As Chatham House loses its director after a brief tenure, Claire Sanders considers the institute's challenges.

When Chris Gamble, the first female director of the Royal Institute of International Affairs, or Chatham House, announced her resignation earlier this month, the struggling institute once again found itself facing an uncertain future.

Set in 18th-century splendour in the heart of London, home to three former prime ministers, including Gladstone, its walls reflect its heritage. Predominantly male dignitaries - apart from the Queen - stare down from gilded frames. Gamble has fought over the past two years to transform the culture of Chatham House, once described by foreign secretary Robin Cook as a "social forum for retired diplomats", in three key ways: to ensure that the institute is financially stable; to alter radically its research programme - by involving younger academics and forming partnerships with universities; and to be more responsive to members and the public, such as by hosting special receptions for new members and briefings for corporate members on future research and events.

Gamble also has had to investigate allegations that someone on staff spied for the East German Stasi. It now appears that the "spy" was a member, passing on information that any journalist or member could have got hold of. "We were very open with the press," she says. "I believe it improved our relations."

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Relations certainly needed improving. Gamble is leaving after just two years in the post because her husband is very ill. As she is the second director to leave after a short time, reports have not been kind.

Halina Ward, a senior research fellow at the institute, is frustrated by the press coverage. "We were even described as the Titanic by one gossip column," she says. "The tone for the press coverage seems to be set by the general meetings, where the gender balance is not what it should be. That is very disappointing. If people just looked inside Chatham House a bit more and saw the interesting work going on, the coverage would be different. Even Gamble's departure has been covered as if she could not possibly be leaving because her husband is ill."

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Gamble is clear on why she is leaving: "My old man really is very unwell. We want to live peacefully in Yorkshire away from stress." She is expected to leave in March.

While she sees it as one of her great successes to have continued the work of her predecessor, Sir Timothy Garden, in clearing the institute's deficit, there is a caveat. In the 1998-99 financial year, the institute found itself for the first time in many years with a surplus, of ?225,000. By 1999-2000, this had been reduced to about ?10,000. "We are a not-for-profit organisation that has shown that it can manage in a difficult environment," Gamble says. "I shall be very surprised if we do not achieve a surplus for the third year running."

The reduced surplus was partly accounted for by an overspend on research. In 1999-2000 Chatham House spent ?1.4 million on research, ?195,000 more than it received. "Over the past year, we have invested heavily in the research side of the institute," Gamble says. In the 1999-2000 annual report, she writes: "We have started to tackle our intellectual directionI Retaining our position is increasingly challenging." She points to the growth in university departments of international affairs, in London-based think-tanks and in specialists and institutes outside the United Kingdom.

The institute's research base needs to change from "our traditional and resource-heavy research model to a faster, flexible outfit working through original thinking within networks," she writes.

In September, Simon Reich arrived from the University of Pittsburgh to become Chatham House's director of research. He is an expert on Germany and German foreign policy, international political economy (in particular multinational corporations) and US foreign policy in Asia and Europe.

"The director of research is responsible for a number of different types of programme," he says. "There are those designed primarily for networking, such as the British Angola forum. Then we have two major thematic programmes, the energy and environment programme (the largest at Chatham House) and the international economics programme. And then there are the more geographically based programmes, which have focused on the Middle East, Russia and Eurasia, Europe and Asia."

Reich points to developments in the Asia programme as a possible model for the future. Chatham House has forged a partnership with Warwick University, in which research will be undertaken at the university, with Warwick academics running seminars and meetings from Chatham House. "We want young academics to make Chatham House their home, we want this coterie of talented people to come here to discuss their ideas," he says.

Peter Ferdinand, director of the Centre for Democratisation at Warwick, says a big problem he had as head of the Asia/Pacific programme at Chatham House in the early 1990s was over the cost of research overheads. "I think the way forward for Chatham House is through partnerships such as this one," he says. "We can offer cheaper overheads, and they can offer us a higher profile for our research through access to Whitehall, to business leaders and to policy-makers overseas."

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Reich also wants to reorganise the research programme around global governance, under four main headings. "These are redistribution, regulatory issues, developmental and democratisation issues and finally liberalisation. Much of the existing work can be fitted into such a framework," he says.

He also wants to emphasise that Chatham House has no direct grant from the Foreign Office for its work. "We compete for all our monies," he says. Chatham House has more corporate members than any of its UK counterparts, but membership has been declining over the past few years and stands at 379.

One of Gamble's priorities has been to talk to the corporate members about what they want from the institute and to enhance membership services.

Reich insists that satisfying members does not mean compromising independence. "A company may offer us money, but it is up to us to define the research programme and to publish the results," he says.

British American Tobacco has long figured in its lists of major corporate members, funding library and information systems. BP Amoco has also been a big funder, sponsoring the highly regarded energy and environment programme.

Although Reich argues that a corporate sponsor can never determine research output, he is aware that there are certain areas in which it is hard to get corporate research, such as corporate responsibility and foreign direct liability. This is Ward's field. Previously a solicitor, she is now researching the trend for multinationals to be sued at home for their activities in developing countries, including environmental damage and human rights abuse. "Part of this research involves looking at how public policy should evolve to cover this area - something multinationals are uncomfortable with." She has received funding from the Foreign and Commonwealth Office and the World Wildlife Fund UK, but she needs more funds.

Reich is also seeking more money. "I want to be far more proactive in approaching research councils and foundations. The Leverhulme foundation recently gave away ?20 million, and we did not get a penny of that. We intend to change that."

When Gamble arrived two years ago, she says that there was "still blood on the carpet" as the institute brought its budget into line. Much of the ill-feeling came from departing staff, but there were also reports of snubs from new Labour.

The launch of the UK-China Forum, a government-to-government initiative seeking to widen dialogue, by prime minister Tony Blair and the president of China, Jiang Zemin, at Chatham House last year was seen as a turning point. "Robin Cook and Clare Short have both spoken here as well as opposition members. Our great strength is our independence," Gamble says. The institute has also set up a parliamentary briefing group, which has about 30 members.

"One of my main regrets is that I cannot start work on the building," Gamble says. "It is a beautiful building in need of renovation." As for what goes on in the building, she says: "We are at the end of the beginning of the first phase of change."

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Reich argues: "There are programmes here that I believe are fantastically exciting. The foreign direct liability work and the environment and energy programme in particular. I just hope interested academics will pick up the phone and ring me."