Does the $400K Bequest Belong to KPFA?

WHAT MY OCTOBER
DIRECTOR
S INSPECTION REVEALED

By Janet Kobren,

In mid-October 2015 after numerous inquiries from KPFA members regarding the two large bequests made to KPFA amounting to a total of $958,000, I decided to perform a director’s inspection at KPFA to look into the bequest documents.LastWill

Note that the bequests had been reported at the April 2015 KPFA Local Station Board meeting. SaveKPFA’s LSB member Margy Wilkinson was serving as PNB chair and interim Executive Director at the time. KPFA General Manager Quincy McCoy’s April and May 2015 General Manager’s Report reflected these bequests (see “A Partial Financial Landscape of KPFA”.)

As a result of my director’s inspection I learned, among other things, that:

1)   The will of the Hall Trust listed $400,000 to be distributed to PACIFICA FOUNDATION RADIO*,

2)   The estate’s check was made out for this amount to pay to the order of PACIFICA FOUNDATION RADIO and was deposited in KPFA’s bank account (albeit one of Pacifica Foundation’s DBA’s** is KPFA), and

3)   There was no reference to KPFA in the will or on the check.

I also learned that the check for the other bequest was specifically written to KPFA for $558,000 and correctly deposited in KPFA’s bank account.

This discrepancy caused me to explore the Hall Trust further, discovering some gaps in information with regards to how the Hall Trust bequest had been handled internally. The bequest that had been spelled out in the bequest document and the check to go to PACIFICA FOUNDATION RADIO, rather than going to or through a Pacifica Foundation bank account, was deposited directly into KPFA’s bank account.

I meticulously chronicled this matter with substantial source documentation that included references to and actions by individual employees and which also revealed other individuals and organizations named in the bequest documents, all of which would have precluded this matter from being addressed in an open session. I had suspected there was more to be learned regarding this matter, but absent any other documentation provided even after requesting additional information that would have filled in some of the gaps, I was motivated by my fiduciary duties as a Pacifica National Board Director to bring the matter to the PNB as soon as possible. There was some back and forth within the PNB by email but no additional documentation was provided. So I presented the chronology/analysis that I had prepared to the PNB prior to its October 29, 2015 PNB closed session meeting and made the following motion during the meeting:

That by the end of day November 4, 2015 the KPFA GM and the interim Controller:

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  1. Produce an accounting with documentation to the PNB of how the Hall Trust bequest has been allocated and spent to date, including what KPFA transferred to Pacifica units – KPFT, KPFK, PRA, WBAI and election deposit shortages and the remaining balance, if any; and
  2. If a remaining balance exists, transfer it to the PNO unit or other Pacifica units as appropriate; and
  3. Based on the accounting, revise the plan to repay KPFA; and
  4. Based on the accounting, revise the KPFA and PNO budgets accordingly.

This is how the vote went:

Voting YES: Teresa Allen (KPFT), Rodrigo Argueta (KPFK), Lydia Brazon (KPFK), Jim Brown (WPFW), Stephen Brown (WBAI), Adriana Casenave (KPFT), Janet Coleman (WBAI), Benito Diaz (WPFW), Janet Kobren (KPFA), Janis Lane-Ewart (KFAI Affiliate), Lawrence Reyes (KPFK)

Voting NO: Brian Edwards-Tiekert (KPFA), George Reiter (KPFT), Cerene Roberts (WBAI), Pete Tucker (WPFW), Margy Wilkinson (KPFA)

ABSTENSIONS: None

PRESENT NOT VOTING: Robert Mark (KPFT), Tony Norman (WPFW)

The tally came to: 11-YES, 5-NO, 0 ABSTENSIONS, 2-PRESENT NOT VOTING

The motion passed handily and was included in the report-out of the executive session.

The main argument against my motion, chiefly by those directors who have a vested interest in KPFA, included a claim that since the snail mail address of an individual whose name was similar to but not the same as the name spelled out in the Hall Trust documents, someone who had donated a total of $1,745 between 1990 and 2014 (which by the way was way less than 1% of $400K) was in the North Bay and within the KPFA “signal area”, it was the “intent” of the donor to bequeath the $400K to KPFA, and not the Pacifica Foundation, even though the will and the check had spelled out PACIFICA FOUNDATION RADIO on both, with no reference to KPFA.

Janet Kobren at a protest at the San Leandro Walmart, 2013

Janet Kobren (with green hand) at a protest at the San Leandro Walmart, 2013

To me this was an attempt by some within Pacifica to interpret the intent of the donor, and there is no way, short of a seance, to determine the donor’s intent beyond that specified in her will.

Many questions remain, among which are the following: Was SaveKPFA’s influence through the then PNB chair/iED Margy Wilkinson used to make the interest of the Pacifica Foundation network to solely benefit SaveKPFA? 

To what extent does a financially weakened Pacifica Foundation, possibly intentionally starved to facilitate its bankruptcy, benefit a private entity, the now not-so-secret KPFA Foundation?

And, how far will Brian Edwards-Tiekert, the SaveKPFA, KPFA LSB member, PNB Director and chair of the PNB National Finance Committee (aka the PNB treasurer) go through motion after motion to attempt to get proposals passed to “capture” KPFA’s license for the benefit of an undemocratic, private entity?

KPFA has transferred approximately $310,000 of the two bequests to various Pacifica units to compensate for network-wide shortages at WBAI, KPFT, KPFK, WPFW, PRA, and PNO (see the KPFA General Manager’s April and May 2015 Report here),

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* Between February 26, 2013 and January 20, 2015, the “Pacifica Foundation” name had been captured by an entity in New York during which Pacifica used the name “Pacifica Foundation Radio” until recapturing the “Pacifica Foundation” name back on April 9, 2015.

** DBA = Doing Business As.  A DBA is also sometimes referred to as a fictitious business name. In the case of the Pacifica Foundation, it is the Pacifica Foundation, not the fictitious name, that is the entity conducting any business in the name of a DBA.

 

♦♦♦♦

SEE MORE INFORMATION AND SUPPORTING DOCUMENTATION HERE A Partial Financial Landscape of KPFA

November 3, 2015

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Bringing Peace to KPFA

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By Akio Tanaka 10-15-15
[KPFA LSB Member 2006-2012]

 

Underlying Problems
Whenever there is a conflict, there is always an escalation in rhetoric, such as the divisive and inflammatory charge a few years ago that the Pacifica National Office engaged in union busting, and the labeling of volunteers who worked on the Morning Mix as scabs. We should avoid getting caught up in rhetoric and address real problems and concerns.

The underlying problem is financial. The trauma of the layoffs in 2010 was the consequence of the station increasing the payroll by 140% between 2000 and 2009. Even with the cuts made in 2010, income has not kept up with the expenses.

AndresSoto

Andrés Soto

One area of friction is programming. It stands to reason that a trade union looking after the financial security of its members will prefer programming which appeals to a more affluent audience. But the mission of Pacifica is to be the commons of the airwaves, to represent a broader and more diverse community, to include marginalized and under-represented voices.   (Lew Hill, the founder of Pacifica, was a conscientious objector. One program exemplifying this diversity – and which saved KPFA money — was the Morning Mix, which included members of the local activist community, like Peter Phillips of Project Censored, Andres Soto of Richmond Progressive Alliance, and the well-produced “Poor News” and “Strike Debt” segments. However, in 2014 it was inexplicably replaced by a show produced in L.A. rather than being supported and improved by KPFA paid staff. (Paid staff member Davey D did support this show.)

An area of friction is the working relationship between paid and unpaid staff. Originally, both were represented by one union. In 1996, it was replaced by a union which only represented the paid staff. This created a class system resulting in an uneasy working relationship between the paid and the unpaid staff.

Possible Solutions

So what to do with these conflicting needs and interests? How does a union look after the financial security of its members in a non-profit organization that relies on donations by listeners and must live within a balanced budget?

The management and the union should work out a staffing level that is sustainable over the economic ups and downs, and avoid the temptation to add more paid staff during the economic boom times as happened in 2001-2006. Achieving a sustainable paid staffing level is a challenge, but it would help address the main source of tension. It could curtail the seemingly endless appeal for funds.

The primary task of the station should be to fulfill the mission of Pacifica.

It is important to note that KPFA has always relied on a large number of volunteers (e.g. Alan Watts), who produce the majority of programming. At KPFA there simply is not enough money to pay all those who contribute to the station. Progressive organizations like KPFA should have one all-inclusive union for everyone who works at the station. While the notion of workers’ rights resonates to all within the progressive community, it must be remembered that it is about respecting and honoring ALL workers.

Instead of taking sides, we as listeners should encourage the paid and unpaid staff to work together and help each other to produce the best in progressive radio. It is time for the staff, paid and unpaid, and for the listeners to embrace the democratic victory that was won in the legal and street battles of 1999-2001. It is time to stop dividing the station.

13 Years of KPFA Finances

 

 

  1. Listener Support:

The audited financials show that steep decline in Listener Support occurred between 2006 and 2009 before cuts were made in 2010. (Adjusted for inflation, since 2010, Listener Support is back to the 2000 level, irrespective of the morning programming line-up.)

  1. Salary and Benefits:

            The audited financials show that between 2002 and 2006, the station added way too many people (the payroll more than doubled), and between 2006 and 2010, the station, understandably, did not address the steep decline in Listener Support. By the fall of 2010, the station was in danger of insolvency, which is the only reason that the Pacifica National Office stepped in, to bring expenses in line with income. (Adjusted for inflation, even with the cuts that were made in 2010, the current Salaries and Benefits are still above the 2000 level.)

  1. Central Services:

            Central Services pay for network administrative services like FCC licenses, audit, insurance, legal, Pacifica archives, and national programming like Democracy Now! (Adjusted for inflation, since 2010, Central Services has been below the 2000 level.)

 

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“SaveKPFA” Squanders $600 Thousand Bucks

by Adrienne Lauby

Something remarkable happened earlier this year.   Two devoted KPFA listeners made bequests to KPFA in their wills totaling nine hundred and fifty-eight thousand dollars — nearly a million greenbacks. While these unexpected gifts allowed our sister station KPFT to finally replace their failing transmitter and made some improvements in KPFA’s building, most of the money vanished down a rabbit hole in routine salary expenses.2678453389_b997dd3496

It was remarkable to have such generous gifts. It was also remarkable that the SaveKPFA-led governing board allowed the money to disappear so quickly.

Here’s the details.

An Unrealistic Budget

The local station board adopted KPFA’s 2015 budget a year ago in the fall of 2014.   In what has become a yearly ritual, United for Community Radio board member, Janet Kobren, criticized the budget as unrealistic. The Save KPFA board members, as usual, claimed that the budget was reasonable because the projected expenses would be covered by an increase in fund drive income.

Why, one asks, was it reasonable when, KPFA subscriber numbers are decreasing? In only three years, KPFA’s subscriber numbers have dropped by 1800 individuals. And, what was the projection based on, given that fund drive numbers have dropped consistently over the last decade?

With the strong Save KPFA majority, the board passed the budget with the anticipated fantasy income intact.

That budget was again questioned when it went to the Pacifica National Board for approval.   The National Finance Committee asked the same questions that were asked by Janet Kobren on the local level. With several stations in the network unable to meet a payroll in the previous year and facing other financial problems, the Finance Committee wasn’t in the mood for fantasies. They said that KPFA’s income projections were over-estimated by at least $250 thousand dollars (1) and told General Manager Quincy McCoy to make cuts to bring that figure down.

Standard budget practices are contentious at KPFA. Generally, an organization makes its budget carefully, setting out the expenses it knows it can meet, and happily accommodating any additional money in a quarterly budget review process.

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At KPFA, most of the expenses are fixed. There’s no wiggle room in the electric bill and license fees, and only four managers do the administration and engineering work of a 300 person staff.  To stay within amount of money donated by the listeners, KPFA would have to lay off some of its union staff members.  Under SaveKPFA’s board majority and union leadership, this has become an unthinkable taboo.

The Bequests

Near the beginning of the year, $958 thousand in unexpected bequest income was greeted with great pleasure. For one thing, it alleviated General Manager Quincy McCoy’s immediate problem. As I said, the national board had told him to make cuts and later added that any cuts should include management. In addition, McCoy knew that after the spring fund drive, it would be obvious he didn’t have the cash to make his payroll.

McCoy knew that layoffs that would be greeted with a storm of public criticism and perhaps even the outright rebellion faced by former Pacifica Executive Director, Arlene Engelhardt, when she ordered tough cuts to save KPFA from bankruptcy in 2010. Nevertheless, McCoy began union negotiations to make the necessary cuts.

When news of the unexpected bequests arrived, McCoy not only cancelled the union negotiations but also cancelled two fund drives.   Save KPFA’s board members and staff representatives tacitly agreed with him. McCoy went on air to proclaim the fund drive cancellation and many paid staff members also made triumphant on-air announcements. They all spoke in glowing terms about “KPFA’s promise to the listeners” claiming that KPFA had cancelled the summer drive because listeners had asked for it.

There was a vague thank you for those who include KPFA in their wills in an announcement encouraging more listeners to leave some of their cash to KFPA. But, no one made it clear that the summer fund drive was cancelled because of the generosity and love of two deceased listeners.

This emotional manipulation of KPFA’s listeners hit a new propaganda low in the station that claims to “tell truth to power.”

How the Money was Spent

General manager, Quincy McCoy presented his plans for spending the money to the local station board after that spending was in progress. United for Community Radio representatives reminded the board that it is their responsibility to set budgets and asked that there be a discussion with Mr. McCoy about his plans for the money.   The SaveKPFA majority did not agree and managed the meetings to keep such a discussion off the agenda.

Here’s numbers the General Manager gave to the local board (rounded to the nearest hundred):

$119,000 help for other stations in the network2
$110,250 building improvements (carpeting, elevator repair, painting)

$30,000 new membership software
$223,400 routine payments (National Office and Pacifica Archives)3
$350,000 salaries4

$134,500 lost income due to cancelled fund drives

In short, only $260 thousand dollars of these incredible gifts were spent on one-time expenses and improvements.  $573 thousand dollars were frittered away on expenses that should have been covered by KPFA’s usual fundraising.

A Missed Opportunity

It’s fairly standard financial practice to sequester unexpected and large gifts.   It’s Bookkeeping 101 that large gifts should not be used for routine expenses.  To use gifts to push tough decisions down the road creates an unrealistic expectation that expenses can and will remain high.  It’s far better to make the tough decisions based on the routine income and use the major money for something that will strengthen the organization over the long haul.

Here’s a few things this money was NOT used for:

  1. A major outreach effort to new, more diverse and younger audiences.
  2. An improvement in KPFA’s digital and social media presence in order to connect with audiences who are migrating to wireless and web devices.
  3. A revamp of the program grid with new programs, hosts and formats.
  4. Remodeling work on the crumbling and currently uninhabitable property owned by KPFA on the corner of Martin Luther King Jr. Way and Berkeley Way.

These projects, many of them proposed as no-brainers by multiple listeners and staff members, have been on the back burner for years. Managers haven’t been able to find the money and staff time to spearhead anything beyond the next payroll.

Large gifts should be used for large projects, items that can’t be funded with the usual income. They should be used to initiate well-planned projects that might develop greater income, larger audience or be of use to listeners over the long haul. Naturally, most organizations are tempted to use an unexpected gift to relieve some immediate or chronic stress. But generations of bookkeepers and accountants have taught us that is the fast road to regret. If an organization receives a large gift, it should leave something tangible in place when it is gone.

Under Save KPFA and Quincy McCoy’s watch, these lessons have yet to be learned. Next year, unless more generous and devoted people die, KPFA will return to the grind of one fund drive after another, with the energy of paid and unpaid staff alike tied up in, (have I said this enough?) an unsustainable level of staffing.

10-18-15

  1. Link to National Finance Committee meeting.  Begin listening at 9:40 to hear the resolution.
  2.  $100 thousand was loaned to KPFT in Houston who had been operating at 30-50% of its authorized power (100 kilowatts) for almost three years in order to stay on the air despite a failing transmitter. This money allowed them to make the replacement.  Approx. $19 thousand was loaned to WBAI to help them meet an immediate legal obligation.   It’s unlikely either loan will be repaid.
  3. KPFA’s obligations to pay a share of the national Pacifica office cost as well as support the Pacifica Archives are anticipated expenses that should be covered in routine fund drive income.
  4. Salaries ($350 thousand). This figure was called a 3-month reserve but it will be, obviously, a reserve that is quickly spent.

 

photo credit: Money via photopin (license)  

photo credit: Pay Bills via photopin (license)

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