2009 Annual Report Investing in People and Ideas C O R P O R A T I O N rand Board of Trus T e e s December 2009 Paul G. Kaminski (Chairman) Michael Lynton Chairman and Chief Executive Officer, Technovation, Inc.; Chairman and Chief Executive Officer, Sony Pictures Entertainment Former U.S. Under Secretary of Defense for Acquisition and Technology Ronald L. Olson Karen Elliott House (Vice Chairman) Partner, Munger, Tolles & Olson LLP Former Publisher, The Wall Street Journal; Former Senior Vice President, Dow Jones and Company, Inc. Paul H. O’Neill Former U.S. Secretary of the Treasury Barbara Barrett President and Chief Executive Officer, Triple Creek Ranch; Michael K. Powell Former U.S. Ambassador to Finland Former Chairman, Federal Communications Commission; Senior Advisor, Providence Equity Capital; Chairman, MK Powell Group Richard J. Danzig Chairman, Center for New American Security; Donald B. Rice Former U.S. Secretary of the Navy President and Chief Executive Officer, Agensys, Inc.; Former U.S. Secretary of the Air Force Francis Fukuyama Bernard L. Schwartz Professor of International Political Economy, James E. Rohr Paul H. Nitze School of Advanced International Studies, Chairman and Chief Executive Officer, The PNC Financial Johns Hopkins University Services Group Richard Gephardt James F. Rothenberg President and Chief Executive Officer, Gephardt Group Chairman and Principal Executive Officer, Capital Research Government Affairs; Former U.S. Congressman and Management Company John W. Handy Hector Ruiz Former Executive Vice President, Horizon Lines, Inc.; Chairman, GLOBALFOUNDRIES General, United States Air Force, Retired Carlos Slim Helú Jen-Hsun Huang Honorary Life Chairman, Grupo CARSO, S. A. de C.V. President and Chief Executive Officer, NVIDIA Corporation Donald Tang John M. Keane Chief Executive Officer, CITIC Securities International Partners Senior Managing Director and Cofounder, Keane Advisors, LLC; General, United States Army, Retired James A. Thomson President and Chief Executive Officer, RAND Corporation Lydia H. Kennard Former Executive Director, Los Angeles World Airports Robert C. Wright Former Vice Chairman, General Electric; Former Chairman and Philip Lader Chief Executive Officer, NBC Universal; Chairman and Cofounder, Chairman, The WPP Group; Former U.S. Ambassador Autism Speaks; Senior Advisor, Lee Capital to the Court of St. James’s Peter Lowy Trustees Emeriti Chief Executive Officer, Westfield, LLC Harold Brown Counselor, Center for Strategic and International Studies; Former U.S. Secretary of Defense Frank C. Carlucci Chairman Emeritus, The Carlyle Group; Former U.S. Secretary of Defense Contents Message from the Chairman and the President 3 Investing in People and Ideas Healthy Societies Strategy & Diplomacy Children & Families Energy & Environment Conflict & Instability Global Recession 16 Outreach 18 Our People 20 Educational Opportunities 22 Philanthropy at RAND 24 Policy Circle 28 RAND Advisory Boards 36 Clients and Grantors 38 Financial Report C O R P O R A T I O N Message from the Chairman and the President Investing in People and Ideas he year 2009 was a productive one for the RAND Corporation. We remain, as always, committed to research and analysis that is of the highest quality, decidedly nonpartisan, and rich in its T potential to solve some of the world’s most vexing problems. This, despite some challenging trends—such as unprecedented partisanship among U.S. policymakers and a global financial environment in which we see ever-greater competition for funding among nonprofit institutions such as RAND. The vast majority of the policy research at RAND is supported by our clients and sponsors. But sometimes we need to move beyond that work, to integrate it, supplement it, and sometimes break new ground in policy areas outside the boundaries of sponsored research. We do that with our “Investments in People and Ideas.” The program, largely bolstered Message from the Chairman and the President through philanthropic support, helps RAND continue to lend an objective, evidence-based voice to big, often divisive issues; to engage the most Investing in People and Ideas talented individuals to be a part of that effort; and to reach the broadest possible audience to ensure our research and analysis can be used to shape decisions and improve outcomes. Our work in 2009 rests upon more than 60 years of sustained investment in people and ideas, and demonstrates how this investment has helped build and will contribute to building a better world. Our investments in healthy societies paid off with solid projections for U.S. health care reform and timely preparations for pandemic flu. Our investments in children and families evaluated charter schools and appraised the challenges facing children in military families. Our investments in understanding the global recession found fraud and error in the social safety nets of developing countries and took stock of the coping mechanisms of U.S. households. Our investments in energy and the environment are helping Israel to maintain its energy self-sufficiency and exploring how commercial buildings can become more energy efficient. Finally, our broad portfolio in global security and conflict abatement has produced valuable insights for promoting security in Mexico and the United States, dealing with nuclear proliferation, understanding China, facing Iran, and stabilizing Iraq and Afghanistan. In these and other areas, it is RAND’s adherence to our core values of quality and objectivity that gives confidence to our clients and philanthropic supporters—and makes RAND a trusted resource for the policymakers who use the ideas we generate. We believe our investment in people and ideas makes communities around the world safer, healthier, and more prosperous. We thank our clients and donors for supporting our research endeavors in 2009, and we look forward to continuing in this tradition with their support in the years to come. James A. Thomson Paul G. Kaminski President and Chief Executive Officer Chairman, RAND Board of Trustees Providing Evidence to Support Healthy Societies RAND ideas are helping to improve the health of people around the world. Researchers examine what works, what doesn’t, and where we should channel resources to yield the best possible outcome. RAND’s investment in improving health in 2009—ranging from health care reform in the United States and patient safety in Europe to influenza preparedness throughout the world— results in long-term dividends for us all. A+ F INDINGS U.S. Health Care Reform Giving California physicians financial In 2009, RAND launched incentives to improve COMPARE (Comprehensive the quality of medi- Assessment of Reform Efforts), cal care stimulates changes in practice a transparent, evidence-based that advance quality. approach to help decisionmakers assess the effects of reform proposals on health care system performance In a first-of-its-kind (such as access, quality, and cost). $ effort to construct COMPARE offers objective analyses of policy options being 23 a comprehensive national assessment used, considered, or discussed by public and private policymakers. Billion of the costs of the COMPARE was developed over many years in anticipation of the methamphetamine problem in enormous consequences and considerations for dramatically revising the United States, a study by the way health care in the United States is delivered and managed. the RAND Drug Policy Research Center revealed the economic The COMPARE resources and tools were briefed widely to cost to be $23.4 billion in 2005. Congress and other key stakeholders and its analytic features were The analysis considers a wide used to help evaluate proposed reform bills and variations among range of consequences of meth use, including the burden of them. Designed to be comprehensive, user-friendly, and flexible, addiction, premature death, drug COMPARE is a tool that has innumerable applications and can treatment, and lost productivity, be used by a wide variety of stakeholders to better understand and among other factors. evaluate this complex issue. Use of radio frequency Responding to H1N1 identification technology in For years, RAND has been at the Europe to track forefront of policy discussions to help patients and their conditions can increase patient safety improve preparedness for a potential and reduce costs. influenza pandemic. RAND’s contributions helped facilitate a unified global response to the H1N1 $18 billion could influenza pandemic in 2009. A set be saved in annual of RAND global exercises helped health care costs if Americans reduce strengthen regional disease surveillance response capability in sodium intake to recommended three regions: The countries and two provinces of China that share amounts. the Mekong Delta of Southeast Asia; a Middle East consortium involving Jordan, Israel, and the Palestinian Authority; and a similar group involving India, Pakistan, and Bangladesh. RAND People in poor also worked with the U.S. Department of Health and Human physical and mental health suffer Services and the Centers for Disease Control and Prevention to disproportionately clarify the roles of national and local agencies during a pandemic, from disasters, develop a guide for managing critical decisions that will be needed revealing the need for public prior to and during a pandemic, and improve essential data health agencies to collaborate with community partners and collection on matters such as the incidence and severity of seasonal care providers on improving