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    Defending and Promoting Freedom, Opportunity, and Enterprise

    2019 Annual Report

A Message from the Chairman and President

“Building a humane social order is not a task for one generation merely. It is a journey of a thousand years. For democratic capitalism, barely two hundred have been traversed. To know its ideals is to be restless under the status quo and to wish to do better in the future.”
—Michael Novak

The late, great AEI scholar, philosopher, and theologian Michael Novak wrote these words in one of his best known economic writings, The Spirit of Democratic Capitalism, published in 1982. His words bear repeating, particularly today, as we face serious challenges to the market system and liberal democracy, both at home and abroad.

Over the past year, AEI has vigorously promoted our Institute’s—and our nation’s—founding values: free people, free markets, limited government, opportunity for all, and America’s role in promoting freedom around the world. We have engaged in this work by building an energetic intellectual community that is never dogmatic, challenges false ideals, and tests bold ideas.

AEI scholars have led the way in articulating the vital importance of competition and innovation to America’s free-market economy; in crafting the public policy solutions at the federal, state, and local levels to increase economic prosperity; and in explaining how best to combat and defeat terrorism and confront rogue regimes and revisionist powers.

We also launched a new research division, Social, Cultural, and Constitutional Studies, and brought the leading conservative policy journal National Affairs to AEI. AEI is now even more strongly positioned to advance the case for capitalism, liberal democracy, and the rule of law and improve our understanding of the breakdown of core social institutions.

Throughout the year, policymakers continued to rely on AEI scholars, who briefed leaders and testified more than 30 times before the 116th Congress. As a result, our scholars contributed to major policy initiatives, advanced specific policy improvements, and offered entirely new strategic frameworks for US policy.

Building on former AEI President Arthur Brooks’ tremendous efforts over the past decade in raising the profile of our work among new audiences, we injected our work into the public debate in innovative ways. We produced new podcast series, bringing our total offerings to seven different series with almost 700,000 combined downloads in 2019, and created new video series for our YouTube channel, which has attracted more than 27,000,000 views to date. We also created interactive infographics and launched a new AEI website with a number of improved features.

AEI scholars appeared on television and radio more than 730 times, including on the Sunday morning news shows, and penned thousands of articles and op-eds that appeared in the most popular print and online outlets, reaching millions of people.

Our leadership development and educational offerings continue to serve as a way to develop in rising generations an appreciation for the competition of ideas and democratic values. Our broad-based coalition of state and local leaders through our Leadership Network now numbers more than 800 business, nonprofit, and community leaders who have attended an intensive two-day policy and communications training seminar with AEI scholars. And in the past year, we hosted 230 college students for our intensive Summer Honors Program, created new partnerships with universities and other organizations across the country, and traveled to more than 200 college campuses, reaching tens of thousands of students with AEI scholars’ work.

Although AEI’s leadership changed in 2019, our commitment to defending, promoting, and fortifying our nation’s founding ideals remains steadfast. We are honored to lead this great Institute at such a critical time for our country, and we are thankful for our community of scholars and supporters for standing with us.

Daniel A. D’Aniello
Chairman

Robert Doar
President; Morgridge Scholar

Bolstering Competition and Innovation

Competition and innovation are central to the free enterprise system and to maximizing prosperity for the greatest number of people. Over the past year, AEI scholars engaged in a number of projects across various policy areas with the goal of advancing sound policy ideas that ultimately disrupt industry, increase competition, and bolster economic prosperity and human flourishing. From supporting labor market and financial market deregulation to advancing pro-market health, tax, and monetary policy to championing creative destruction in the technology sector, AEI scholars have led the way in articulating the vital importance of competition and innovation to America’s free-market economy.

“There is no employment program as effective as a hot economy. And especially over the longer term, no policy change can match economic growth’s effectiveness at raising the incomes of everyone in society.” —Michael R. Strain

Increasing Economic and Social Mobility

America has made enormous progress against poverty since the 1960s. Poverty today, however, expresses itself not mainly as a problem of consumption, but in nonmaterial forms: declining workforce participation, ineffective and wasteful government programs, a lack of affordable housing, rising opioid addiction, a growing opportunity gap in early learning and development among children, and recidivism among the formerly incarcerated, to name a few. A major focus for AEI scholars over the past year was identifying and driving the public policy innovations—including federal, state, local, community, and civic—needed to increase economic and social prosperity for still-struggling individuals, families, and communities.

“Among the most signifcant obstacles to economic mobility in contemporary America is the breakdown of the capacity of many Americans to amass social capital.” —Yuval Levin

Revitalizing the Foundations of Liberal Democracy

We are living through a resurgence of both illiberalism and socialism in our politics that threatens the foundations of liberal democracy, the rule of law, and the market economy. Americans are increasingly distrusting of our nation’s most crucial institutions—along with capitalism itself—and we are witnessing atrophying civic engagement. It is essential in the debates roiling our nation today that the principles of the American founding, the wisdom of the Western tradition, the ideals of classical liberalism, the frameworks of American constitutionalism, and the commitment to democratic capitalism are not lost or abandoned. In 2019, AEI launched a new Social, Cultural, and Constitutional Studies research division to help articulate, defend, and apply these ideals.

“The essence of being an American is not your party, class, or creed, not your race or your religion, but rather your willingness to share in a common set of principles.” —Robert Doar

Strengthening America’s Leadership Role in the World

America’s foremost foreign and defense policy challenge is a multigenerational fight to create a new peaceful and stable international order conducive to our values. Together with our allies, we face the continued rise of threats to security, sovereignty, and democracy from revisionist powers, terrorist organizations, and state sponsors. AEI is dedicated to the principle that American global leadership is vital to a peaceful, prosperous, and free world. Through their work, AEI scholars are wholly devoted to protecting the people, interests, and allies of the United States and tackling core issues such as defense spending and modernization, counterterrorism strategy, transnational threats, and economic statecraft across regions and countries such as the Middle East, China and East Asia, India, Europe, Latin America, and Russia.

“Dissidents should be able to look to Washington and know they have a patron, not for their every idea, but for their human rights.” —Danielle Pletka

Identifying and Developing Leaders

The economic advantages of free enterprise are demonstrable; they are matters of fact more than of ideology or politics. And its moral benefits—its capacity to improve lives—are just as obvious. But the free enterprise system is not guaranteed to us, and it cannot be taken for granted. Its survival requires the understanding and assent of the public and of leaders in education, government, business, and media. Its survival also requires that successive generations know and understand the fundamental principles so that they are not easily swayed by false ideals. Over the past year, AEI played a leading role in identifying, educating, and developing our nation’s next generation of policymakers, scholars, journalists, and business executives, who will fight every day for America’s first principles.

Academic Programs

AEI’s Academic Programs stands at the vanguard of identifying, mentoring, and developing the next generation of policy practitioners, scholars, business leaders, and strategists who will exert enormous influence on our country’s future. Since its inception, this program has become one of the most substantive and innovative campus outreach efforts in the nation, developing in students an appreciation for the competition of ideas and liberal democratic values. We have developed a strong presence at more than a hundred campuses across the country, helping us reach thousands of students each year with AEI’s scholarship and ideas.

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96% of Summer Honors students say they feel more prepared to make an impact on public policy debates
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97% of Summer Honors students plan on using the material they learned in the program
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97% of Summer Honors students plan on staying connected with AEI
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65% of Summer Honors students changed or challenged previously held views about public policy because of the program
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5,000 applications for 176 internship positions
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3.73 average GPA among AEI interns
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82 colleges represented among AEI interns
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16 languages spoken among AEI interns

AEI Interns

AEI’s internship program offers talented young people the opportunity to engage with AEI scholars’ work and pursue meaningful projects while learning to practice respectful discourse and intellectual rigor. AEI interns go on to serve as force multipliers for our work and of the principle that a competition of ideas is essential to learning.

Each year, AEI Talent Development staff make more than 100 visits to campuses across the country to recruit interns and entry-level employees. In the past academic year, these recruiting efforts resulted in more than 5,000 applications for AEI’s internship program. From this pipeline, AEI selected 176 interns (54 interns in fall 2018, 59 in spring 2019, and 63 in summer 2019)—an acceptance rate of less than 4 percent.

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AEI Enterprise Club

AEI’s Enterprise Club is an international community of 30- to 40-year-old leaders in business, entrepreneurship, finance, law, and public policy who are interested in serious discussion on the most significant challenges facing our country and world. This invitation-only group of professionals is selected based on depth of intellectual interest in policy, exceptional record of achievement, and potential for future impact. They engage with AEI scholars and other friends of the Institute on a broad array of topics and serve as a source for new intellectual insight and fresh perspectives for AEI’s scholars and executives. They also serve as mentors to student leaders in AEI’s network. We currently count nearly 400 Enterprise Club members (in more than 25 cities) and 14 formal chapters in the United States and London.

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AEI Leadership Network

The Leadership Network celebrated its fifth anniversary in 2019. This effort, which began as a small-scale pilot project in 2014, has grown into a major component of AEI’s outreach. The Leadership Network reaches mid-career professionals interested in advancing free enterprise in their communities. It currently comprises a personally, professionally, and ideologically diverse group of more than 800 leaders across 43 states, primarily from nonprofits, local government, and community organizations.

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801 members
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43 states represented
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87% more likely to promote free enterprise
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97% More likely to stay involved with AEI

AEI Welcomes New Members to Its Board of Trustees

This is an important time for AEI and for our country, and we are honored to have four new board members who share AEI’s commitment to open inquiry, vigorous debate, and the advancement of freedom and opportunity for all. Their advice and guidance are key in this new chapter for the Institute, and I know they will greatly contribute to AEI’s culture of integrity, intellectual rigor, and excellence.”
—Robert Doar

“For those of us engaged in conservative public policy, AEI is a trusted source. You don’t have to agree with all of its ideas. But you can be sure they are all deeply rooted in America’s values."

—Nikki Haley, Former United States Ambassador to the United Nations and Governor of South Carolina

Resources That Support AEI’s Work

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AEI’s unaudited financial performance for the 2019 fiscal year ending June 30 is provided in accordance with GAAP accounting conventions.

AEI is entirely privately funded. It accepts no funds from any US or foreign government and does no contract research.

The Institute raised $20.3 million in contributions from individuals, $16.5 million from foundations, $5.4 million from corporations, and $3.2 million in capital campaign gifts. These fundraising activities, along with conference revenue and publication royalties of $3.4 million, brought the Institute’s annual operating revenues to $48.8 million.

Consistent with all previous AEI annual reports, investment activity, a gain of $4.0 million in fiscal year 2019, is excluded from the revenues.

Expenses for the year totaled $59.4 million, with 71 percent for programs, 13 percent for management and administration, 8 percent for fundraising, and 8 percent for building operations. Roughly $4 million of those expenses are nonrecurring.

Thank you for your support

Thank you to our community of generous investors whose support enables us to fight every day for polices that defend human dignity, expand human potential, and build a freer and safer world. AEI is deeply grateful for your investment in our mission and for the trust you have placed in AEI scholars and staff to pursue our shared principles and goals.