Times are tough at the free-enterprise-oriented non-profit Competitive Enterprise Institute.

CEI, which just celebrated its 25th anniversary, is still run by its bearded, Schumpeter-quoting founder, Fred Smith, and remains popular with conservative foundations and corporations. Its combination of free-market analysis with pro-industry advocacy on a broad range of environmental and consumer issues infuriates opponents, and has been a magnet for contributions in years past. The group's fudning rose nearly 70 per cent between 2004 and 2007, peaking at $5.2 million (the group's fiscal year ended September 30th 2008.)

But this year, amidst economic turmoil, contributions are down 15 per cent and the group is running a deficit of roughly 10 per cent, Smith told National Journal's Under The Influence. That comes to about $450,000 worth of red-ink--though some sources suggest the hole may be deeper. Smith says the group's reserves have cushioned the loss and that he has seen an uptick in fundraising recently.

But the Institute's financial woes may have precipitated another loss: its Center for Risk, Regulation and Markets has decided to leave the institute and affiliate with another conservative think tank, taking most of its five person staff and likely much of its roughly $500,000 budget with it.

The Center, run by Eli Lehrer, has been especially active in fighting state-sponsored natural disaster insurance pools that compete with private reinsurers, and had opened an office in Florida to wage a steady war of words with the state government on the issue; it is poised to open a second office in Texas.

Smith and Lehrer insist the split was amicable, and mutually agreed upon. Smith said he was uncomfortable with the Center's opening of branch offices, arguing that such arrangements haven't worked well for other think tanks; Lehrer said the split was because "our project had grown a good deal, where as the rest of CEI had not."

Lehrer said he plans to decide soon between a couple competing offers to house the Center, while the Institute says it plans to continue doing work on insurance issues as well.

(Photo of Fred Smith from CEI)

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