Public radio

Friends of WLRN board defends its fund-raising budget

 

dsmiley@MiamiHerald.com

When it comes to drumming up dollars to keep public television and radio on the South Florida airwaves, Michael Peyton is a major rainmaker.

The chief underwriter for the fund-raising arm of WLRN radio and TV consults his corporate contacts each year and brings in millions in sponsorships to the Friends of WLRN, a non-profit that through underwriting and pledge drives helps the stations beam programs like Curious George and the Diane Rehm Show to more than a million fans from Palm Beach to Key West.

For his efforts, Peyton is paid well by Friends. The organization lists his compensation, including bonuses, at close to $400,000 each year — a sum that is among several issues that in recent months have drawn increasing scrutiny from the Miami-Dade School Board, which owns and licenses the stations.

“I appreciate the work that Friends does in term of fund-raising, but I think that level of work can be done in a more modest way,” Superintendent Alberto Carvalho said recently. “I thought we had dealt with this issue, particularly salary levels, three or four years ago.”

Sniping over how Friends of WLRN spends its millions is nothing new. For years, the School Board and the nonprofit have sparred over everything from salaries and bylaws to licensing revenues while together still managing to support and produce award-winning content. Of late, relations have again grown tense — a development that the chairman of Friends finds “mind-boggling” and insists is based on a lack of understanding of the group’s finances.

Last month, School Board Chairwoman Perla Tabares Hantman requested quarterly reports, saying the organization’s doings have long been and remain “a mystery.” Dorothy Bendross-Mindingall, who sits on both the School Board and the Friends of WLRN board of directors, said “I share those same concerns.”

Compounding the issue: Friends’ IRS Form 990s — typically used as a measuring stick for charities — suggest that for every dollar raised by the organization, less than half goes to the stations. Revenues have tripled over the last 10 years, but the amount of stated “grants” provided to WLRN have remained flat at about $3.5 million.

“It’s hard to just take one snapshot and just say ‘Aha, there’s a bad situation.’ But there seems to be less money than is ideal going toward programming,” said Doug White, a Columbia professor and consultant who has written books on the ethics of charitable fund-raising.

But Michael Kreitzer, Friends’ chairman, said in actuality about 72 percent of every dollar raised by Friends goes to either the radio or TV station — a larger cut than the 70 percent mark identified by the Better Business Bureau as a “best practice” for charitable organizations. Kreitzer said an even greater cut from individual pledges goes toward the stations because Friends’ expenses are largely related to corporate fund-raising.

He said attempting to draw conclusions off Friends’ IRS returns can be fraught with errors. On the form — created for thousands of charities of different kinds around the country — expenses and contributions aren’t broken down the way they typically would be by a public broadcasting station, he said.

For instance, Friends lists close to $1 million in “other salaries and wages” as fund-raising costs on the IRS form. But Kreitzer said $750,000 of that expense is actually incurred by an affiliate, South Florida Public Media Co., which pays for the WLRN reporters who provide news content on the airwaves.

The Miami Herald and WLRN have a news sharing partnership, and the Herald provides studio and desk space for WLRN Herald News staff in its Doral newsroom.

Kreitzer said there’s another muddied line item: roughly $2 million raised by leasing the “excess capacity,” or unused satellite circuits, of Educational Services Broadband frequencies.

Kreitzer said those dollars go into an endowment, which he said provides a minimum 5 percent annual dividends to the stations. The organization last year had $8.6 million in investments, which help provide stability to an organization that mostly relies on contributions from companies and donors.

On the IRS form, dollars from the long-term lease agreement, in terms of revenues, are reflected as “royalties.” But as for the expense of those dollars, the form isn’t clear. Kreitzer said the money is ultimately reflected as “revenue less expenses.”

“If you looked at our financial statements you’d come to understand that of the $9 million in revenue we generated in 2012, by way of contributions, we returned almost $6.5 million of that back to the radio and television station,” Kreitzer said. “The service the IRS is trying to create with a document like that is kind of like a square that everyone is trying to get a round peg into.”

He said the same issues persist for required filings with Florida’s Department of Agriculture, which also suggest low percentages of funds going from Friends of WLRN to “program services.”

The most recent audits for the radio and TV stations, which combined list about $15 million in annual expenses, actually show Friends’ contributions at an even higher dollar value than what Kreitzer lists. When it comes to radio, by far the more expensive of the two operations, Friends provides more than 80 percent of its income. Other sources of WLRN revenue include the Corporation for Public Broadcasting and the school district, which according to a spokesman spent about $2 million on WLRN last year.

White, the expert on charities, said Kreitzer’s explanations make sense, though he thought Friends of WLRN could be more explicit.

“I’m all for criticizing charities over their expenditures but I don’t feel the 990 is the best way to do that,” he said. “The 990 can be a really misleading document.”

White also noted that “friends” organizations play a role in keeping separation from political bodies. He said the school board, were it to have complete say over WLRN’s finances, could be tempted to shift revenues away from the stations and into school board coffers depending on who is in power.

Still, Carvalho says the most recent list of executive salaries continues to raise questions about whether more money could be going to the stations. Carvalho, whose own salary is $318,000, said four years ago that Friends’ executive salaries -- which were lower at the time than they are today -- were “tantamount to insulting.” He said Wednesday that he’s “disappointed, to say the least” that the compensation levels have only grown since then.

Miami New Times recently raised a similar criticism, noting that Peyton earns $400,000 while “on-air employees face cutbacks.”

Kreitzer, however, pointed out that Peyton’s pay is actually based on a $60,000 salary plus commission. The more money he raises, the more pay he receives. And Peyton, who didn’t return calls, raises more than $2 million each year, Kreitzer said — making him key to the station’s success in a competitive fund-raising environment.

Kreitzer stressed that Peyton’s commissions are based off corporate underwriting — not pledges from individuals.

“He’s one of most successful nonprofit fundraisers in this market, and in order to keep a quality talent like Michael Peyton you have to compensate him fairly,” said Kreitzer. “We could strive for mediocrity and hire less successful underwriters and probably pay them less money but why would we cut off our nose despite our face?”

For now, despite the barbs, relations between Friends and the School Board, which have co-existed since 1974, don’t appear to be as acrimonious as in the past. Four years ago, the two sides were locked in what Carvalho has described as “war” over money and independence. At the time, Carvalho pushed to oust then-Friends CEO Rick Lewis and slammed the organization for quietly removing powers of the superintendent over the Friends board — something he’s still upset about.

Board members at one point questioned whether Friends of WLRN was sitting on millions due to the TV and radio stations and threatened “legal action,” but Carvalho said recently that those issues were resolved.

Kreitzer said push back from the district “always comes as a surprise.” He said the organization will continue to file annual audits with the school board, and remain transparent. He said they’ll cooperate with efforts for quarterly reports to the school board, which are supposed to come from Bendross-Mindingall.

“We’re arms wide open,” he said.

Whether the dispute even matters to WLRN’s 1 million listeners and viewers remains to be seen. For Betty Skipp, who has listened to WLRN FM-91.3 for a quarter-century, it’s meaningless. She said she and her husband donate a few hundred dollars each year, and she has no concerns about where her money goes.

“I don’t think they’re sitting behind closed doors and no one knows what the CEO is being paid. “I could look it up, you know what I mean?” she said. “I love having public radio.”

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