raised hope for long-needed financial reform at the troubled charitable foundation after years of overspending on construction and sky-high salaries under predecessor
There were ample reasons to move quickly. Freedom Forum's money-losing
about news history in Washington had gnawed away at the foundation's crucial income-generating endowment. That spurred deep program cuts -- and an occasionally antic search for more revenue, like the museum's just-opened exhibit promoting Paramount's sequel to
.
Duff was named CEO two years ago -- only the second in the non-profit's history after Overby eased into retirement (or so it seemed) at age 65. He and
had turned the original Gannett Foundation into a refashioned Freedom Forum when the legendary jet-setting chairman retired from the Gannett Co. media giant in 1989. The move has cost Gannett communities nationwide hundreds of millions in lost charitable support, however.
: "We’ve certainly worked on tightening up on expenditures. I think we’re making good progress. And certainly our numbers are very, very encouraging."
But now, newly released public documents show foundation finances grew even more precarious last year after Overby got a 55% pay raise and Neuharth's compensation hit a record high, jaw-dropping expenditures even for Freedom Forum.
For the seventh consecutive year, Freedom Forum racked up another, enormous deficit: $48 million, according to its annual Internal Revenue Service tax return. Total overspending has now reached $410 million during 2006-2012 alone, the period when the museum moved to new quarters costing nearly twice initial estimates.
By the end of last year, the endowment's value dropped to $351 million, a record low, according to an examination of hundreds of pages of tax returns. In 2000, before the museum buildup, it topped $914 million -- $1.2 billion in today's dollars.
A contributing factor comes as a surprise. Although Overby ostensibly retired in 2011, the foundation paid him $987,000 in 2012 as
at his Ole Miss University alma mater -- a position previously undisclosed in tax returns. Last year's pay was way up from $638,000 in 2011.
Overby's pay, which included $480,000 in deferred retirement benefits and a $207,000 expense account, was his third highest on record, exceeded only in 2005, when the foundation paid him $1.3 million, and just barely in 2008, when he got $991,000, according to tax returns.
, who got $742,000. With $2.1 billion in assets, Knight is three times bigger than Freedom Forum, even when real estate is included. The Miami-based charity
to help open the museum's new home. Ibarguen is a former museum trustee. Knight is now represented on the board by former Gannett executive
, tax returns show. But he certainly wasn't the only Freedom Forum employee pulling down big bucks in 2012:
Neuharth was paid $602,000 as founder, the most he's ever received in a single year. It included a record $303,000 expense account. Neuharth
, former CEO of the foundation's First Amendment Center, also got $602,000 -- a record for him, too. That included a $367,000 salary plus $186,000 for his retirement account. In July, he
at the College of Mass Communications at Middle Tennessee State University. A former top
.
Finally, Duff earned $514,000, most of which was his $445,000 salary. To be sure, that was far less than in 2011, when he
got $1.6 million, almost entirely in deferred retirement pay.
Those fat paydays were followed by
another round of cost-cutting early this year. Duff slashed dozens of foundation and museum jobs, sources told me, hitting the First Amendment Center and Diversity Institute in Nashville especially hard. Freedom Forum also
canceled the Crazy Horse Journalism Workshop, an annual event encouraging young Native Americans to enter the profession.
Whether Duff has made more progress stabilizing the foundation this year likely won't become clear until late 2014, when the foundation files its next tax return. I obtained a copy of the most recent one on Friday under open records law. They're the only comprehensive source of financial information non-profits are required to make public.
 |
| Neuharth |
Neuharth's compensation and duties remain a mystery. Freedom Forum has repeatedly refused to detail his job responsibilities whenever I've asked. The tax return only says the late octogenarian media mogul averaged 40 hours a week in his role as founder -- an average $289 an hour.
His $303,000 expense account suggests he traveled a lot, two years after double knee replacement surgery left him
riding an adult-sized tricycle near his seaside estate in Cocoa Beach, Fla. He died in April after sustaining injuries following a fall at home.
His
12-page will signed in 2009 included detailed plans for three memorial services, but no bequests to Freedom Forum or the museum. However, he did
order their names chiseled on his headstone. And the Neuharth family is
listed among donors of $100,000 or more to the museum.
Meet the boss: his daughter
Freedom Forum's latest deficit came during Neuharth daughter
Jan Neuharth's first full year
chairing the 11-member board of trustees. She replaced Overby. The foundation paid her $50,000 last year.
 |
| Jan Neuharth |
There is considerable overlap between
Freedom Forum's trustees and
the museum's, which is a legally separate entity. Many are long-time close associates of Al Neuharth.
Duff is on both boards. So is Neuharth's Cocoa Beach attorney,
Malcolm Kirschenbaum, and the former Gannett newspaper publisher
Mike Coleman. One of the more high-profile trustees is
PBS NewsHour co-anchor
Judy Woodruff.
Over the years, Freedom Forum and the museum have become a popular way station to retirement for many other top Gannett executives, including
Peter Prichard, chairman of the museum board and another editor of the paper Neuharth founded,
USA Today. As a Freedom Forum trustee, Prichard was paid $44,000 last year.
That the foundation and museum have been run by former newspaper editors, rather than trained professionals with experience in the field, suggests a major reason why both entities have become such financial boondoggles.
Duff, 60, is an attorney
who came to his job without any discernible experience in museum or foundation work. He was chief administrator of the sprawling U.S. court system, with 35,000 employees and a $7 billion budget. Before that, he was managing partner of the Washington office of
Baker, Donelson, Bearman, Caldwell & Berkowitz.
The office, which did legal work for the foundation, was founded by
Howard Baker Jr., former majority leader of the U.S. Senate for Tennessee. Freedom Forum's tax return says he's a trustee and secretary, but the foundation's website says only that he's trustee emeritus. Overby, Paulson and the foundation also have deep Tennessee ties.
Overby lives in upscale Franklin, Tenn., which draws country music stars from nearby Nashville. In addition to his Freedom Forum pay last year, he also earned $200,000 as a director at for-profit prison operator
Corrections Corp. of America in Nashville. He's been on the board 12 years, piling up 89,000
CCA shares, mostly options, with a gross value of $3.2 million, according to U.S. Securities and Exchange Commission filings.
(In court, CCA is at odds with Freedom Forum's free press and free speech mission. It has unsuccessfully
opposed Tennessee open-records laws, arguing it shouldn't be required to disclose public documents about lawsuits against the company. CCA is a major government contractor. Overby has contributed $25,000 to its political action committee since 2009, according to the non-partisan
Center for Responsive Politics.)
From Franklin, it's a four-hour drive to the Ole Miss campus' Overby journalism center. The center got its name after Freedom Forum donated $5 million to the school,
one of a slew of eyebrow-raising grants. It's unclear whether it will continue paying him a six-figure salary as the center's chairman. On his retirement as foundation CEO, the university hosted a testimonial dinner that included a breathtakingly hagiographic video called
Charles Overby: A Journey of Courage. It describes the $450 million museum as his "bold idea."
$27 million for museum
Whatever Duff accomplishes in belt-tightening, he won't immediately escape Freedom Forum's biggest ongoing obligation: the museum, which had 374 employees and a $68 million budget last year. The foundation gave the museum $27 million vs. $30 million in 2011. Freedom Forum's total 2012 spending last year was $56 million vs. $55 million. It generated only $8 million in revenue, producing the enormous deficit. The largest operating expenditures were employee pensions, salaries and wages.
The museum has fought for a Washington audience where many must-see attractions are free. It
charges $22 for adults, although tickets are sometimes discounted. Admission revenue has barely budged since it opened in 2008. Last year's $7 million was virtually unchanged from 2011.
 |
| Newseum's Washington exterior. |
As with many cultural institutions, it derives most of its revenue from contributions, facilities rental and concessions: $13 million in 2012, according to the tax return.
Its
collection is eclectic, reflecting the breadth of its First Amendment mission:
three-ton chunks of the Berlin Wall, newspaper comics and cartoons, and perhaps its most visible exhibit,
an online collection of newspaper front pages from around the world.
But as the news industry grows more diffuse in the Twitter age, the museum has stretched the bounds of what might advance the foundation's free press ideals. The newest display --
Anchorman: The Exhibit -- is as much a promotion for Paramount's latest comedy as it is about journalism. The museum says the exhibit explores sexism in 1970s newsrooms. Its perhaps unintentionally arch Twitter hashtag:
#stayclassynewseum.
 |
| Presley got star treatment in 2010. |
The exhibit includes props, costumes and footage from 2004's
Anchorman: The Legend of Ron Burgundy, starring
Will Ferrell. Organized with Paramount, it opened Thursday, ahead of Dec. 20's debut of the sequel
Anchorman 2: The Legend Continues. The foundation's website
features a trailer for the movie. Paramount didn't make any payments to the museum,
according to The New York Times.
To be sure, the exhibit isn't the first devoted to an entertainer; in 2010
the subject was Tennessee's adopted son,
Elvis Presley.
A $650 million start
Neuharth, after retiring as Gannett's controversial CEO and chairman, held onto the company's philanthropic arm and installed Overby as chief executive. Founder
Frank E. Gannett originally established the Gannett Foundation in 1935 for the benefit of Red Cross chapters and other needy causes in communities where the newspaper publisher did business.
 |
| Frank Gannett |
Neuharth pressured Gannett to buy back $650 million in company stock that was the entirety of the foundation's endowment, then gave it a new name and mission, transforming it into a global journalism charity.
But in 2000, he and Overby shifted gears, focusing the foundation's money on one project: the museum. A promoter of the First Amendment, the museum also was to be a lasting physical legacy of Neuharth's life and career. Housed in a mammoth 643,000-square foot complex on a $100 million Pennsylvania Avenue parcel in Washington, it also is home to Freedom Forum's headquarters.
Opened years late for a whopping $450 million -- nearly twice initial estimates -- the museum now accounts for virtually all the foundation's annual gifts to non-profits. It wasn't Freedom Forum's first experience with runaway construction spending, however.
In 1994, Overby
negotiated a 17-page settlement with New York's attorney general when the foundation was still incorporated in New York. Overby and Neuharth agreed to curtail what the attorney general called excessive spending on Freedom Forum's first headquarters, such as a $40,000 desk for Neuharth's office. Its provisions effectively remained in force only three years, however.
Neuharth and the other trustees paid $175,000 in restitution to the foundation. He later called the payments "utter nonsense," made simply to avoid a costly court case,
according to Editor & Publisher. "Darts and arrows like this go with the territory for any action-oriented organization," he said.
 |
| A "font-tastic" t-shirt. |
Under the settlement, Neuharth gave the Gannett Foundation name back to the company, which
launched a new one under the same name. It has never returned to its former financial clout. Its most recently released tax return, for 2011, says it made $5.4 million in grants. Administrative overhead totaled only $194,000, however.
Where the original Gannett foundation supported untold numbers of community groups, Freedom Forum is spending down its endowment while the museum's gift shop sells $20
gag t-shirts and
bangle bracelets. The foundation's administrative costs hit $28 million last year -- not including another $28 million for the museum.
But what about Elmira?
The museum's website features a
by-the-numbers breakdown of its operations, such as the weight in pounds of the artifacts moved in for the 2008 reopening (145,460), the height in feet of the building's tallest point (137) and the number of TV studios (2).
Here are some numbers for last year that didn't get mentioned:
- The museum's operating expenses: $185,850 per day.
- Admissions revenue: $19,672 per day.
- Foundation grants to the U.S. Equestrian Team (Jan Neuharth is a horse enthusiast): $1,000.
- Overby's compensation: $475 per hour.
- Grants to non-profit groups in Elmira, N.Y., where in 1906 Frank Gannett started his company: $0.
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