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

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