Exclusive: Gannett Foundation documents reveal platinum benefit for company's elite executives

Updated: Company spokeswoman Tara Connell's response.

It's no secret that Gannett has given millions of dollars in bonuses and benefits to CEO Craig Dubow and other top officers, as they cut thousands of jobs and burdened thousands of other employees with additional work.

Now, I'm going to tell you about an executive benefit you probably don't know: a program available only to Corporate's elite. It comes via the Gannett Foundation -- the company's charitable arm, best known for helping homeless shelters and other worthy causes in communities where Gannett owns newspapers and TV stations.

Public documents show the foundation has given hundreds of thousands of dollars to charities favored by top company officers under the little-known executive benefit program. Federal tax returns for 2004-2006 show that Dubow and 15 other current and former executives used the benefit to steer nearly $424,000 to their alma maters and to other favorite causes. The charities were often far from any Gannett paper or TV station, a requirement for members of the public seeking community grants. And the foundation gifts required no matching money from the executives -- unlike a provision under a similar program for average employees, called GannettMatch.

I don't think there's anything illegal here. I bet this goes on all the time at corporate foundations. But it's still monumentally tacky. The company has quietly walled off a part of the Gannett Foundation -- a vehicle created for public good works -- and turned it into a private reserve for already well-paid senior executives to earmark money for pet charities. In other words, even as it preaches fiscal austerity, top brass's demands to be pampered now extend even to turning the company's charitable vehicle into just another platinum perq.

For example, at Dubow's direction, the foundation gave $40,000 to the University of Texas at Austin, where he graduated. The money went mostly for endowed scholarships. The community grants guidelines for everyone else, on the foundation's website, do not list Texas as an eligible state. Those guidelines also say: "The only scholarship program currently funded by the Foundation is the Madelyn P. Jennings Scholarship Program for children of Gannett employees."

At the request of Chief Financial Officer Gracia Martore (left), the foundation gave $45,000 to private Wellesley College near Boston, where she graduated. Gannett owns no papers or stations in Massachusetts. The school's website doesn't show a journalism department, or any journalism classes. Also at Martore's direction, the foundation gave $5,000 for "general support" to the exclusive Potomac School in McLean, Va., near Gannett's headquarters. The foundation's guidelines for the general public say it will not support elementary or secondary schools, except for special programs.

The money flowed through a charity benefit available to just a handful of executives. It is not mentioned on the foundation's website, where rank-and-file employees and the public are directed for information. The foundation's tax returns only hint at its existence; there are no related-party transaction footnotes. And there's nothing about it in the annual proxy report to shareholders, which details benefits for top officers.

Look: Buchanan Hall in tony Upperville, Va., is no doubt a delightful place to hold a garden club luncheon in Virginia's bucolic horse country. I'm sure it's lovely after its extensive renovation. But if former CEO Doug McCorkindale (left) thinks Buchanan Hall deserved $13,000, as the documents show, couldn't he have just written his own check -- instead of getting the foundation to pay? Then he could have told the foundation to give the $13,000 to a needy Boys and Girls Club in a poor neighborhood in Des Moines, Iowa. Amid Dubow's cutbacks, the 107 U.S. cities with a community newspaper or a TV station can use all the foundation's financial support they can get.

After all, the foundation describes its mission prominently on its homepage this way: "We give grants to organizations in the communities in which Gannett owns a daily newspaper or television station. The Gannett Foundation’s mission: to invest in the future of the communities in which Gannett does business, and in the future of our industry."

The company's response
I discovered the executive-driven money in the past week after sifting through hundreds of grants listed in the foundation's most recent tax returns. (The 2007 return will be available after May 15.) Gannett's chief spokeswoman, Tara Connell, who also is the foundation's executive director, told me about the program's existence after I raised questions about some of the grants.

Connell says the program helps Gannett retain senior executives. Plus, she says, "it's a great way to give money to charity."

She compared the executive program to GannettMatch, where the foundation matches employee gifts to qualified charities, including charities in communities where Gannett doesn't own papers or TV stations. But, Connell acknowledged, top executives are not required to contribute any of their own money under their program to get foundation support.

The foundation is hardly independent of Gannett, which provides funding. Dubow is the foundation's president, a position he's held since becoming Gannett CEO in 2005. (McCorkindale was president in 2004.) Martore is one of the foundation's vice presidents, a position she held in the three years I examined.

The program's disclosure comes as Dubow (left) boosts cost-cutting as a cornerstone of his plan to reverse the company's flagging revenue and its plunging stock price. "We maintained our usual fiscal discipline throughout the year, aligning it with our strategic plan,'' Dubow wrote in his annual letter to shareholders, published last month.

Dubow and Martore may donate lots of their own money to charity. They can certainly afford to: They are Gannett's two highest-paid executives. Dubow got a $1.75 million bonus last year on top of his $1.2 million in base pay; Martore got a $600,000 bonus on top of her $700,000 in pay. Their compensation -- nearly identical to what they got in 2006 -- came despite the fact Gannett's stock lost 35% of its value in 2007.

What the documents show
Overall, the tax returns show, the foundation gave nearly $18 million during 2004-06. But the documents give just a glimpse of the executive giving program. Approximately $720,000 in about 120 grants was directed by current and former executives, the documents show. I focused on 63 grants totaling about $424,000 because they seemed far removed from the foundation's stated mission and its guidelines for the public. The more noteworthy ones include:

• $60,000 to Penn State University, on the recommendation of former CEO John Curley, who now teaches there. The guidelines for the public community grants program do not list Pennsylvania as an eligible state.
• $16,000 to scholarship funds at Columbia University in New York City, at the behest of former CEO McCorkindale. He earned undergraduate and graduate degrees at Columbia. At least $5,000 went to a fund named for McCorkindale. The foundation's guidelines say any credit for grants should go to the Gannett Foundation.
• $30,000 to Young Life Williamson County in Franklin, Tenn., at the behest of USA Today Publisher Craig Moon, who has long ties to the state. Young Life's website says "every Young Life gathering or event is intended to give kids the chance to experience God's love and to consider the relevance of Jesus Christ for their lives." The foundation's public guidelines prohibit gifts to "programs or initiatives where the primary purpose is the promotion of religious doctrine or tenets."
• $17,000 to Walker family funds at the University of Nebraska Foundation in Lincoln, the University of Georgia Foundation in Athens, and the University of Colorado Foundation in Boulder. The gifts were recommended by retired broadcast division chief Cecil Walker. Gannett owns no papers or TV stations in Nebraska. Plus, the foundation's guidelines ask that any credit for gifts go to the Gannett Foundation. Also at Walker's direction, the foundation gave $11,500 to the University of Colorado at Boulder, for scholarships, when scholarships aren't an option for everyone else. And there's no Gannett paper or station in Boulder. But The Coloradoan is just an hour north in Fort Collins. Even Corporate's page shows Colorado State University in Fort Collins. Why couldn't that $11,500 in scholarship money at least have gone to CSU?
• $40,000 to Hartwick College in Oneonta, N.Y., on the recommendation of former human resources chief Richard Clapp. He graduated from Hartwick, I believe in 1962. Gannett does not own any papers or stations in Oneonta. The closest I could find is the Press & Sun-Bulletin of Binghamton, about an hour away.

Now, it's your turn
How to examine a non-profit's public tax returns.

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