Current.org | Joan Kroc bequest to NPR, 2003

Kroc’s $200 million gift frees pubradio’s dreams

Originally published in Current, Nov. 17, 2003
By Mike Janssen

Talk about how to spend Joan Kroc's record-setting $200 million gift to NPR began at a meeting of the network's board last week, as giddiness lingered in the form of backslapping and big smiles.

Following Kroc's intent, NPR will invest most of the money and draw on the annual returns of about $10 million, according to NPR President Kevin Klose. The network's management and board will consult with stations, regional groups and CPB about how to spend the gain. Producers and station execs are batting around ideas while the media and NPR listeners weigh in with their views.

In a field where tight finances so often stifle dreams, stakeholders from every corner are jumping at a chance to think big.

The chatter went public the morning of Nov. 6 [2003], when NPR held a press conference at its Washington headquarters. Klose had learned of the windfall the week after Kroc's death Oct. 12 from brain cancer at the age of 75.

Kroc, whose late husband, Ray, founded McDonald's, gave generously during her life to a range of causes, including hospices, homeless centers, the Salvation Army and peace institutes at two universities. She had also given to KPBS, the public radio and TV broadcaster in San Diego, her hometown, whose executives later steered her to Klose and NPR. Upon her death she left the station an additional $5 million, its largest gift ever, bringing her total KPBS contributions to more than $8 million.

Her gift to NPR easily dwarfs the network's previous top donation, $14 million from the MacArthur Foundation. It is the largest individual monetary donation ever given to an American cultural institution, according to NPR, and is double the size of NPR's annual budget of $104 million.

All those zeroes sent jaws dropping, but Klose focused on how the gift would initiate "the transformation of who we are" in public radio.

The "225-million-pound gorilla"

"We are not spending the money, but we are making changes," joked NPR correspondent Susan Stamberg at the Nov. 6 press conference. "I'm changing my name to McStamberg."

Kroc's no-strings-attached gift will filter into NPR's hands in the next four to six months. Its ultimate size will be determined by what is left after bequests are drawn from two Charitable Remainder Trusts, and it may even exceed $200 million.

Kroc divided her bequest in two. A sum of at least $25 million will go directly to NPR, which will store it in cash reserves. The network's reserves usually pay emergency bills, such as expenses for war coverage.

The remainder, at least $175 million, goes to the NPR Foundation, greatly supplementing its present endowment of $35 million. If the combined investments earn the 5 percent annual return typical of foundations in a healthy economy, it will yield at least $10 million a year for NPR.

KPBS will divide its money equally among reserves, its endowment and a fund for equipment depreciation and replacement.

Kroc's unprecedented generosity injected a sense of added urgency and responsibility to contemplations of public radio's future. Mark Handley, chair of the NPR Board, said the gift loomed over last week's board meetings like a "225-million-pound gorilla," influencing "everything we've talked about."

Handley and Klose met last week with the board's last three chairs, asking, "What are the possibilities we've been afraid to consider?" They offered no specific answers.

The donation gives NPR breathing room, said Jay Kernis, senior v.p. of programming. Tight budgets have always kept him wondering where he'll have to cut back. "This will take that fear away for a little while," he told Current.

The gift offers an opportunity to determine what will make NPR's programming as strong as possible, Kernis told a board committee. "We need to focus on the bread and butter, what listeners know us for," he said.

The network does less investigative reporting than it gets credit for, he said, asking, "What would our air sound like if we had 10 more Anne Garrels?"

Klose urged attention to secondary delivery platforms such as the Internet, satellite radio and digital radio, with its promise of supplemental audio channels. "How do we make sure that we have scanned the horizon enough?" he asked.

Klose and others emphasized the importance of partnership between NPR and member stations, such as the one that brought Kroc to the network's door. One possible change: the board might revise a policy preventing NPR from soliciting directly for donations.

Klose cited "a responsibility to view partnership as a genuine two-way street."

From the other side of the station-network divide, Dave Spizale, president of Southern Public Radio, got big laughs when, sounding like a throwback to hippie days, he professed a "deep," "warm" love for each and every board member.

The idea of partnership, he cracked, really solidifies "when one of those partners receives $200 million."

A boost to giving?

Announcement of the bequest ignited immediate debate over allocation of the gift. Some station managers clamored for the payoff to trickle their way as financial relief.

"We are expected to pinch pennies while NPR seems to find new and creative ways to spend what we give them," wrote Alan Chartock, executive director of WAMC in Albany, N.Y., to the Pubradio e-mail forum. "We've always been there for them. Now it's payback time."

Independent producer Robin White made a case for his camp in its own online klatch. "Now is a time when NPR cannot use poverty or the economic situation to argue for putting off, once again, increasing (at this point at least doubling) pay rates for freelancers and making sure that independents are paid fairly against station producers," he wrote to an online forum of the Association of Independents in Radio.

The Boston Globe ran a wish-list editorial, urging NPR to beef up cultural programming and do more online.

The media splash made by Kroc's gift raised fears in public radio that the bequest would discourage support from listeners, other donors and Congress. Station staffers took calls from listeners who assumed that they had endured their last pledge drive.

NPR's public relations wing added information about funding and operations to the "About NPR" section of its website and stepped in to help stations with the inquiries. "That's something we'll be working on for the next six months at least," said NPR spokeswoman Jenny Lawhorn.

Rep. Earl Blumenauer (D-Ore.), co-founder of the Congressional Public Broadcasting Caucus, said Nov. 6 that the gift would not encourage a cry in Congress to cut funds for pubcasting. He hoped it would prompt state legislators, including those in his beleaguered home state, to back off from pubcasting cuts as a bandage for deficits.

Fundraising experts said the gift should boost, not diminish, listeners' financial support for public radio. Big, attention-grabbing gifts "usually are very significant testimonials to the substance of the nonprofit, and they usually serve as encouragement," said Kent Dove, a professor of major giving at Indiana University's Center on Philanthropy.

"They create and expand the field of possibilities for others who are considering supporting the particular nonprofit and help them to realize what is possible," he said.

"This is going to position NPR as it would position any charity — to speak positively about its future, and to show how this gift is going to impact its ability to deliver services," said George Ruotolo, head of Ruotolo Associates, a national fundraising firm.

Let's do "something great"

Kroc found her way to NPR through KPBS, a staple of her daily media diet at her home in Rancho Santa Fe near San Diego. She began giving to KPBS in the early '80s, and in 1996 gave $3 million toward construction of new studios. The philanthropist valued NPR for what she saw as its in-depth, unbiased coverage, according to her assistant, Dick Starmann.

She had always worked with Stephanie Bergsma, now associate g.m. for development at KPBS. But they became closer three years ago, when Bergsma's husband was dying of cancer in a hospice founded with Kroc's largesse and wrote the philanthropist a letter of gratitude.

Over small lunches, Kroc and Bergsma became close friends. As Klose recalled, Bergsma suggested last year that he meet Kroc, who wanted "to explore the possibility of funding at a very different level."

Klose started writing to Kroc, running every word of his letters past Bergsma for approval, he said. "Because she knew Joan at a very different level, I wanted to make sure I had her advice and counsel," he said.

Kroc donated $500,000 to NPR in a holiday note to Klose last year. She would often give smaller donations before considering a larger gift, according to Bergsma and Klose. She followed her intuition when giving, staking her confidence in organizations on friendships with their leaders.

Klose's last visit with Kroc was at a small party she had to celebrate her 75th birthday party in August. Already weakened by cancer, she greeted him in a wheelchair.

"When I came up to her, she grabbed me by both hands and said, 'We're really going to do something great together,'" Klose remembered. "It was a very powerful moment. She was just beaming at me, and I didn't really know what she meant, but I thought, yes, we can do this, whatever it might be."

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