Sunday, November 30, 2008

As layoffs near, charity that doesn't begin at home: Foundation pours more cash into execs' pet causes

Gannett is about to launch one of the industry's single-biggest newspaper layoffs, so I figured it was time to update my reporting on Gannett Foundation gifts to charities favored by company executives. (Who knows? Maybe we can save some jobs if someone in charge realizes there are other ways to economize.) The following is based on the foundation's just-filed 2007 tax return, which I received Friday under the federal Freedom of Information Act.

As CEO Craig Dubow (left) imposed draconian budget cuts last year, the company's charitable arm -- the Gannett Foundation -- made an unusual gift: $20,000 for scholarships at Western Carolina University in Cullowhee, N.C. It was one of the foundation's single-biggest direct grants of 2007, and followed an identical $20,000 gift the year before, public documents show.

The gifts were unusual for several reasons. The Gannett foundation's website says it won't give money to endowment funds; the two grants were for an "endowed scholarship," the foundation's tax returns shows. Also, the foundation's stated mission is to help non-profit groups where Gannett owns a newspaper or TV station. The closest GCI business is 53 miles away: the Citizen-Times in Asheville, N.C.

But Western Carolina had a powerful ally: Dubow himself. He is the foundation's chairman and president, and one of its seven unpaid officers, all Gannett employees. As Gannett's CEO, Dubow is among a handful of current and former executives allowed to steer foundation money to favorite charities -- often, charities including religious groups that would be ineligible under rules applying to regular employees and the public.

Sure enough, Dubow recommended both $20,000 gifts, the foundation's new tax return shows. Last year's grant was among $320,000 awarded to charities recommended by Dubow and 15 current and former executives -- including some of the highest-paid brass, an analysis of the tax return shows. The 2007 grants were on top of $724,000 the foundation gave in 2004-2006 to charities favored by executives.

Unseemly 'philanthropy'
There is nothing illegal about any of this. The grants were made under a little-known perquisite that Gannett says is meant to attract and retain top executives. Under the benefit, the foundation imposes fewer restrictions on donation requests from top management compared to requests from average employees and the public. For example, these direct grants didn't require any matching money from the executives -- unlike a similar program for regular employees, GannettMatch.

Based on last year's giving, each executive got $20,000 in what amounts to play philanthropy money. All of it appears to have gone to non-profit groups. I suspect many other big companies offer a similar benefit to top executives. Plus, the $320,000 last year was just a fraction of the overall $11.3 million in grants approved.

Yet, with a mass layoff coming this week at papers including Florida's News-Press in Fort Myers, spending on executives' pet charities is at sharp odds with Dubow's claims of fiscal discipline and shared sacrifice.

Besides, there's something unseemly about sending foundation money to charities far from Gannett communities -- at the same time GCI is reducing employment and news coverage in those same places. Why didn't these 16 executives give their $320,000 in earmarked grants to the company's Employee Disaster Relief Fund?

It's not even clear whether Gannett is getting credit for all its gifts. Consider the $40,000 to Western Carolina University. The tax return says the money went to an "endowed scholarship," rather than to, say, a general-use scholarship fund. Scholarship funds typically offer naming rights.

I asked foundation Executive Director Tara Connell which fund received the money. I asked WCU, too. I look forward to their replies. (Connell is also Gannett's spokeswoman. Read her objections to my last report.)

The Dubow scholarship fund?
Meanwhile, I searched WCU's website, but turned up just one reference to the Gannett Foundation, a $3,270 grant to a theater group in early 2003. Then I found a page showing a "complete listing of WCU scholarships." But Gannett and the Gannett Foundation do not appear anywhere on the page. There is, however, a scholarship listed under the names of Dubow and his wife:

"Craig and Denise Dubow have established an endowed fund to provide scholarship support for deserving students at Western Carolina University. This scholarship provides support for full time undergraduate students from Jackson, Macon, and Transylvania counties who demonstrate financial need and maintain a B average."

More than likely, this amounts to an out-of-date list on a website or some other innocent omission. The Dubows probably established and funded the scholarships on their own, using their own money. In fact, the return's GannettMatch section shows the foundation matched an unidentified employee's $10,000 gift; that could have been from Dubow, ponying up for his own fund.

But until I hear back from Connell and WCU, I still don't know how the Gannett Foundation received credit for its $40,000 in direct grants. There's reason to be curious: Last spring, I found at least two examples where foundation money went to other scholarship funds named after executives -- rather than Gannett or the foundation. (Updated at 10:41 a.m. ET, Dec. 1: A WCU spokesman has now referred my questions to the the school's fund-raising office.)

More liberal rules
The direct grants to endowed scholarship funds at WCU and elsewhere are made possible because of the more liberal foundation rules for the executives. For anyone else seeking support for their scholarship fund, the foundation's website says: "The only scholarship program currently funded by the foundation is the Madelyn P. Jennings Scholarship Program for children of Gannett employees."

Gannett provides all the foundation's funds. Periodically, it donates a newspaper to the foundation, which then sells it, and reinvests the proceeds in stocks and other investments. That's what happened to the Chronicle-Tribune in Marion, Ind., which Gannett sold last year via the foundation for $12.3 million. It had been a Gannett paper for 36 years.

More executive-directed gifts
Other noteworthy Gannett Foundation direct grants given last year on the recommendation of current or former executives. Each person directed a total $20,000 to charities of their own choosing.

Earlier: How to examine a non-profit's tax returns

Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Image: today's News-Press, Newseum. The paper is expected to lay off up to 80 of 600 employees in the next week]

30 comments:

  1. This information sickens me. How can these executives justify directing money to religious organizations?!

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  2. I am so very confused. What's the point. The Foundation has rules and as long as these rules are followed who cares? I for many years have donated to the three colleges (seriously) that I went to, and the GanFoundation matched each and every donation.

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  3. Great work once again, Jim.

    This makes me ill.

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  4. 5:25: Unlike you and other regular employees, these executives did not have to put up a dime of their own under the special foundation rules created just for them.

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  5. 5:25
    Gannett employees are limited to $10,000 in matching grants a year (and I'd be surprised if anyone can afford to contribute anything near that amount), far below what these executives have managed to funnel to their alma maters.

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  6. FYI: I did this analysis as quickly as possible after receiving the tax return from Gannett on Friday.

    I first requested the 2007 return last March, but was told it wouldn't be filed until about May 15. The foundation received permission to file late. It appears to have been signed and dated Nov. 15.

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  7. This is part of their compensation package. You may not like it but it's certainly not a scandal. That's not to say it's a bad thing to have out in the open but really, who cares.

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  8. Typical Gannett double standard, employees may NOT make matching donations to their religious causes but Dubow & Co can.

    I have worked for Gannett for 20+ years and have no desire to see this company prosper any longer, even if it impacts me personally.

    I only have contempt for GCI management. At every turn, it seems they no moral compass, whether it involves foundation grants, outrageous profit margins, or a sadistic 5 week wait to find out who will join the ranks of the unemployed.

    One final note: nice work Jim

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  9. Ahhhggggrrrrrrr!!!!!!Their "compensation program"??
    What it really is is a way to give money from a foundation with no rules. Money that if they felt so strongly about should be coming from their pockets not the foundations.
    I served on a board of a foundation and was very careful to not grant dollars to my own pet charities (colleges, women’s rights, animal rights, literacy etc). I kept my money separate from my duty as a director of other people charitable giving. This is what is suppose to happen to those that are ethical and moral. We aren't talking about what's written in by-laws. We are talking about doing what is right.
    This isn't the right thing to do and they know it. They feel they are above everyone else and do whatever they please. The company is in such turmoil and this is what they continue to do? And we pay for their lunch? When will it stop? They have no idea what the rest of the company is going through. What a sad shame.
    Such a great company that has gone so very wrong.
    May God have mercy on your souls!

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  10. yes indeed, thanks 6:33 - after all, you wouldn't want to be informed about a major change that will be happening in the company - of course, had the company not told everyone what was going to happen and this blog was given information about it, yo would have been the first to congratulate the blog for getting the information - no double standard there...

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  11. Great stuff, Jim. Thanks. I love how the brass gets to skirt the rules that everyone else has to follow. Rank has its privileges, wot wot?

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  12. Mr. Yesterday11/30/2008 7:01 PM

    I don't have much of a problem with the general concept. BUT...

    The Foundation's front page says: "We give grants to organizations in the communities in which Gannett owns a daily newspaper or television station.."
    and
    "...mission: to invest in the future of the communities in which Gannett does business, and in the future of our industry."

    Last I checked neither Penn State, Columbia or Wellesley are home to Gannett papers. New Mexico doesn't have a Gannett paper and none of the New York papers are exactly "The Voice of the Adirondacks."

    Can anybody help with Tennessee? Are Franklin and Williamson counties home to Gannett papers or is the whole lot of these suits so shortsighted as to not invest in the communities they do business in?

    Good read, Jim.

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  13. Jim,

    Any idea of whether and how Paul Davidson (Gannett boss in the UK) used this loophole?

    Cheers.

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  14. 7:15 pm: Davidson's name does not appear in the tax returns. Newsquest gets block grants from the foundation, for distribution in the U.K.

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  15. Same 'Anonymous' as at 7.15pm11/30/2008 7:29 PM

    OK, cheers. Thought he may have spent it all on a new black cape and machete.

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  16. Know where Dubow keeps his second home?

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  17. Williamson is in Nashville's coverage area. Since the disposal of papers in Utica (and years ago, Saratoga Springs) Gannett hasn't owned a paper within hours of the Adirondacks.

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  18. What is Dubow's tie to Western Carolina?

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  19. Does the Asheville Citizen-Times circulate in Cullowhee, N.C., where Western Carolina University has its campus? Does the C-T have a bureau there, or reporter/freelancer dedicated to the community?

    In other words, to what degree is Cullowhee considered a Gannett "community?"

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  20. Well, 8:30, technically Burlington is within an a hour or so of the Adirondacks, but I'd hardly call it within the BFP's coverage area.

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  21. The Citizen-Times is considered the daily newspaper of note in the region that includes Western Carolina University, and does distribute here. The closest bureau, though, is 30 min. east, in Waynesville, and the running joke is that the C-T only ventures this way for blood or football.

    I can't imagine our being considered a "Gannett Community"

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  22. Check out some of the scheduled guest speakers at the Gospel Volunteers/Camp of the Woods place.
    Makes me wonder why Gannett, with all it's diversity talk and brand concerns, would let a contributor reach out that far.

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  23. It would nice if the Gannett Foundation set up an account to help Gannett employees who have been fired (err, laid off) transition to their next job. Even if it was something like a Gannett food bank. Not sure what the law or tax code is on this, but if we can help the families of strangers at risk (and I have no problem with this) maybe we could help the families of former employees who are at risk.

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  24. I believe Craig Dubow has a home in Cashiers, NC, which is about 25 miles from Cullowhee where WCU is located. And, yes, Cullowhee is a part of the Citizen-Times coverage area.

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  25. Agreed, 7:01 - "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."

    I can't be mad at the idea of them giving hundreds of thousands of dollars to charity. But they're not even sticking to the stated mission of the foundation, and that is just plain wrong.

    Maybe this year they'll give a lot of their money to the Employee Disaster Relief Fund. (Either that, or they'll change the mission language so that they can donate wherever they want with an even cleaner conscience.)

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  26. Is there a government body responsible for overseeing foundations, or would the IRS be the one since foundations file tax returns?

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  27. 10:25 am: Generally, charitable foundations such as Gannett's are regulated by state attorneys general. It was the N.Y. attorney general who went after the OLD Gannett Foundation -- now Freedom Forum -- after Al Neuharth basically hijacked it from the company in the late 1980s.

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  28. I can only see the 2006 report on Guidestar, but some additional info on the Gannett Foundation seems relevant.
    To wit:
    * Despite month-long fund-raising “game-like”antics at my paper for the United Way Campaign, the United Way where I worked, where my Gannett paper is located, didn’t receive a dime from the Gannett Foundation that year. Why was my publisher begging me and my co-workers, when he apparently didn’t dare ask the cash cow for some kibble?
    * Some good charities are given cash for sure. However, a quick look shows that top officers of GCI routinely suggest money be sent to very specific sites where Gannett does not have a newspaper or TV station. Some examples of what seem like good charities in the “wrong” places”
    - $2,000 for sports programs for the ‘Elm Street School’ in Newnan, GA. That was suggested by Cecil Walker.
    - $5,000 (again, Cecil Walker) to a scholarship program at the University of Colorado in Boulder
    - $4,500 to University of Denver, recommended by Roger Ogden.
    - $5,000 to Nine Health Services in Denver (Cecil Walker again)
    - $1,000 to Hospice Care in Falmouth, Mass (Dick Clapp suggested).

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