The Institute was founded in 1984 by Chicago investor David H. Padden, who served as the organization's chairman until 1995. Padden had been a director of the Cato Institute, a libertarian think tank headquartered in Washington, D.C., since its founding as the Charles Koch Foundation in 1974. Padden was also a former director of Citizens for a Sound Economy, the Acton Institute, the Foundation for Economic Education, and the Center for Libertarian Studies. At age 26, Joseph L. Bast became Heartland's first employee. Bast's wife Diane was Heartland's publications director.