NPR expects that a boost in revenue coupled with spending cuts resulting mainly from a staff reduction will lead to the network’s first balanced budget in three years.
A fiscal year 2015 budget presented at a Thursday meeting of NPR’s board of directors projected $190.2 million in revenue and $188.7 million in expenses. Depreciation and other cash adjustments are anticipated to eat up the $1.5 million overage, leaving NPR with a balanced budget.
“This will be the first balanced budget since 2011,” said Roger Sarow, chair of the board’s Finance and Administration Committee and g.m. of WFAE-FM in Charlotte, N.C. “It was unbalanced three years out of five, and that just wasn’t sustainable.”
NPR reported a $681,000 surplus as of the end of July based largely on a 4 percent reduction in expenses, compared to a $1.1 million loss at the same time last year. Regardless, NPR is still projecting a deficit by Sept. 30, when its current fiscal year ends.
But with revenue from individual giving at nearly twice the budgeted level and next year’s corporate sponsorship pipeline up 28 percent, NPR staffers and committee members said they were confident about breaking even next year.
“I feel like we’re really getting on track,” said Betsy Gardella, chair of the board’s Resources Development Committee and c.e.o. of New Hampshire Public Radio.
During the board meeting Thursday, NPR staffers said that by the end of July, NPR had recorded $25.1 million in institutional support, individual giving and previously restricted revenue that had been released. An additional $1.14 million brought in during August pushed those categories 11 percent above budget.
At the meeting of the Resources Development Committee, NPR’s chief development officer told committee members that the network expects fundraising revenue to grow for a third consecutive year in fiscal 2015. NPR projects a 40 percent increase in development revenue for the year ending Sept. 30, 2015, from $28.3 million projected for fiscal year 2014 to $36.3 million in the upcoming fiscal year.
The new revenue will come from increases in individual giving, institutional giving, and major and planned gifts, Hanson said. Partnering with member stations to target major donors will also raise revenue, as will a series of live events, NPR Presents, which kicked off in September.
Reduced expenses have also made a difference. Cuts in personnel costs, most notably from voluntary buyouts late last year, accounted for 75 percent of NPR’s cost savings this fiscal year. The buyouts cost the company $9.6 million.
Other cost-cutting measures included the cancellation of Tell Me More and structural reorganizations in the Digital Services and NPR Labs divisions. At the end of July, expenses were reported at $147.8 million of a $154.8 million budget.
The reductions were part of a two-year plan for NPR to balance its budget by next October. Former NPR interim CEO and board member Paul Haaga, who was voted back on to the board starting in November, had pushed for a balanced budget. The two-year approach gave NPR time to transition thoughtfully, he said.
“One of the wisest things we did is we didn’t say, ‘Balance the next budget,’” Haaga said. “We said, ‘Balance the next next budget.’ We couldn’t have done a voluntary buyout if it was next budget — we would have had to lay people off.”
From the audience, Jenny Gentry, senior v.p. of finance and administration for Colorado Public Radio, asked members of the Finance and Administration Committee if they had quantified the impact of the buyouts beyond dollars and cents.
“Has anyone asked, ‘What is the institutional cost of the buyout?’” Gentry said. “You lost years and years of institutional knowledge. How is the organization dealing with that?”
Employees who took the buyouts worked in a range of divisions throughout NPR, Haaga said, which averted a talent drain in any one area.
“We were fortunate in a couple of ways,” he said. “We didn’t have huge concentrations, and things were spread out well.”