Tuesday, December 27, 2011

Freedom Forum cuts expenses -- but not exec pay; $540K for Paulson; a mysterious $337K for Prichard

The Freedom Forum foundation, best known for its costly Newseum about news history in Washington, slashed overhead in 2010 -- but not enough to avoid a fifth consecutive year of enormous deficit spending, according to newly released IRS tax returns.

Top administrators still landed big raises, however. Ken Paulson, president and chief operating officer until his abrupt resignation midway through 2010, got $540,000 in salary, benefits and expense reimbursements -- nearly $100,000 more than in 2009.

And in a surprising disclosure, the Newseum said it paid trustee and retired president Peter Prichard $337,000 in a bonus and for expenses. The museum didn’t explain the payment, which was far in excess of anything paid to other trustees, and foundation documents only hint at a possible reason.

Freedom Forum was the original Gannett Foundation until 1991, when retired Gannett Chairman and CEO Al Neuharth relaunched it with a new name and mission. It now focuses almost exclusively on the Newseum, a dramatic shift from its founding purpose in 1935: supporting charities in communities where Gannett does business.

The foundation and museum disclosed the figures in their 2010 Form 990 tax returns, which I obtained this month under federal open-records laws.

The returns raise intriguing questions, including why Prichard, a former USA Today editor, got so much money. And the documents only advance Freedom Forum's long-standing reputation as a retirement haven paying lifetime annuities to aging former executives close to Neuharth.

Foundation administrators didn’t respond to any of my questions about the 2010 tax returns, however, continuing a years-long pattern of secrecy that seems at odds with its mission.

Expenses down, endowment up
Freedom Forum ran a $59 million deficit in 2010, even after substantially curtailing spending for the Newseum. That was a huge improvement over the $82 million deficit in 2009.

Its endowment of stocks, bonds and other securities had a market value of $422 million at year’s end, up from $399 million the year before. That reflected a better investment return compared to overall stock markets, especially after factoring in the Newseum subsidy.

Nonetheless, the foundation has now spent $315 million more than it earned in 2006-2010 alone, forcing it to dip into the endowment even more. That portfolio was worth $900 million in 2000, when administrators started an expansion of the museum that ultimately cost $450 million, nearly double its initial price tag.

The foundation’s single-biggest expense last year was its grant to the Newseum: $39 million, down from $52 million in 2009.

Related: see links, bottom of this post, to 2010 foundation and museum tax returns, plus summaries of historic financials.

Paulson's pay as No. 2
The foundation’s tax return shows Paulson was paid $473,746 in salary and benefits, plus $66,797 for expense reimbursements. That was up from $373,130 in wages and benefits, plus $70,055 for expenses, in 2009.

After stepping down as the No. 2 executive in August 2010, Paulson was made CEO of the foundation’s First Amendment Center in Nashville, Tenn.

The tax returns don’t say whether Paulson’s 2010 pay was just for the seven months he was the foundation’s president and COO, or whether it also included his four months at the Nashville center.

Paulson had been in line to succeed Charles "Peanut" Overby, Freedom Forum’s long-time chairman and chief executive, positions he took after retiring from Gannett. Four months ago, Overby, 65, was replaced as CEO by chief U.S. courts administrator James Duff. Then, this month, Overby stepped down as chairman. He remains a trustee of both the foundation and the Newseum.

Prichard the headhunter
The Newseum paid Prichard a $206,329 bonus plus $126,244 for expenses, according to the museum’s 2010 tax return.

The payments are a bit of a mystery. Prichard quit as president of the foundation and museum at the end of 2008, when Paulson -- then USA Today’s top editor -- was given his job. Freedom Forum said Prichard would spend 2009, the year he turned 65, working on special projects, then retire. He continued as a trustee.

Prichard’s 2010 pay may have been for helping Freedom Forum’s executive headhunters find Overby’s 57-year-old replacement, Duff. In a May 2011 2010 news release when Duff’s appointment was announced, the foundation said:

“The nationwide search was led by Peter S. Prichard, retired president of the Newseum and Freedom Forum, and by the search firm Isaacson, Miller of Boston. John Isaacson and Rachel Ellenport led IM’s efforts.”

I asked the foundation about Prichard’s compensation. I also asked how much it paid the Isaacson firm; the tax return doesn't say. These were among the questions administrators didn't answer.

Headhunters like Isaacson are pricey. "Don't pick a firm solely on the basis of price," the company says on its website. "In this business, as in most others, you get what you pay for."

Indeed, the University of Illinois paid Isaacson almost $160,000 last year to find its new president, Michael Hogan, according to The News-Gazette of Champaign-Urbana. The school also paid $142,000 for search-related lodging, travel and food expenses. Hogan earns $620,000 a year.

Prichard’s pay last year brings to $5.3 million his total compensation since 2000, the year the Newseum expansion started. The museum eventually opened years late and $200 million over initial budget projections. Prichard was a key player in the expansion.

Coffey, Seigenthaler and Quinn
The foundation paid Overby $478,981 in wages and benefits last year, plus another $123,603 for expenses. That $602,584 was up 34% from 2009, and brings his total compensation since 2000 to $7.6 million.

Jan Neuharth
Overby was replaced as foundation chairman this month by Jan Neuharth, a long-time trustee who is founder Neuharth’s daughter from his first marriage. At the same time, Prichard was elected chairman of the Newseum's board; the museum is a legally separate entity.

As trustee, Jan Neuharth got paid $39,000 in 2010. Whether the foundation boosts her pay as chairman likely won’t be reported until the next IRS return is filed a year from now. Since 2000, Neuharth has been paid nearly $650,000 in fees and expenses.

Museum trustee Shelby Coffey III was paid $120,000 in 2010. He got an identical amount in 2009.

Coffey was elected the Newseum vice chairman this month. He was the Los Angeles Times’ editor until 1997. (Later, he was an ABC News executive under David Westin, the network’s president until a year ago. Westin is a Newseum trustee, too.)

John Seigenthaler, founder of the First Amendment Center, was paid $200,000 plus $95,819 for expenses. That was close to what he got in 2009.

John Quinn, an advisor to the foundation, got $150,000 plus $121,200 for expenses -- also close to what he was paid in 2009. Quinn is the retired Gannett chief news executive who helped launch USA Today. He was the paper’s editor and then editor-in-chief from 1983 to 1989.

As founder, Neuharth, 87, was paid $225,000 in wages plus $286,003 for expenses -- more than in any other year since 2000. The tax return says only that he worked an average 40 hours a week, apparently year-round.

The foundation has paid him at least $2.3 million since 2000.

Neuharth lives in a seaside estate called the Pumpkin Center in Cocoa Beach, Fla., where he writes a weekly column for USA Today. Gannett pays him a combined $300,000 annually under deferred compensation and consulting agreements with lifetime terms, according to U.S. Securities and Exchange Commission documents.

Tax returns online
Want to see all 2010 payments to foundation and museum trustees, officers and employees? Start with Page 33 of Freedom Forum’s return and Page 7 and Page 26 of the Newseum’s.

Related: select Freedom Forum financials for 2000, 2007-2010. Plus: select Newseum financials, 2007-2010.

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


  1. Good God, these people run up big expense tabs. What on earth could Seigenthaler spend $95,000 on to be reimbursed for by the foundation? How could Quinn have possibly run up $121,000 in reimbursable expenses?

    This is fascinating stuff, Jim, but I fear your reporting is unlikely to disturb the cushy lives of these card-carrying One Percenters.

  2. More like the 1/10th of 1%ers taking care of themselves. Someone should pull the expense reports and see what they claim.

    word verification: expensie, LOL!

  3. I'm sure old Al is really working 40 hours a week all year for this nonprofit...another example of the vast disparity between the haves and the have nots at Gannett.

  4. Great reporting. I agree with John. How could you spend 10 grand a month?

  5. While I find this interesting what does it have to do with modern day Gannett? Yes we gave birth to it but it has now been decades since we split. If you want to cover the FF then why not start a new blog. The majority of Gannett employees were probably hired after the split. Just asking. We don't cover Norwich or San Bernardino

  6. agree with 11:42 - the freedom forum is so far removed from the current gannett, it is time to start a blog devoted to it or JIM needs to just put it to bed - it's tiresome!!! (Plus, if you're going to call the FF, the original Gannett Foundation - please provide the basic history as most probably have no clue (and maybe Jim doesn't either....just saying).

  7. 11:42 and 11:50 raise fair questions.

    But consider this: Gannett communities across the country are poorer because the original $650 million Gannett Foundation no longer supports communities where the company does business. I'm talking about thousands of food pantries, youth groups, arts organizations, disaster-relief agencies and other non-profits. These are the very communities that were the source of that $650 million.

    As I wrote today: Freedom Forum now focuses almost exclusively on the Newseum, a dramatic shift from its founding purpose in 1935: supporting charities in communities where Gannett does business. And the 2010 tax documents only advance the foundation's long-standing reputation as a retirement haven paying lifetime annuities to aging former executives close to Neuharth.

    Plus, I don't write that much about Freedom Forum and the Gannett Foundation. In the past year, I've published about 1,225 posts overall -- and just 10 posts were about those two foundations.

  8. 11:42 and 11:50. The influence of these men (and daddy's girl) still reaches into far into Gannett. And they all fan each other's egos in very public ways, perpetuating a myth that USAT was once great. Most were Al's flunkies (not Siegenthaler) on his capades who now get their payback. These men are fading fast, thank God. But not as fast as all the $20,000 Newseum gift shop and security workers who got let go last year.
    Jim: Keep tracking the money.

  9. Jim I still don't get it. You've made your point. The FF is not part of Gannett. Now a good final comparison would be what kind I'd dollars did the foundation donate the last tear they were part of Gannett and how much did the GF donate in 2010. The $650 isn't relevant since it was the gross amount. The foundation never donated $650 million in one year. From a Gannett standpoint the FF is irrelevant

  10. I will see if I can hunt down that final Gannett Foundation tax report.

    I do know this, however. Under long-standing federal law today, foundations are required to spend annually an amount equal to 5% of their assets.

    Using that formula, the Gannett Foundation would have been required to throw off $32.5 million a year on that $650 million.

    In 2010, by comparison, the "new" Gannett Foundation donated $6.9 million to charities where the company does business.

  11. Please get the figures Jim. You should also look at similar foundations and compare their donations for the same years to take the economy into effect

  12. I don't blame the Gannett apologists for wanting Jim to stop writing about FF. It's an embarrassment to Gannett and, from their point of view, is best swept under the rug.

    A savvy investigative editor at USA Today could get quite a scoop by assigning a reporter to dig into the Foundation's activities over the past decade. While the apologists deny any link between GCI and FF, what are the chances of such an assignment happening?

  13. Quinn's expenses may be for the Chips Quinn training program, named for his late son, who was a Poughkeepsie Journal editor.

    That's the sort of context Freedom Forum could provide -- if it was willing to respond to questions about its finances.

  14. Jim, it's great that you're still pursuing this -- and it's appropriate for the Gannett blog because there are so many Gannett connections. Thanks for the continuing great work on this.

  15. The sycophants are railing.
    Good sign Jim's on to something big here.

  16. 5:09, the only big thing Jim is on to is whether he can make more of an ass of himself in 2012 than he did in 2011.

  17. 3:05, even if you allege what's true, why would the broad public care? Besides, most of Usa Today's investigative team writes maybe one or two stories a year.

  18. Jim,
    Why do you feel you still have to justify what you do here to the chronic naysayers and negative ninnies?
    Nobody cares what they say.
    Hope you plan to carry on into the new year with your fine work on this blog!
    Appreciate it. This piece was good stuff.

  19. Paulson and Prichard. Can anyone name some of their massive leadership contributions as editors of USA Today? One?

  20. 5:57 The public would care if it knew the $650 million used to start Freedom Forum is the public's money -- not a personal kitty for the foundation's executives to use as they please.

    This is because, under federal law, Freedom Forum is merely the trustee for the assets it controls. It is obligated to devote those financial resources to charity.

    To be sure, the law allows for a certain amount to be spent on overhead: the cost of reviewing and fulfilling grant requests to non-profits; postage, office rent, etc.

    But law-enforcement authorities don't like it when charitable assets are abused. That's what got Freedom Forum in trouble in the mid-1990s, when it had to settle a complaint from the New York Attorney General's Office. (Read the settlement document.)

    Among several issues, the AG was concerned about how much money the foundation was spending on building its new headquarters. (Sound familiar?) The AG also was concerned with exorbitant spending on travel.

    Trustees were required to adopt best practices on spending, and had to pay $175,000 in restitution to Freedom Forum and agree to "institute cost controls to curb lavish spending practices in the future."

    But there's another reason the public should care.

    Freedom Forum's story offers a window on a vast network of thousands of other public and private foundations that have sprung up in recent decades. When Freedom Forum was launched In 1991, there were 33,356. By 2009, there were 76,545, according to the most recent data at the Foundation Center.

    Collectively, they hold nearly $600 billion in assets that are supposed to be spent for the public's benefit. That means support for the Red Cross, community centers, aid for the elderly, and so on.

    Unfortunately, there are few regulators and other safeguards making sure those assets are properly managed. Attorneys general have some purview, but there are only 50 of those for tens of thousands of foundations.

    So, it falls to the media -- including bloggers like me -- to serve as watchdogs.

  21. The Gannett-FF connections are long and strong. The Chips Quinn staff includes Karen Catone, who started with Gannett in 1974, former Gannett editor Jack Marsh and former Newsuem employee Mary Ann Hogan. She is married to Eric Newton from the Knight Foundation (he worked at the Newseum too). Knight over the years dumped a lot of money into the Newseum and FF.

  22. 7:06 ancient history. These folks haven't been part of Gannett for tears. By your logic Jim should write about Google, Yahoo, Kinght Foundation, and many more. I don't care about companies where former colleagues went to work. It makes no sense.

  23. 7:02 Jim. It's your blog so you can do what you want. If you have information about illegal activities then do something about it. But quite frankly I don't care about bonuses, and expense accounts for people that have no relationship with Gannett. That's my only point. Since it's the only legit news topic you have ever been recognized for I cam kind of understAnd why you won't let it go. Now let's get back to character attacks and MILF references

  24. Ken Paulson sickens me. The guy had no clue while at USAT, ruined some people's careers, yet still he continues to do well in the world. I assume he sleeps well at night, like all these frauds who have been fortunate enough to earn six figures wherever they go in or around Gannett, just ruining lives and careers without blinking an eye. Even though you could directly connect him and his negligence in overseeing his lieutenants to a lot of anguish, Paulson keeps smiling. Hey Ken, do you ever think about all the people who fell through the cracks while you were asleep at the wheel? Are you even aware that those people exist? Did you know their names while they worked three or four levels under you. You never seemed to have any blood on your hands, but believe me, under your leadership, a lot of good people unjustly fell by the wayside. And you did nothing to stop it or to even question the selection process that led to the slaughter. You just let your top people hand pick who they wanted to slash, without thinking for a second whether those choices were made fairly and objectively. That was your job, to prevent unnecessary losses and personal vendettas, but you passed the buck to people even more incompetent and ruthless than you.

  25. 7:02 it's called Gannett Blog not Freedom Forum Blog. Your last sentence says it all. By the way no media site cares but you.

  26. Jim, you confuse $600 billion with $600 million. To put it in context, the subprime mortgage mess cost the country more than $1 trillion, and counting. Wall streets collusion additional billions. Dont go off on us again. Between this and your oddly anti free press stance against the chhesy stuff on bnqt is a bit odd.

    Stop swilling the eggnog, Jimbo.

  27. Paulson knew he was a stop gap temporary editor and didnt give a hoot about anyone but himself and his next job. All the outward showmanship masked a selfish, self centerd carpet bagging mentality. He made some horrendous management appointments that the paper and website still suffer from. After Karen Jurgensen, the worst editor in the paper's history.

  28. 7:28 Gannett Blog has a far-flung and varied audience.

    Please don't overlook the fact that many of my readers are ex-Gannettoids who worked for the company for 20, 30 or more years. Only today, for example, I was corresponding with a retired operating unit executive who started with Gannett in the late 1970s.

    Indeed, my ongoing survey of readers currently shows that 37% of the 2,800 people who have responded are former Gannettoids.

    For many of them, this site is an alumni network where they keep up with former colleagues. I don't write about them all, of course, but I try to keep current with the more prominent ones. Example: Al Neuharth.

  29. 8:43 No; the correct figure is the one I cited: nearly $600 BILLION in assets held by the nation's foundations. That's according to the authoritative Foundation Center.

  30. I am talking about gannett/Freedom forum numbers, which represent about 1 percent of that overall foundation money, Jim.

  31. Click on the link to the First Amendment Center and shake your head. Paulson smiling away, running a twitter contest funded by Knight and writing pedestrian essays that run in USAT and the Tennessean. Another group of good 'ol boys are the top dogs. Lone female is a librarian, of course.

  32. Furloughed Fury12/27/2011 11:21 PM

    Does anyone else appreciate the irony of an organization called the "freedom foundation" refusing to answer a reporter's questions? Keep up the good work Jim, shine the light on topics those in charge would rather have left in the dark.

  33. 9:10 Gannett/Freedom Forum's would actually be a far, far smaller share: 0.1%.

  34. Jim,

    Keep it up and don't bother responding to the apologists. They must be the new editors the Gannett papers have hired. They wouldn't know news if it bit them you-know-where. I love how the media and media-related organizations cannot stand the heat. I'm a former Gannettoid from the 80s and am still fascinated with how these guys ruined the chain and continue to serve themselves.

  35. Good grief. Two mediocre -- at best -- editors from USAT sucking up nearly $1 million in their ill-defined roles at the foundation. Almost makes this old man consider an Occupy Newseum chapter. This is so sad in so many ways ...

  36. Following is an edited version of a note I sent to a reader yesterday about the history of the original Gannett Foundation and Freedom Forum.

    You are, of course, correct about Al Neuharth wanting to sell the $650 million of Gannett stock held by the Gannett Foundation, so he could invest in stocks that had a greater potential to grow, thus funding his ambitious plans for what became Freedom Forum.

    He indicated that if CEO John Curley didn't buy the stock, he'd sell it on the open market. The Gannett Foundation's shares, I recall, constituted about 15% of all Gannett's stock.

    If Al had sold those to an unfriendly investor, he could have ignited a takeover, which would have left Curley and others jobless. In effect, he was holding Wall Street's version of a gun to Curley's head. And Curley was forced to blink.

    The New York Attorney General's Office outlines the legal technicalities of how the Gannett Foundation then became Freedom Forum; this history appears in the AG's 1994 settlement of its investigation of the Gannett Foundation under Neuharth's control.

    If you read the settlement agreement, you will note that the AG says the Gannett Foundation was merged into Freedom Forum; it wasn't dissolved. Please see Page 4. Note, also, that the settlement says the Gannett Foundation "is a non-for-profit corporation now known as Freedom Forum International Inc."

    Further, it says that in 1991, the Gannett Foundation formed a Virginia corporation "with the intent of merging the New York corporation into the Virginia corporation." That merger had been held up during the AG's investigation; the settlement cleared the decks for the merger to be completed.

    To clear up any potential confusion, any activities by Freedom Forum have no direct bearing on spending by the Gannett Co. itself. 

In the past, a few Gannett Blog readers have wondered, for example, whether the foundation's overspending might result in Gannett layoffs. It would not.

  37. We have plenty of mediocre editors stiil drawing big money at usa today. But they dont make as mich as nearly two dozen barely mediocre vice presidents, still trying to figure out what all of them do.

    Mr. Hunke, Ms. Ellwood, please tell us.

  38. The Newseum is as mediocre as these money grabbers. It is worth one trip, but they can't afford new exhibits or purchases. So once you've seen it, no need to return. They are practically giving tickets away through Groupon and have a local radio station pay for student tours. They will never give you attendance figures Jim, and if they did, you'd have to ask how many were full price. These men were not great at newspapering and obviously don't know how to run a museum or foundation.

  39. FF used to have a media studies center in New York (mediocre) and overseas offices to help journalists around the world. Both are long gone as key salaries jumped and the Newseum drags the FF down. The Newseum should have stayed in Arlington, Virginia. Hubris.

  40. I'm an outsider looking in, and count me among those interested in these apparent excesses. Just how does a top executive warrant that kind of pay under these chronic corporate circumstances? It reminds me of the line the banking industry used; something like "if we didn't pay this much they'd go elsewhere." With this kind of red ink? Fkg let them go elsewhere. But leave the bonus at the door please.


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