Here in Los Angeles we are blessed with an excellent classical music station called KUSC. The station’s movement selections go well beyond greatest hits like Beethoven’s 5th and Tchaikovsky’s Nutcracker, and I’m in awe of all the announcers’ deep knowledge of classical music and their ability to effortlessly pronounce German, Russian, Italian, and a host of other foreign names. I’d welcome a chance to hang with the broadcast gang and treat them to a round of Chardonnay Spritzers.
KUSC promotes itself as a “listener supported” nonprofit, and the station hits its audience up for money seemingly with more frequency than the homeless person who lingers around my local Starbuck’s. KUSC says it’s a “service” of the University of Southern California, a “nonprofit” university with a $5.7 billion endowment. Undergraduate USC tuition is about $58,000, although its known that some very wealthy parents like Lori Loughlin paid a lot more to get their kids into the school.
KUSC’s website prominently features how to donate to the station but finding the company’s financials took a little digging. With some additional research I quickly figured out why the fall season fund drive that ended yesterday was shortened to four days from the customary nine. KUSC is a lot better off than it leads its listeners to believe.
That’s because nonprofits like to exploit the myth they are run by altruistic people surviving on shoestring budgets. There is no doubt many that fit the image, but there are legions that don’t. It’s also a myth that nonprofits act with greater integrity or compassion. Some even egregiously violate the mission they promote. The dirty secret is that nonprofits get away with little oversight. Michigan Attorney General Dana Nessel recently indicated she’s not even certain of the nonprofits she’s responsible for regulating.
Hospitals are the biggest exploiters of the nonprofit myth. According to a study conducted by university researchers, nonprofit hospitals don’t price their services any less aggressively than their for-profit counterparts. In fact, they become quite greedy when they get market concentration. California’s attorney general last year negotiated a $575 million settlement with “not-for-profit” Sutter Health because it excessively jacked up prices after buying up other Northern California hospital networks.
Although nonprofit hospitals enjoy their tax-avoidance status because of their supposed charitable community work, many aggressively force patients into bankruptcy because of their inability to pay their bills. A Milwaukee television station in February reported on the haste that a local nonprofit hospital filed lawsuits for unpaid bills, some as low as $602.
An analysis by the Kaiser Health News found that the nonprofit University of Virginia Health System sued former patients more than 36,000 times for more than $106 million over a six year period, seizing wages and bank accounts and forcing families into bankruptcy. According to the Washington Post, for-profit and publicly traded Tenet Healthcare won’t pursue uninsured or unemployed patients for payments.
CEOs of nonprofit hospitals are rewarded quite handsomely. More than half earned more than $2.5 million last year, and 13 companies paid their CEOs between $5 million and $22 million. The CEO of Michigan’s Beaumont Health earns about $6 million a year, despite driving the hospital network into the ground and lacking the trust and confidence of the majority of doctors working there. He will likely earn millions more if he’s successful folding Beaumont into Chicago-based Advocate Aurora, whose CEO is one of the highest paid nonprofit executives in the country.
This commentary by Marni Jameson Carey, who heads an organization promoting independent medical practices, effectively argues why the nonprofit hospital industry is “the biggest rip off in America.”
Universities aren’t far behind. University endowments in America total more than $600 billion, while U.S. families have $1.5 trillion in student debt. Clemson’s Dabo Swinney pays its football coach $9.3 million a year, and he’s not involved in education. That’s more than the New Orleans Saints pays Sean McVay to coach one of the better teams in the NFL. To its credit, the NFL voluntarily gave up its tax-free status in 2015.
Then there are nonprofit organizations like Consumers Union. One might expect the publisher of Consumer Reports would be at the forefront of consumer data privacy. Consumers Union two years ago agreed to pay a $16.4 million settlement in Michigan for — you ready for this? – allegedly selling readers’ subscription and personal data to third parties without their consent. Data that was allegedly shared by the nonprofit included age, race, religion, income levels, charitable donations, medical conditions, political affiliations and travel habits.
The average age of a CR print subscriber is 65. When third parties are seeking info to target that demographic its often to scam them. CR routinely runs sweepstakes, a very questionable practice since the elderly often falls prey to them. CR stored my credit card information without my authorization, and I’m not alone making this and other allegations about CR’s questionable business practices.
I was disappointed to see that Craig Newmark, a well meaning philanthropist who supports journalism initiatives, gave $6 million to Consumer Reports last year. Newmark also funded a nonprofit called The Markup, a news site focused on scrutinizing technology and its effects on society. That publication had a very troubled beginning.
Most shameful of all is that nonprofits receive little or no oversight from regulators. According to Bloomberg, the California charity at the center of the USC college-admissions scandal listed no employees, had questionable documentation, and didn’t live up to its promises for years before it was exposed as a conduit to bribes to officials at elite universities. The IRS never took notice.
As for L.A.’s classical KUSC, the station in 2017 received a $2 million bequest from a devoted listener. The station’s revenues from donations from subscriptions, foundations, and other sources last year totaled $17.6 million, up from $16.1 million a year earlier. The financials don’t include a management discussion, so I’m unable to determine how frugally money is spent. My sense is that KUSC announcers aren’t struggling bohemians barely surviving on meager wages.
I’d still love to treat them to a round of Chardonnay Spritzers, but they likely can afford to pay for their own drinks.