Is NPR practicing moral hazard or am I freerider?

April 8, 2008 6:13 PM

How much money does my local NPR station need to stop all the fundraising drives?

I'd contribute to NPR, but I'd be ticked off that I still had to listen to their fundraising drives. I know, I know. The contribution is to support the content itself. But let's say that I wanted to figure out how much money to donate to my local NPR station so that they'd never have to run a fundraiser ever again.

How much money does my local station raise in a year? How much money does my local station need on hand? If I left them enough money so that they didn't need to do fundraisers, would they stop doing them altogether? Or are NPR listeners doomed to listen to donation solicitation no matter what?

posted by clearlynuts to media & arts (35 comments total)

Not exactly an answer to your question, but apropos: this
posted by qxntpqbbbqxl at 6:25 PM on April 8, 2008 [1 favorite]

Your mouth to Kevin Klose's ears, c-nuts!

(Klose is the NPR President...)

I was suffering through another interminable pledge drive just a few days ago here in Boston when one of the Pledge-Trons mentioned that the local station (WGBH) had to pay $450 USD per hour to NPR for the right to broadcast their programming.
I'm not sure how many hours each day is local vs. the NPR feed, but wildly guessing that they purchase, say, 12 hours a day means that they owe $5400 each day.
Multiplied by a month: $151,200.
By a year: $1,814, 400.
That does not factor in local fees, costs, salaries, equipment, licensing, etc...
No wonder these give-a-thons seem to never cease.
posted by Dizzy at 6:26 PM on April 8, 2008

Assume a 2.5% return on their endowment, they'd need to raise $40M in endowment for every $1M they raise annually.
posted by Good Brain at 6:28 PM on April 8, 2008 [1 favorite]

From this article:

"In the case of KCRW [Los Angeles radio], the cost [to purchase and run NPR content] is nearly $1.2 million a year. In addition, the stations are solely responsible for their own operating costs, which is the bulk of their yearly budget..."

"...it takes about $800 million a year to run NPR and its member stations..."
posted by greenland at 6:28 PM on April 8, 2008

This may sound flippant, but there will never be enough. More money means (according to their logic) they can do more. Better programming. Higher salaries means better quality, right?

So I do believe there is some moral hazard there. I'm a fan of NPR's mission, but not their execution. Too many delicate geniuses.
posted by gjc at 6:49 PM on April 8, 2008

My local station (WRNI) just did their spring fundraiser. Their goal was $60,000. I think they do this twice a year. Does that help?
posted by knave at 6:52 PM on April 8, 2008

In San Fran, they end the pledge drive early once they reach their goal. It's the best motivation to donate.
posted by Gucky at 7:00 PM on April 8, 2008

This is a Chatfilter question. However:

I'd contribute to NPR

Go ahead, but there's a difference between NPR and "my local NPR station" -- they are not the same thing.

You can call it "my local NPR station" if you contribute to it. If you don't, don't call it "my station."

How much do they need? Depends on the station. Are you in Raleigh, NC (guessing by what looks like a ZIP code in your profile)? There are public multiple stations there, so be specific and maybe the question is specifically answerable.

If I left them enough money so that they didn't need to do fundraisers, would they stop doing them altogether?

Obviously, yes. If they "didn't need to" they wouldn't. But I doubt if a single public radio station in the U. S. is so endowed.

Assume a 2.5% return on their endowment.

Why? Most endowments are run with at least a 5% assumed return.

are NPR listeners doomed to listen to donation solicitation no matter what?

Look at it this way: a point made by the CEO of one public station in my area (Alan Chartock of WAMC, Albany, NY) is that that's really the way it should be. The alternatives are that either some Daddy Warbucks or Uncle Sam finances the stations. Either way, the great danger is that the funding comes with strings influencing in some way what the station broadcasts. Only with a large number of small donors are public stations truly independent in a way that no other media are. So pony up, and grin & bear those fund drives.
posted by beagle at 7:00 PM on April 8, 2008 [1 favorite]

Yeah, I'd just take their goal for this fundraiser and extend that out into the future, allowing for inflation, and that will give you an idea of how much you'd need to give.

But if you're just giving them money to pay the bills then it's going to run out someday, and you want it to last forever. So what you need to do is set up an endowment where the annual interest/earnings will provide the amount they'd need while the principal amount remains untouched.
posted by winston at 7:03 PM on April 8, 2008

It depends on the station and how many listeners there are and the cume.
posted by melodykramer at 7:05 PM on April 8, 2008

Here's what puzzles me: Our local NPR affiliates (WOI and KUNI - Iowa - great stations) run little "ads" from their sponsors. Sometimes it's a local restaurant, law firm, medical practice, etc... All of these are "for profit" businesses. But fairly regularly they run the same sort of blurb from local non-profits who also operate on charitable contributions. The blurbs are along the lines of "Support for [station name] comes from the [charitable organization], bringing/supporting the arts in central Iowa" (that's the general gist of it).

My question is why does one non-profit provide financial support to another non-profit? If I'm a contributor to non-profit X, do I really want my donations being funneled on to Y?

I can understand contributions from large philanthropic organizations (Gates Foundation, Ford Foundation, etc..), but from why would one small (relatively) local non-profit give financial support to another?

This has always struck me as odd.
posted by webhund at 7:05 PM on April 8, 2008

I can understand contributions from large philanthropic organizations (Gates Foundation, Ford Foundation, etc..), but from why would one small (relatively) local non-profit give financial support to another?

To reach out to a new audience of potentially supporters for their cause? Like any other form of advertising...
posted by knave at 7:24 PM on April 8, 2008

webhund: nonprofits benefit from advertising too, so think of their sponsorship of NPR as a marketing expense like taking an ad out in a magazine or something. The demographics are probably pretty appealing..
posted by kanuck at 7:28 PM on April 8, 2008

why would one small (relatively) local non-profit give financial support to another?

This isn't just a grant—I don't think you would find this exchange of nonprofit dollars if there weren't a marketing benefit that comes out of it. What knave said.
posted by grouse at 7:28 PM on April 8, 2008

GJC is right: if they have more money, they'll find more things to spend it on. There won't ever be a level for any kind of institution like that where they say, "Yeah, that's enough, we don't need any more."

Harvard's endowment is more than 25 billion dollars, but they still do fundraising.
posted by Class Goat at 7:48 PM on April 8, 2008

Another question that you don't ask is: Is my well-funded NPR station in a big, urban, liberal market helping out a smaller, less-well funded station in a rural and conservative southern town? Kinda like how red states complain about "government handouts" but are supported by big blue states picking up the welfare and medicare costs of those states. ... I imagine that this definitely happens. Every station kicks upstairs to the National NPR offices and they re-distribute the wealth a bit. This is why tons of cities have an NPR affiliate (even if they, in my experience, don't get every NPR show -- they can't afford it).
posted by zpousman at 7:59 PM on April 8, 2008

If you lived in the northeast and listened to WAMC you would love the fund drive.

They raise about six hundred thousand dollars twice a year to run the station. It never takes more than a week. They have incredible on air people and give away great stuff and are so entertaining. WAMC is a treasure.

I've driven in different parts of the country and heard very lame fund drives though, so no wonder it takes so long for some.
posted by starfish at 8:07 PM on April 8, 2008

The station in your locality (not your station, as beagle points out, since you're not a member) pays for its NPR, PRI, et al. programming based on how many listeners it's calculated to have. I'm not sure if that's based on Arbitron numbers or a different source, but the point is, it's a sliding scale. As their market grows, their costs increase, since they are assumed to have a larger pool of listeners to appeal to for support.

Usually when an organism finds itself capable of growth or expansion, it does so. That's just the damned evolutionary spirit, unfortunately. So, a successful public radio station will add programming, attract more listeners, be charged a higher price for said programming, etc. etc. until such time as it achieves an equilibrium. Partly that's going to depend on the size of the local population, its politics, level of education, etc.

I agree that this is chatfilter, given the unknowns, but I believe that the answer is "yes," it is possible to meet all of a station's financial needs forever. It would take gobs and gobs and gobs of money to ensure that they had a sufficient endowment, and probably a few paid oversight positions to ensure that the endowment was properly cared for, but I'll bet you could do it. Or rather, it could be done. Whether you have that kind of earning potential I'll leave to you to decide.

Of course, if you're feeling so generous as to want to donate untold millions on your deathbed, I would suggest to you that the journey of a thousand miles begins with a single step. Why not call in a $60 pledge? I'm sure the station will be happy to deduct it from your bank account in venti latte-sized $5 increments, and you will doubtless receive a bumper sticker or keychain to remind you of your recent largesse. Then you can really feel self-righteous when the next pledge-a-thon rolls around.
posted by mumkin at 8:26 PM on April 8, 2008

My question is why does one non-profit provide financial support to another non-profit? If I'm a contributor to non-profit X, do I really want my donations being funneled on to Y?

There's no exchange of money. Most commonly with public radio and TV stations, nonprofits trade "in-kind" gifts. For instance, my museum runs underwriting (not thought of as sponsorship but, more broadly, direct support) on the state public radio stations and our local LPFM. In return, we make available free ads in our event programs, list them as event supporters, and exchange event tickets for giveaway as premiums. In the vast majority of cases, nonprofits are not paying cash for the underwriting you hear on public owned media outlets.

The argument that 'there will never be enough' is, I suppose, somewhat true but is not necessarily a bad thing. The organizations exist to deliver mission, and with more resources they will deliver more of it. That is their purpose. It might mean building a new transmission tower to reach more listeners, creating more original programming, branching out with educational efforts - but yes, the more support the audience gives them, the more they'll be able to do for the audience. Unlike with private business, any additional income does not migrate to shareholder profits, it's required by law to be reinvested in the project. I don't see that as a bad thing.
posted by Miko at 9:04 PM on April 8, 2008

Apparently, $5 million wasn't enough for my local station, since they still do fundraising drives, nor was the $200 million she (Joan Kroc) gave NPR itself!
I think the "never enough" answer is correct--they will just try to do more things, and do them better.
posted by exceptinsects at 9:23 PM on April 8, 2008

Okay, here's the thing.

Stations don't want this. At least at my station, the budget is split roughly 50/50 (I work far from the numbers department, so the details are fuzzy) between listener donations and underwriting (the little "ads.") This will of course vary wildly between stations, but so do costs - as has been mentioned above, costs (at least for NPR programming) are proportional to listenership.

The reason stations don't want large endowments is because they don't want to be seen as being set apart from the community - they want to be "your public radio." This is why they have Town Halls, open steering committee meetings, and volunteer positions. They want to have the "two-way conversation," rather than just having a lot of passive listeners.

So. In short, you're a freerider. Sadly, you're in the majority (by far). You want the campaigns to end? Donate. You want to feel really embarrassed? Figure out what their weekly listenership is (from Arbitron), and divide the dollar amount by that. At my station it works out to about $2/listener, twice a year. Please try and tell me you don't get that much worth out of the station you listen to.

(on preview - Notably, the $8 million Joan Croc gave to KPBS went towards the operation of both a Television and a Radio station. Also, the $200 million she gave NPR was one of, if not the primary, source(s) of funding for the construction of their studios in Culver City, CA.)
posted by god hates math at 9:32 PM on April 8, 2008

Assuming that your local NPR station is WUNC, the answer that you seek is about $8M per year and thus somewhere in the rough vicinity of $150M as an endowment (depending on the rate of return and on the rate at which costs increase). WUNC has their annual financial statements available on their website, though they seem to be quite slow in posting them, so that number is from 2006. Though it might take a little digging or a phone call in some cases, you should be able to turn up financial statements for any NPR station that you'd care to research.
posted by ssg at 10:14 PM on April 8, 2008

The sad thing is that shows that provide content to NPR stations do not have the right to fund raise on those stations, except to say "Thank you" to supporters. This is one of the reason most programs have institutional endowments or are looking for listeners to donate individually. It's the reason why many great shows where the employee producers don't make a fortune; I have worked all over and have never made anything above $37,000 a year in public radio. It's also the reason why great shows, like Open Source, Legally Speaking, Common Ground, and others have gone out of business: when institutional resources dry up, they are often completely unprepared to make the jump to individual donations to sustain regular production and salary levels. I have moved into membership and donor development for non-profits specifically because of this calamity. Great radio programming outside of the station-centered mainstream is lost because of bad fund planning.

If you support public radio, please consider the shows that do their work without the umbrella of NPR or PRI. There are many and they need your support.
posted by parmanparman at 10:17 PM on April 8, 2008

Whoops! Legally Speaking is actually Justice Talking, which folded six weeks ago. And my third sentence should say: "It's the reason why many great shows where the employee producers don't make a fortune are done at a sort of mission level, where the employees take to the program like a sculptor to a block of marble; each week we are trying to come out with the best programming for the least amount of money - sometimes only if it brings a smile, a shiver, or a tear."
posted by parmanparman at 10:21 PM on April 8, 2008

The fact is that many public radio stations have cut back their membership drives dramatically as they have increased efficiency in direct mail and major donors.

I am a public radio producer, and the largest station that carries my show, WNYC in New York, doesn't use my pledge shows at all -- they don't pledge on weekends.

Ultimately, the reason stations use pledge drives is that it's the most efficient way to reach their listeners, upon whom they rely for support. Stations don't love asking for money, and they sure don't like interrupting their programming, but it's very difficult to get around.

There are just some freeloaders out there who won't give their fair share.

Cough, cough cough.

Ultimately, public radio still uses dramatically less time for non-content stuff than almost any other (professional) free medium. On public radio, you get maybe 1-3 minutes per hour of underwriting announcements, which are very distinct from commercials. You get 2-4 weeks a year with 10-20 minutes per hour devoted to fundraising. On commercial radio, you get 20 minutes of ads every hour, every week of the year.

And NPR (the network, not the stations) has used the Kroc money and the additional money from increased listenership to dramatically expand their newsgathering operations over the past 15 years or so. They used to joke that they'd report the news a day late and call it "analysis," but these days they are a formidable news operation, certainly as formidable as anyone in broadcast (only competitor, really, is CNN), and right up there with the best newspapers.

And to be clear: I am not affiliated with NPR in any way -- in fact, their programming is my competition.

Also: disclaimer: my show is underwritten in part by... drumroll... Metafilter.
posted by YoungAmerican at 10:38 PM on April 8, 2008 [1 favorite]

Also: w/r/t announcements for non-profits on public radio.

In many cases, they're free. In almost all, the non-profit paid much less than a for-profit would have.
posted by YoungAmerican at 10:39 PM on April 8, 2008

If you support public radio, please consider the shows that do their work without the umbrella of NPR or PRI. There are many and they need your support.

My show is under the (distribution) umbrella of PRI, but is completely independently owned and operated. And thus far, I haven't yet made more than $20K in a year, including direct listener donations.
posted by YoungAmerican at 10:41 PM on April 8, 2008 [1 favorite]

For those who think the money's going down some sort of black hole, consider the stats - NPR programming has delivered a pretty good ROI over the last two decades. The fact that you can hear the pledge drives and complain about them reflects the fact that you're listening which reflects the fact that you have a local affiliate to listen to and that it can afford the nationally distributed programming. Their growth and success have been very impressive.

From 1999 through 2004, listenership increased by about 66%. This increase may have been the result of any of a number of factors, including audience interest in coverage of the September 11 attacks and the subsequent military actions, a general lack of interest in other terrestrial radio outlets, alienation from television and radio media seen as increasingly biased, and an increase in NPR news and talk programming (instead of jazz or classical music). NPR attracted these new listeners at the same time that the size of the overall radio audience in the United States was decreasing rapidly as people abandoned the medium in favor of MP3 players.

NPR's $200 million grant from Joan Kroc, in context:

Joan Kroc Grant

On November 6, 2003, NPR was given over US$225 million from the estate of the late Joan B. Kroc, the widow of Ray Kroc, founder of McDonald's Corporation. This was a record—the largest monetary gift ever to a cultural institution.[10] For context, the 2003 annual budget of NPR was US$101 million. In 2004 that number increased by over 50% to US$153 million due to the Kroc gift, as the bequest required that US$34 million be spent to shore up operating reserves.[11] NPR has dedicated the earnings from the remainder of the bequest to expanding its news staff and reducing some member stations' fees. The 2005 budget was about US$120 million.

posted by Miko at 5:40 AM on April 9, 2008

ssg: WUNC has their annual financial statements available on their website, though they seem to be quite slow in posting them, so that number is from 2006.

2006 is reasonably the most recent statement they should have posted on their site; our own 2007 tax returns are not due until next week. Financials for all nonprofits are publicly available via Guidestar (registration required, but it's free); most larger nonprofits file for an extension which means their statements for the prior year don't get completed and posted until October.
posted by beagle at 6:39 AM on April 9, 2008

Also, some nonprofits use a fiscal year that ends March 31. For instance, at my job, we just closed Fiscal 2007. The financials were reviewed by the board last night and are only now elegible to be posted and shared.
posted by Miko at 7:51 AM on April 9, 2008

For WNYC in New York, NY, according to The New York Times the annual operating budget in 2006 was $29.7 million, of which $8.5 million was raised from corporate underwriters. In addition, at that time, WNYC was conducting a capital campaign to raise $57.5 million to lease, construct and operate its new studio facility and create a $12.5 million fund to create new programming.
posted by andrewraff at 8:08 AM on April 9, 2008

Dang, 29.7 mil? I gotta get more money outta them.
posted by YoungAmerican at 8:59 AM on April 9, 2008

As others are pointing out, NPR is not really the issue - it is a content-producing organization that your local radio station, a separate and independent entity, is a member of - giving them limited governance influence and access to programming in exchange for membership and programming fees. Likewise, they may pay for access to programming from the other content producing networks, Public Radio International and American Public Media, and independent producers. While any of these entities will be happy to talk to you about major gifts, it would not have an impact on how your local station conducts its fund drives.

I'm quite certain the type of deal you describe could ever happen. Organizations simply don't think that way - if they get a major new funding source, they are going to look to expand their operations in ways that support their mission, they're not going to just stop accessing their other revenue sources. Public radio stations run fund drives because they work. Individual membership-type support is a huge component of public radio funding and nothing will get rid of pledge drives.
posted by nanojath at 10:50 AM on April 9, 2008

And beyond all that, as someone pointed out upthread, they probably will always stump for membership because they are, truly, a public organization. Like any club, made up of members who elect officers to run things. In the case of public radio stations, membership is open to anyone - anyone! - and the idea is that members are working together to create an enterprise that will benefit them and their communities directly.

I volunteer at an LP public/community station at which the grassroots structure is very visible. No one gets paid. We have two membership drives a year to pay rent and buy equipment and postage and stuff. You bet your sweet bippy that we have plans to grow and do even better things to serve the community. As long as we can keep building membership, we can do better things. Eventually, we'll have enough cash on hand to hire some staff - a general manager, a development director, a volunteer coordinator - to do jobs we're doing as volunteers right now. This is the way most local public radio stations got started. The membership model is essential because, in a very real way, the members are the station. Even if another funding source showed up that could cover all expenses, they'd still need to have membership because it's in the bylaws, it's in the structure, it's in the history, it's the raison d'etre. Members are the 'public' in public radio.
posted by Miko at 11:08 AM on April 9, 2008

And thus far, I haven't yet made more than $20K in a year, including direct listener donations.

Proof-positive that there is no justice in this miserable world. Damn.

clearlynuts: support the decent men and women who sacrifice material pleasures in order to make your radiophonic edification possible. Would you stiff your barista for a tip? Because it sounds like they get paid just about as well, while providing a rather nobler service (not baristaist).
posted by mumkin at 3:03 PM on April 9, 2008