hadn't even thought of it as a marketplace before."

In its entrepreneurial approach to marketing information to key target audiences, The Heritage Foundation is unlike most other public policy organizations. But in other respects, we have much in common with other think tanks in Washington and elsewhere throughout the United States. For example, the brief (5,000- to 20,000-word) policy studies Heritage began producing more than 20 years ago in the form of our Backgrounders have been emulated by other institutions across the political spectrum. We always find it amusing that many of our sister institutions use the same disclaimer of not trying to influence specific legislation, and even use the same color ink on their mastheads.

So, while Heritage is clearly different, it is also broadly reflective of other institutions involved in the policy research arena within the United States.

One challenge that generally faces a multi-issue think tank is differentiating its product from those of sister institutions. This must be done not only in terms of the "look and feel" of publications, but also in the way one's primary audience uses them. At Heritage, these two variables are constantly changing. Our papers seldom undergo a major facelift, but month-by-month and year-by-year, we make improvements, so that if one compares our papers from five or 10 years ago with those published today, the contrasts are dramatic. Similarly, the ways we reach our target audiences have evolved rather dramatically as well.

Another valuable technique for getting views before the public and in position to influence public policy outcomes is to harness the power and effectiveness of other organizations. That is why Heritage has concentrated so much effort on networking.

It was in the mid-1970s that Richard Larry of the Sarah Scaife Foundation in Pittsburgh first advanced the idea of a network of conservative institutions — a "resource bank" — to help build the conservative movement. His idea became a reality in 1977, when Phil Truluck (as our COO) and I took the Heritage helm. The first informal meeting, attended by some 20 academics and the leaders of the few right-of-center policy organizations that existed at the time, was appended to the 1978 annual meeting of the Philadelphia Society. Subsequent meetings became known as The Heritage Foundation's annual Resource Bank meetings. Today, thanks to this forum, networking comes naturally to most conservatives. When the Resource Bank held its most recent meeting in April 1998, it brought together 315 conservative leaders representing more than 200 policy organizations. More than 100 of those groups were represented by their CEO or COO.

Networking has received a tremendous boost from new technologies, none more dramatic than the Internet. After considerable review, the Heritage Board of Trustees saw the potential and approved a plan to establish an Internet site. As far back as 1992, Heritage and National Review magazine began operating the "Town Hall" forum on CompuServe. By 1995, Heritage was sponsoring a host of sites on the World Wide Web - including the Heritage home page (www.heritage.org) and a new Web-based version of Town Hall (www.townhall.com), which rapidly became the largest conservative site on the Internet. More recently, we developed branch sites devoted to specific policy issues such as taxation, regulation, labor, and foreign policy.

Heritage now has one of the most-visited sites on the Internet. The site has won many major awards and has enabled millions of users to access not only Heritage Foundation studies, but also those from more than 30 of our sister institutions. As we continue to make our past publications available on our website, we are finding that references to them are increasing, as are hits from around the world to newly released studies.

Thomas Atwood, Heritage's Robert H. Krieble Director of Coalition Relations, explains the growing vista of opportunities for marketing: "Today, the conservative movement includes an amazing variety of players and organizational models. There are the conservative academics. There are national, state and local think tanks. There are grassroots organizations, public interest legal groups, associations of state and local political leaders, initiative and referendum groups, and countless community organizations doing the work of civil society."

For networking, however, if variety brings opportunity, it also brings problems. One obvious problem is that of resolving conflicting views and goals among various conservative organizations. Atwood's job as director of coalition relations is to develop cooperative endeavors that focus on what conservative groups have in common rather than on what divides them. Twice each year, for example, we organize a Legal Strategy Forum that brings together a variety of public interest legal groups. They discuss issues that are ripe for litigation, promising legal theories on which to litigate a given kind of case, the implications of recent Supreme Court decisions, ways to deal effectively with new media, and so on.

Through these interchanges, activist legal groups come to see themselves not as isolated by their particular goals but united by their common ideals. Thus, if one group is litigating a case at the state level as a means of bringing it on appeal to the U.S. Supreme Court, a different group in another state might decide not to duplicate that effort. On the other hand, there might be an advantage in some cases to duplicating litigation efforts in several states at once. Participants can thresh out such strategic questions at our Legal Strategy Forums.

The great variety among conservative organizations produces a second kind of problem: the problem of finding the needle one needs in the conservative haystack. If our Resource Bank is in any sense a bank, its bankbook is The Guide to Public Policy Experts. This, as the title suggests, is a directory of more than 1,900 individuals and some 400 organizations. They are sorted under 11 main areas of expertise, including national security, foreign policy, taxation and budget, culture and community, and education. Each of these areas is further subdivided, for a total of 117 narrower categories. Under "Education," for example, one can find experts in the areas of school choice, charter schools, testing and standards, home schooling, higher education, and five other sub-specialties. At nearly 700 pages, this is an immensely useful guide for the media and for interest groups in almost any area. To make it more accessible, we have put the full text of the guide on our Internet site.

We recognized yet another marketing opportunity a few years ago, when talk radio was still considered a media backwater. We believed that things were about to change. That's why in 1994 Heritage became the first think tank in Washington to build its own fully equipped radio studio. Designed to serve as a home away from home for talk radio hosts visiting the nation's capital, Heritage's state-of-the-art broadcast facility was soon attracting some of the biggest names in the industry. The demand for use of the studio grew so rapidly that we built a second studio two years later. In 1997 alone, Heritage hosted more than 110 live broadcasts from its two studios, prompting Michael Harrison, editor and publisher of the talk-radio trade journal Talkers Magazine, to call Heritage "the most talk-radio-friendly think tank in America."

These radio studios serve a valuable secondary purpose: They enable us to make our policy analysts available for guest appearances on extremely short notice. To illustrate, a radio station in Chicago might want a particular analyst to appear as a guest on a talk show, perhaps to discuss a Heritage study just published. We can link via an ISDN line with the Chicago station, so that their studio and ours become as one with respect to audio quality. Thus, instead of spending the better part of a day flying to Chicago for the program, the analyst can simply ride the elevator down a floor or two, step into our studio, and he is, for all practical broadcast purposes, in Chicago.

Another area in which Heritage has broken new ground for think tanks concerns data analysis. For many years, the costly technical resources needed to "score" tax and spending legislation have been a virtual monopoly of such federal agencies as the Congressional Budget Office and the White House Office of Management and Budget. Moreover, these agencies have tended to be left-leaning in their methods and assumptions. This has put sponsors of conservative reforms at a decided disadvantage.

In 1995, Heritage set out to break this monopoly by building our own Center for Data Analysis. At the heart of the Center are two Viper 1000 supercomputers built by National Computers Plus. This is the same model computer that NASA uses to interpret real-time data from the Hubble Space Telescope. To harness the supercomputer's capabilities, we acquired the WEFA U.S. Macroeconomic Model (the same model used by federal agencies) and the WEFA Industry Model, which helps predict the effect of policy changes on specific sectors of the U.S. economy. Heritage analysts have built a number of additional specialized models — all peer-reviewed — that can project the economic and public-finance effects of changes in tax, entitlement, and spending policies. To complete the Center, we assembled a statistically matched database that yields a detailed portrait of the American public. The three main sources of data for this database are the Census Bureau's Survey of Current Population, the Internal Revenue Service's Public Use File, and the Bureau of Labor Statistics' Consumer Expenditure Survey.

Using this combination of resources, we can describe with great accuracy how policy changes will affect American families in every demographic and economic segment of the population. To illustrate, during the debate in 1997 over the $500-per-child tax credit, Heritage economists found that the version proposed by President Clinton would deny tax relief to 6.3 million working women. These included 600,000 nurses, 350,000 elementary school teachers, and 290,000 secretaries - the very people whom the tax credit was supposed to help.

We have embarked on a three-year plan to greatly expand our Center's capabilities. The void that we'll soon be able to fill can be illustrated by the debate over the capital gains tax. Proposals to reduce this tax rate are often characterized as a "tax break for the rich," yet little solid evidence is produced to support this claim. By upgrading our matched database, we will soon be able to tell a great deal more about the people who pay capital gains taxes. For example, we will be able to characterize them in terms of their age, family status, consumption behavior (whether they're big spenders), ethnic background, and professional status. This is relevant information, because the percentage of Americans who own stock increased from 21 percent in 1990 to more than 50 percent in 1997. This suggests that, with credible data analysis, we might discover that cutting the capital gains tax rate is more accurately described as a tax break for average Americans.

The larger point, though, is that by developing this analytical capacity, Heritage can supply facts that inform issues such as this and displace unsupported rhetoric. In its capacity to supply such facts, our Center for Data Analysis is a production tool, of course. But it is equally a marketing tool, for it enables us to offer information - to news media, members of Congress, and others - that other think tanks simply cannot deliver.

In developing and implementing the sorts of innovations described above, The Heritage Foundation has had a major, positive impact on public policy in America. We have played a significant role in almost every recent public policy debate, including strategic defense, NATO expansion, enterprise zones, health care and welfare reform, Social Security reform, tax reform, the North American Free Trade Agreement, farm policy reform, telecommunications deregulation, congressional reform, and the culture wars.

The question of measuring our impact - or any other institution's, for that matter - must not be confused with the question of whether we have had an impact. Many institutions plainly have enormous social impacts that cannot be quantified. Newspapers, churches, and entertainment media are obvious examples. So it is neither boasting nor speculating to say that America is a different place than it would have been without The Heritage Foundation. If our impact often defies empirical measurement, it is nonetheless an impact that has made policy-makers and other think tanks take increasing notice.

The Future of Think Tanks in America
From my vantage point, it appears that the trend for think tanks in the United States is one of multiplication, localization, and specialization. Think tanks have proliferated enormously in the last 25 years. But except for the founding of The Heritage Foundation in 1973, the Cato Institute in 1978, and the Progressive Policy Institute in 1989, no significant new national think tank has been established that covers the entire range of policy issues, at least not with private funds and based on a non-governmental traditional model.

Instead, the new breed of think tank in the United States is designed to examine issues at the state, county, or even local level. The Heritage Foundation's Resource Bank has identified more than 35 such institutions that are philosophically to the right of center. Among the most prominent are the Mackinac Center for Public Policy, a state think tank based in Midland, Michigan; the Barry Goldwater Institute for Public Policy Research in Phoenix, Arizona; the Texas Public Policy Foundation; and the South Carolina Policy Council, led by Heritage alumnus Edward McMullen. In addition, the number of county- and city-oriented think tanks is also growing. Of these, a few notables are the Allegheny Institute in Pittsburgh, Pa., and the Manhattan Institute in New York City.

One reason for the "downsizing" of the think-tank model in America is that the entry costs for a think tank on the national policy scene are very high. To assemble a team of first-rate research personnel and combine it with effective marketing personnel, successful fundraising, and efficient management, is a formidable task when so many mature institutions are already present.

Ironically, the success of so many national think tanks has made it easier for local or regional think tanks to open shop. In successfully marketing their ideas, the national tanks have made the concept of a think tank familiar to most of the American people. And in most people's minds, this is a positive idea. They continually see think tank scholars as sources of useful information in newspapers, on television and radio newscasts, and on talk shows. Through such media exposure, think tanks and their denizens have become familiar and usually welcome players on the U.S. public policy landscape. So it is no surprise when serious scholars also devote their energies to solving problems in their hometowns and states.

Conclusions
What conclusions can be drawn from America's think tank experience? I will offer several. First, ideas are the raw material from which legislation is made, and good ideas are always in demand by policy-makers. Second, young scholars increasingly regard think tanks as alternative points of entry into the policy world, and therefore come to institutions like a Heritage Foundation in search of a berth. This trend increases the odds of our attracting the best and the brightest. Third, as more Americans learn about think tanks, and as the philanthropic "pie" expands, newcomers with a good product and a competent marketing team have a greater chance of succeeding in the think tank world. Fourth, the future trend in America will be toward state and local institutions, or think tanks with a narrower-than-national policy focus. Finally, the "war of ideas" is truly a war. To enter it with anything less than a wholehearted resolve to win is to court defeat.

Ideas, unlike wealth, cannot be passively handed from one generation to the next. Every new generation of Americans must be convinced anew that some ideas are better than others, and they must sort out the conflicting arguments as to which ones are better. In the public policy arena, this is not a gentle, deliberative process. It is a market process in which aggressive entrepreneurs enjoy a decided advantage.

In the public policy war of ideas, entrepreneurial prowess is necessary to win, but it is not sufficient. Just as a skilled business entrepreneur will ultimately fail if his product is inferior, so the cleverest and most aggressive of think tanks will fail if its ideas are inferior. The Heritage Foundation has recorded 25 years of ever greater success. Those who attribute our success to skillful and aggressive marketing, and to nothing more, overlook the most critical factor of them all: the power of our ideas.


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