Financial Capture

Financial capture operates through the dependence of institutional behavior on the preferences of funders. It need not involve any explicit transaction or quid pro quo. It operates through the internalization, often below the level of conscious awareness, of what will and will not generate continued financial support. Institutions that depend on funders with specific interests will, over time, come to understand their mission in terms that are compatible with those interests, without any single decision having compromised the institutional mission.

The design responses include: diversification of funding sources, so that no single funder or category of funders provides more than a specified percentage of the institution's operating budget; explicit governance firewalls between funders and programmatic decisions, so that funders' preferences about specific activities cannot directly influence those activities; legal structures that limit funders' ability to condition their contributions on specific institutional behavior; and regular constitutional audits that evaluate whether programmatic decisions have drifted in directions consistent with funder preferences but inconsistent with constitutional principles.