We haven't heard any details since the Dec. 17 announcement that Peter Prichard, 65 (left), was stepping aside to make room for USA Today Editor Ken Paulson, 55, who only last week took over as president and chief operating officer of the Freedom Forum journalism foundation and its Newseum in Washington, D.C.Just curious: Have you been discussing any of them -- perhaps one in particular -- with USAT Publisher Craig Moon? ;)
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Having lost millions of dollars of foundation money in reckless stock market speculation, Prichard is earmarked to head up USAT's coverage of financial affairs and the bank bailout. You will need to get the 1099 forms for 2008 when they come out later this year. It is breathtaking how much money Prichard lost at the foundation.
ReplyDeleteIndeed!
ReplyDeleteIn all fairness to him, didn't most of the foundations take huge hits in 2008?
ReplyDelete1:20 pm: Yes. But here's what could makes Freedom Forum different in terms of any endowment losses -- accumulated debt at its biggest project, the Newseum in Washington, D.C.
ReplyDeleteThe museum about news opened last April -- three years late, $200 million over budget, and with what looks like a gaping hole in its business plan. Here's what I mean.
At its most basic, the museum is the anchor tenant of a large, mixed-used entertainment, business conference and residential complex.
The original plan called for 135 luxury condos. At some point, they morphed into rental apartments. That means that when it came time to replace the original construction financing with a permanent loan, Newseum officials did not have the cash from selling those condos.
For example, say the condos would have sold for $500,000 each (I'm low-balling to be conservative.) Had they all sold, that would have produced about $68 million in revenue. Under this scenario, that was $68 million that could not be put toward paying off construction costs. To be sure, the apartments -- assuming they are fully rented -- produce their own income stream.
The Newseum is legally separate from the foundation. So, in a worst-case scenario, it could go bust, without pulling down the foundation. But that would be hugely embarrassing. So, I suspect the foundation will continue to prop up the complex.
Indeed, by 2007, the foundation gave 96% of its $60 million in grants to the Newseum vs. just 51% of $44 million only seven years before, Gannett Blog has found.
The 2007 grant may have been the biggest, of course, because the Newseum had not yet re-opened, so it didn't have any revenue. We will not know the 2008 subsidy until the foundation's public IRS tax return is filed later this year. That, too, is when we should see the Newseum's separate return, showing its total debt.
For my original post on this subject: http://tinyurl.com/bqeq6y
No, 1:20, not all foundations took a huge hit in 2008. Many foundations have conservative investment policies, and invest in Treasury bills. This foundation did not take that course, and chose to invest in some of the most risky investments on the market -- a decision that cost it dearly in the early 2000's. They didn't learn their lesson, and continued to plow money into very precarious positions. I don't think anyone can save them now.
ReplyDelete1:20 PM back again.
ReplyDeleteThanks for the information.
The earlier post seemed to me like such a personal attack on someone when we---or at least I---don't even know who makes investment decisions for the foundation's money. The foundation has a board. I'm guessing someone is paid to make investment decisions, so I'm still not sure if this guy is the one to blame for "reckless stock market speculation." Maybe he is, and maybe he isn't.
Glad to know there are some foundations that invested wisely and are doing okay.
Oh. I don't work for Gannett anymore. Wouldn't know Prichard if I bumped into him.
Jim zeroes in on the spending part of this boondoggle, but I recommend looking at the investment part to get the complex picture. They were investing their money in OEX index, an index of S&P funds. It has declined in half in the last six months, so I would guess the foundation investments have also declined by that amount. See also the salaries paid the huge Newseum staff, and declining entrance fees (recession/winter) and you can conclude this is a concern on the edge of bankruptcy. Plus I doubt the apartment deals Jim details worked out. They are much too small for that price, and there is too much competition in the neighborhood.
ReplyDelete