Elizabeth Harris
05/01/2006
Arnold Schwarzenegger swore that California suffered from the nation’s highest workers’ compensation liabilities, energy costs and “all of those things that drive business away.” The Gray Davis camp rebutted that eight of the 15 most business-friendly cities in the U.S. were in California. What was odd about these particular assertions in the 2003 gubernatorial special election was that both Davis and Schwarzenegger were referring to research from the same think tank: the Milken Institute in Santa Monica, Calif.
Earlier that year, Defense Secretary Donald Rumsfeld had cited a report by the Milken Institute on the financial toll of the 9/11 attacks in his testimony to the House Appropriations Subcommittee on Defense to justify the cost of the Iraq war.
The Milken Institute’s work, unlike those of advocacy think tanks, was not designed to influence the outcome of the California election or to shape U.S. military strategy. But Michael Milken is happy to see the institute’s work contributing to the public debate in each of these cases. While some think tank benefactors might oppose the use of their apolitical analyses for partisan purposes, Milken says that when both sides cite his institute’s research, it must truly be having an impact.
Milken is scrupulously nonpartisan when it comes to his personal politics. He takes no public positions on partisan issues, and he does not support individual candidates. He seeks out national political leaders from both parties to advance the causes he supports. His is an example of how a nonideological think tank can have a profound effect on national debate and policy. “You have to create an environment where ideas flourish, and that’s why we’re not partisan,” Milken says. “We don’t want people to think ‘Hey, we don’t think that way around here.’ ”
Milken has invested about $80 million of his own funds in the institute, which he established 17 years ago to produce research intended to advance global prosperity and democracy and show the value and applicability of free markets and business principles to education and health care. “Our goal is to expose people to new ideas, and we think that the think tank research area is the best way to accelerate the movement of those ideas in society,” he says.
Milken is proud of the role his think tank’s research has played in
encouraging the expansion of pension fund investment in emerging markets, the
creation of a market to trade emissions credits, a greater dedication of
resources to troubled urban areas, and even advances in cancer research
championed through FasterCures, his organization dedicated to fostering medical
breakthroughs. “How do you create prosperity?” he asks. “You create it by
improving human capital through education. You also do it through faster cures,
by extending life and the quality of life, and, next, you do it through the
deployment of existing financial technology and the deployment of developing new
financial technology.” Looking forward, Milken hopes his institute’s work may
help spur a mortgage market in the Middle East, which he believes would
transform the region’s social and political environment, not only by freeing up
capital, but also by democratizing home ownership.
Although Milken remains the institute’s nonexecutive chairman and a major
donor, he has deliberately reduced his role. The institute’s research has
shifted from an acutely scholarly approach to one emphasizing applied and,
usually, sponsored research. It also relies on revenues from its yearly
conference, held each April. The event contributes 30 to 40 percent of the
organization’s $10 million annual budget. The conference regularly features
high-profile speakers: a mix of various thought leaders, Fortune 500 executives
and Nobel Prize recipients. Last year, in keeping with Milken’s bipartisan
approach, both Al Gore and Fox News CEO Roger Ailes spoke at a session on the
media’s role in a democracy.
Self-Sustaining Strategy
The Milken Institute receives funding from individuals, other foundations and
the sponsors of research projects. One large patron is Richard Sandler, a member
of the institute’s board of directors, executive vice president of the Milken
Family Foundation and partner in the Los Angeles law firm of Maron &
Sandler, who donated $750,000 in 2004, according to the institute’s IRS Form
990. (Milken provided $7 million, his only donation in a five-year period.)
Shmuel Meitar, a FasterCures board member, director of Aurec Group and vice
chairman of Aurec, an Israeli communications and media company, donated
$500,000. Other supporters of the institute, or its projects, range from the
Ford Foundation and the city of Los Angeles to investment bank Jefferies and
Co.
Milken believes the ability to attract outside support is the litmus test for
measuring the think tank’s effectiveness. “If it’s totally dependent on one
individual or one funding source, then you have no idea whether it will be
around or survive,” he says. “Also, if there isn’t anyone else who finds its
work worthwhile, then maybe you should do something else.”
Because of Milken’s reduced role and competing interests—he is the
nonexecutive chairman of a number of organizations, travels internationally,
keeps a busy speaking schedule and is working on a book about accelerating
medical solutions—the institute’s president and CEO, Michael Klowden, plays a
pivotal role. He oversees a staff of 40 and 12 senior fellows. He evaluates how
well the institute’s ideas are circulating by tracking how often the institute
is mentioned in the media, the number of times reports are downloaded and by
tracking the impact of particular projects.
Klowden admits the organization’s nonpartisan stand both helps and hinders it financially. On the one hand, he says the Milken Institute attracts many donations to fund specific research assignments precisely because its analysts are viewed as unbiased. Conversely, some individuals who regularly attend and praise the Global Conference are known to contribute to ideological think tanks but are less eager to support the Milken Institute because of its nonpartisan position. Klowden says there are some individuals who participate in the institute’s activities and give modest donations, but who, “even though they support our work, find a greater emotional pull to more ideologically based organizations.”
