The Freedom Forumís Shrinking Endowment
Severe stock-market losses cause the nonprofit foundation to close its
satellite offices and significantly reduce its staff, in favor of
continuing the relocation of its popular Newseum.
By Kelly Heyboer
Kelly Heyboer is a reporter at the Star-Ledger in Newark, New Jersey.
With bad news coming in from the accountants, the top executives at the
Freedom Forum had to make a choice: Keep all of the 285 employees and
satellite offices the nonprofit foundation had set up over the last
decade. Or follow through with ambitious plans to move its headquarters
and its popular journalism museum from Virginia to a can't-miss-it
complex between the White House and the Capitol.
In the end, the new building won out. "We chose Washington," said
Charles Overby, chairman and chief executive officer of the Freedom
In September, Overby announced that severe losses in the stock market
will force the high-profile journalism foundation to close its New York,
London, Johannesburg, Hong Kong and Buenos Aires offices by the end of
the year. Employees were told to expect buyouts, early retirements and a
"significant reduction in staff." Programs, including many supporting
foreign journalists in their home countries, will be cut or eliminated.
Overby portrayed the changes as a "reorganization." But it was
clearly more painful than that. "Every one of our priorities is
important. It was not easy to cut," Overby says.
It was a stunning stumble for a journalism foundation that had been
riding high for a decade. The Freedom Forum was founded in 1991 when the
56-year-old Gannett Foundation sold its name and assets back to Gannett
Co. for $670 million. Newly retired Gannett Chairman and USA Today
founder Al Neuharth took the money and the skeleton of the old
charitable foundation and formed the Freedom Forum, with a mission of
fostering "free press, free speech and free spirit."
It became one of the world's largest journalism-oriented foundations,
using the earnings from its investments to fund its operating expenses
and grants. (During the 1990s, AJR was a beneficiary of Freedom Forum
funds.) An impressive headquarters was built across the street from
Gannett's main offices in Virginia, and the foundation's board, under
the colorful Neuharth, traveled in style to board meetings and
fact-finding missions around the world.
The foundation's most visible project was the Newseum, a heavily
visited interactive museum just outside Washington, D.C., in Arlington,
Virginia, dedicated to the history of journalism. But the foundation
also took on less visible projects, including bringing together foreign
journalists for the first time in Latin America, Asia and Africa to
offer training and talk about freedom of the press.
The loss of the Freedom Forum's overseas programs, just as the U.S.
is going to war on foreign soil, will hurt, says David Anable, president
of the International Center for Journalists, a Washington, D.C.-based
organization that offers training and fellowships for journalists.
"There are several other journalism foundations, but they operate from a
slightly different base. Quite honestly, I don't know who's going to
pick up the slack," Anable says.
Overby says the Freedom Forum's money troubles are due to poor luck
in the stock market, not mismanagement. Foundation officials declined to
discuss the financial problems in detail. But according to its 1999 tax
return, the Freedom Forum had assets in excess of $1.1 billion and spent
nearly $80 million running the foundation and handing out grants. Its
money was being invested by a long list of banks and firms, including JP
Morgan, Provident Investment and Scudder Kemper.
Overby says the endowment has shrunk by more than a third to $700
million as the stock market foundered over the last two years.
"They are not unique," says Dorothy Ridings, president and chief
executive officer of the Council on Foundations and the former publisher
of Florida's Bradenton Herald.
The last few years of stock market gyrations have left some
foundations raking in money, while others lost chunks of their
endowments in what turned out to be poor investments. The Freedom Forum
was fairly conventionally invested and took a big hit when the markets
fell, Ridings says.
"I know they are really bleeding. I know Charles [Overby]...is just
really hurting," says Ridings, who spoke with Overby about the
foundation's financial troubles. "The older foundations like Ford and
Rockefeller have been up and down lots of times," she adds. "This is the
Freedom Forum's first setback.... They'll come back. I have no doubt
Overby says the foundation is reconsidering how it invests its money,
including diversifying into hedge funds and venture capital funds.
Insiders say 2001 has been a year of dramatic highs and lows at the
foundation's Virginia headquarters. The year started with a newly inked
$100 million deal with the District of Columbia to buy the last
developable space on Pennsylvania Avenue between the White House and the
Capitol. The Freedom Forum plans to move its headquarters and Newseum by
2005 to the complex that will also include 100 luxury condominiums, a
restaurant and retail space.
In August, the Freedom Forum gave $5 million to the University of
Mississippi's journalism program, the foundation's largest-ever cash
donation to a university. In exchange, the university named its Center
for Southern Journalism & Politics after Overby, a 1968 Ole Miss alumnus
who spent 16 years as a reporter, editor and executive at Gannett.
(Overby says it was the Freedom Forum trustees' decision to make the
donation, not his, and the one-time-only grant had no impact on the
foundation's current financial situation.)
That same month the Freedom Forum ended up in the gossip columns when
the foundation dedicated to free speech abruptly quashed the independent
biography it commissioned of founder Neuharth. Red-faced foundation
executives said they called off the book, which was to be written by
former NBC News President Michael Gartner, because they no longer felt
comfortable with the nine-month-old deal, according to the New York
Times. Reports surfaced in the New York Post that the book was to
contain an interview with a woman claiming to be Neuharth's illegitimate
The year of ups and downs will end at a low point with closed
offices, slashed budgets, early retirements and buyouts. Overby says he
doesn't yet know by how much the workforce will need to be cut. Several
staff members say they saw it coming, but the loss of the New York
office and the key international programs still hurts.
John Schidlovsky, director of the Pew International Journalism
Program, opened the Freedom Forum's Hong Kong office in 1994 and stayed
four years. He says the Freedom Forum fought to overcome a lot of
mistrust of American journalists in Asia and brought together
journalists from China, India and other nations in the region for the
first time. With the war on terrorism under way, the office is closing
perhaps just when it is needed most, he says.
"The Freedom Forum's great contribution was a huge presence overseas
and work with international journalists in their regions," Schidlovsky
says. "I think it's sad.... It's needed more than ever when the U.S. is
involved in a global story."
But Overby concludes the sacrifices will all be worth it when the
Freedom Forum and the Newseum take their symbolic place in the heart of
the nation's capital in 2005.
"The Newseum is going to attract more than a million people each
year," Overby says. "While I regret closing the international offices,
there is no doubt in my mind our priorities are more important than ever
Edited by Lori Robertson