List probe: 9% of stations swapped with political groups
Originally published in Current, Sept. 20, 1999
By Steve Behrens
Nine percent of station licensees receiving CPB aid — 53 of 591 total — exchanged fundraising lists with political groups or rented lists to them, according to a report released Sept. 9 [1999] by Kenneth A. Konz, CPB inspector general.
Among those CPB grantees were 29 in public TV (15.8 percent of total TV grantees) and 24 in public radio (5.9 percent of the radio total).
In addition, many more stations rented lists from political groups. Konz said a separate survey by America's Public Television Stations — not yet released by APTS — showed that 48 percent of public TV licensees reported that they had rented such lists. APTS compiled the survey on the request of House Commerce Committee Chairman Thomas Bliley and submitted it to the committee last month.
Rep. Billy Tauzin (R-La.), chairman of Bliley's telecom subcommittee, was not assuaged by news that the controversial list practices were limited to 9 percent of CPB grantees.
"To those who argue that less than 10 percent engage in that activity, that's 10 percent too many," said Tauzin spokesman Ken Johnson. "Hopefully, public broadcasters have learned a valuable lesson from this experience and can patch up relations with Congress."
Johnson saw a connection between the release of the inspector general's report and PBS's announcement, the same day, that Ervin Duggan was quitting as its president. "The inference is he is being forced to walk the plank for the donor-list scandal," Johnson told the Washington Post. "Ervin Duggan wasn't the problem. The problem was questionable leadership at the station level in markets across the country."
CPB and PBS spokespeople said the same-day release of the two news items was coincidental.
One consequence of the list furor may be that Congress will further delay work on a bill to reauthorize federal aid to pubcasting. Tauzin's subcommittee is busy with the big question of open access to cable systems for Internet service providers, as well as FCC reform, and may not have time to work on the CPB legislation this year, Tauzin's spokesman said. "Public broadcasting had a window of opportunity, and it's passed now," Johnson told Current.
Another result will be a firm ban on any "interaction" between pubcasters and partisan organizations, the spokesman predicted.
And then there's the question of punishing transgressors. Tauzin has repeatedly warned that Congress may reduce CPB funding as a result of the list practices and has asked CPB officials how stations could be punished for dealing with political lists.
Kohn, CPB's inspector general, gave his reply this month. "There is no question ... that such [list] exchanges may create the appearance of improper relationships," he wrote in the report. "A number of stations weren't sensitive enough that CPB's money that they get is coming from ... taxpayer dollars," he added in a press conference Sept. 10. And he added that the list deals also were "possibly a violation of the public trust, about what was expected ... " But Kohn said he couldn't find laws or regulations clearly banning the dealings.
"If you punish someone, they have to have violated something," he said.
He added his personal view: "To me, what I see is not such a major violation of the public trust that I would recommend a signficant reduction."
Though Kohn is a CPB employee, he's a career federal inspector general, who previously spent 33 years with the Environmental Protection Agency; he is appointed directly by the CPB Board and operates independently of CPB management.
Few deals with Republicans
On the touchy question of whether pubcasters are especially "cozy" with Democrats, Kohn came up with evidence that you could take either way.
The right-wing Washington Times said Kohn found that pubcasters dealt "exclusively with Democratic organizations."
Though Kohn did report that "virtually all of the exchange or rental transactions of station membership/donor names were to apparently Democratic organizations," he also found that stations more often rented lists from Republican organizations — at some stations, acquiring up to 20 or even 40 percent of political names from G.O.P. groups. At least one station — KCET in Los Angeles — rented names of 1996 Dole campaign supporters on the "Dole Donors" list, which Kohn found was owned by Bob Dole Enterprises, Inc.
"I found no exchanges or rentals to Republican organizations," Kohn told reporters. "At the same time, I found no stations declining to give names to Republican organizations." Indeed, Konz saw no evidence that Republican organizations had ever requested names from stations.
WGBH told him it had sought names from the Republican National Committee in 1996 and was turned down, Konz said.
The stations also acquired lists of Republican prospects from list companies that derived them from public records of campaign donations, Konz said. Those compiled lists, with names like "Country Club Republicans," initially mystified pubcasters when the controversy blew up in July. "Country Club Republicans" turned out to be a demographic subset of "Great American Donors." Even lists identified by Republican candidate names, like "Pataki" and "Giuliani," were acquired by stations from list companies and not from political groups, Kohn said.
CPB did err when it indicated that "Country Club Republicans" and other such lists were obtained from political organizations, but according to Kahn, CPB's testimony "fairly represented the knowledge of the situation which CPB had at that time."
Kohn himself was delayed in completing his report because it was hard to identify who was ultimately supplying the names offered by list brokers. List brokers and list managers couldn't or wouldn't tell him where the names came from, so he eventually used his subpoena power to force them to reply.
"From reviewing this information," Kohn wrote, "we concluded that no grantee could assess the type of organization it was dealing with, simply based on the list name."
The relative scarcity of Republican lists was not just ammunition for partisan "gotcha" rhetoric. Lawyers' analysis of Internal Revenue Service documents, including one by APTS, indicate that nonprofits doing list deals with partisan groups are on legally safer ground if they have made their own lists equally available for rental to all candidates.
Inside the stations
The inspector general's office gathered its information by questionnaire from 183 TV and 408 radio grantees, and followed up with site visits to 13 grantees last month. All but 27 responded, and the missing stations were so small that Konz thought it wasn't worth pursuing them. The i.g. does not have authority to penalize stations that fail to reply, he said, though he could seek a court order to force a response.
In what now appears to be an oversight, Kohn's July 22 survey didn't ask stations whether they had rented lists from political groups, but only whether they had exchanged lists with them or rented to them. (Later, he was able to get the missing info from the separate survey being compiled by APTS.)
Kohn initially overlooked the rented from issue because he was focusing on what stations had done with the names and addresses of their own members, he told reporters. He admitted that he was "not sufficiently politically astute" to realize that members of Congress were also objecting to rental of lists from pols. "I had looked at that as a more or less commercial transaction."
Though he asserted that some stations had made mistakes, Kohn said he could see how it happened. Direct mail brings in 8-14 percent of station revenues, on average, he said, and virtually all stations amass prospect names by working through list brokers. He found no stations that dealt directly with political groups.
Some stations were saved embarrassment by their choice of direct-mail consultants. A couple firms had clear policies against exchanging lists with political groups, Konz said.
Many stations swapped rather than rented lists because swapping names is six to eight times cheaper than renting lists from list companies, he said.
Fundraisers want to start with large lists because 1 percent or fewer of names will yield responses, and many names on a list may be duplicates or otherwise useless.
At the 13 stations where the i.g. had site visits, investigators found that names from political groups amounted to 0-8.8 percent of all their names acquired in swaps, and 0.3-6.4 percent of names acquired in rentals from political groups.
"I can sure tell you, I wouldn't spend much of my time worrying about where four-tenths of 1 percent of my names were coming from, or even 5 or 6 percent," Kohn said at the press conference. (That was then, of course. Now he'd watch closely, he said later.)
Top management at stations had "very little knowledge" of the now-controversial list deals, Kohn said. Eleven stations told him they didn't know about the exchanges. Officials of at least eight stations denied list deals with political groups and then had to correct themselves when their staffs and vendors did more research, Konz said.
Konz found many stations said they allow members to "opt-out," keeping their own names out of any list exchanges--a practice now required by new CPB grant rules. But many stations don't make it easy to opt out. "Most stations we visited did not ... provide a direct, affirmative method on their pledge form or renewal form for a member to withhold their name from release to other organizations," Kohn wrote. Some expected donors wishing to opt-out to make a request by phone or letter.
In one of its site visit, the i.g.'s office confirmed WGBH's explanation of its 1996 swap with the Democratic National Committee. WGBH, which had a policy against swaps with political groups, first refused the DNC's request — through a list broker — for 20,000 station names, but then "reluctantly" acquiesced when the broker asserted the station owed that many names to the DNC to complete an earlier swap.
Later in 1996 and again in 1998, WGBH stood by its policy and refused the broker's request for much larger swaps with the DNC. But in March 1999, a staffer mistakenly released 20,000 names. One of the WGBH donors was a four-year-old boy in Wellesley, Mass., whose Mom tipped off the Globe.
What CPB did, and could do
Until May 1999, when the Boston Globe broke news of WGBH's list deals with the Democratic National Committee, CPB "apparently had no knowledge" of the list deals with political groups, Konz said, based on what CPB told him and what APTS learned from stations.
Kohn's own reaction at the time, like that of CPB management, was that the problem seemed to be an "isolated incident" at WGBH, and the station's responses to the controversy "sounded okay," he said at the press conference.
But Kohn and everyone else leapt into action in July, when they learned that the issue was bigger than a single incident at a single station. The CPB Board and management "took prompt action to initiate an inquiry" and soon implemented "meaningful regulations," Kohn reported. On July 30, CPB told stations that, if they want to receive grants, they must henceforth certify that they don't exchange member or donor names with political groups, or sell names to them, or buy names from them.
After studying the law, however, Konz found that CPB may not have the authority to enforce its rules by withholding all of a station's grant. The law now requires CPB to give at least the "base grant" portion of a Community Service Grant to every eligible pubcasting station. He says there are no provisions in the law allowing CPB to cancel entire grants even in cases of "potential fraud and misuse of federal funds."
Konz recommends in his report that CPB determine whether it needs legislative changes.
Preliminary and incomplete findings from Konz's survey — similar to his final numbers — were cited Aug. 26 in the Boston Globe. Konz said he had not given the numbers to the reporter, but they were published "prematurely" after he confirmed what the reporter had learned from another source.
Earlier news: CPB bans list deals with political groups.
Outside link: Full text of Konz's report in Adobe Acrobat format on CPB's web site.
Web page created Sept. 20, 1999
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Later news: A year after list furor, Congress in stalemate over added
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