The National Geographic: How to Be Non-Profit and Get Rich
Locksley, Lila
The National Geographic: How to Be Non-Profit and Get Rich by Lila Locksley In the shaky world of the magazine business, longstanding financial prosperity is the rarest of commodities; it’s...
...In 1975, its income exceeded its expenditures by $9 million (although, as we'll see the society doesn’t call this figure its profit...
...The tax on the Maryland roperty would be about which is full of non-profit institutioris, the property-tax exemptibn cbntribUtes mightily to the iow quality 6f schools and other services...
...The truth is that under the law, non-profit organizations need not be non-profit or worthy, and that often they are neither...
...On its downtown property, the Geographic would be paying about $300,000 a year in property tax (and property tax in downtbwn Washington is artificidly low bedhuse assessments have not gone up along with property values) if ‘it weren’t exempt...
...The theory behind government non-profit laws is a reasonable one: that certain kinds of organizations are of great social good but usually fall through the cracks of the free market system...
...And at the same time, the government excludes from non-profit benefits any organization that endorses legislation or candidates for office, whether or not it’s profitable or worthy...
...The National Geographic Society, which publishes the magazine, is a hugely successful corporation...
...In the case of the Geographic, the Jacques Coubteaus and Jane Goodalls 48 who get research grants are only a minor part of the Society’s operationsin 1975 they got $2.6 million, about three per cent of tHie Society’s gross revenues...
...Reasonable people might conceivably argue about the Geographic’s contribution to the public good, but there are some organizations under the non-profit umbrella that aren’t even debatable...
...These are rare and awesome achievements...
...Of course, none of these rules and regulations confront the possibility that there might be some non-profit organizations that take in far more money than they spend, like the National Geographic...
...In a corporation that isn’t protected by non-profit laws, these perquisites might be protested by stockholders as unnecessary, but because the Geographic is non-profit it doesn’t have to report any financial information to the members of the National Geographic Society, who fund it...
...In 1975 the Society’s president, Dr...
...For an organization that started as a tiny band of geography hobbyists less than a century ago, the National Geographic Society has done very well...
...As if to celebrate its success, the National Geographic functions in princely fashion...
...But there’s also another important flaw in the nonprobt regulations: not only do they not guarantee non-profitability, they also dh’t guarantee that the causes they help are worthy of public support...
...Still, profitable non-profits continue to get all the tax breaks their pooter sisters receive...
...In addition to its downtown property, the Society owns a 150-acre tract in Gaithersburg, Maryland, on which stands a 4 0 0 , 00 0-square- f oot Membership Building that overlooks an 11-acre lake and houses 1,000 employees...
...It spent almost as much on second-class mailing, and saved ab These sivings, of co crucial business ad profit magazines because magazines’ circulations depend largely on how many solicitatiom they can send out...
...The magazine’s associate editor makes $67,080...
...Non-profit organizations don’t have to pay income taxes or property taxes...
...they can send mail at reduced rates...
...its senior assistant editor, $60,244...
...The magazine’s circulation is 9.5 million, fourth largest in America...
...Impoverished Do-Gooders Most people have only a hazy notion of what non-profit organizations are and what kind of breaks they get-the conventional wisdom seems to be that they’re all made up of impoverished do-gooders who need some help from the government in order to continue their humanitarian work...
...It is the only organization in downtown Washington with private surface parking provided free to its employees...
...Is it possible to weed out the not-so-worthies from non-profit protection...
...Nobody wants all altruistic activity to flow from the government itself, so it’s a good idea for the government to help along such organizations while allowing them to maintain their independence...
...Because non-profit organizations are among the great respectable, established institutions in America, they are wreathed in a permanent aura of integrity and never get the skeptical attention they so richly deserve...
...and people who give them money can deduct those donations from their taxable income...
...The mailing breaks are of great value to the National Geographic because magazines do a lot of mailing in the course bf soliciting and serving subscribers...
...The Geographic’s members know far less about where their money goes than do the stockholders of most corporations...
...Melville Grosvenor made $59,520...
...and Society vice president and secretary Robert E. Doyle, $8 1,909...
...and its illustrations editor, $54,763...
...The luster of the National Geographic’s success dims a little when you realize that the rest of US are paying for it...
...In 1976, the magatine spent about $3 million on third-class mailings-$6 million less than if it had paid the regular rate for third class...
...Can’t the government stop subsidizing worthy organizations once they’re clearly able to stand on their own two feet economically...
...For example, most of the New York City nursing homes whose nefarious activities were exposed over the last couple of years were non-profit organizations that paid enormous salaries to cover their excess of income over expenditures...
...In 1975 its receipts were $137.5 million and its net worth $80.5 million and rising...
...Melvin Payne, made $128,095...
...It has a diversified investment portfolio worth more than $60 million...
...Salaries and employee benefits are generous, especially at the top...
...Because we don’t want to obey this rule, The Washington Monthly is a for-profit organization, as is Common Causealthough certainly neither organization was formed with profit in mind...
...But this is more than a heartening tale of free enterprise...
...In return, non-profits are forbidden to &tribute earnings to shareholders, the assumption being that if n\obody gets any profits, there must not be any...
...his son, editor Gilbert Grosvenor, $85,373...
...it’s only natural that those few who achieve it should swell with pride...
...In pursuit of that worthy goal, the government drew up a list of safe, reasonable organizations that deserved this protectionones involved in charitable, religious, scientific, educational, or literary work-and constructed a system to help them...
...Sometimes that is the case, but far from always...
...The National Geographic is a non-profit organization, and as a result it gets a number of important breaks from the government that amount to an indirect subsidy from the taxpayers...
...As Melville Bell Grosvenor, the magazine’s editor-in-chief, points out, “kings and queens, astronauts and renowned scientists” are among its subscribers, and its headquarters is a “dramatically handsome” building in downtown Washington, “ten stories of classic simplicity gleaminn with the Lila Locksley is an intern on the staff of The Washing Monthly pale beauty of marble,” flanked by a “magnolia shaded parking lot...
...The society produces books, movies, television shows, globes, and maps, as well as sponsoring exploratiop and research around the world...
...I; n a city like Washington, The Cousteaus and the Goodalls That the Geographic could be so plainly profitable and still qualify for a government program most people imagine helps idealistic chronic money-losers certainly points to one flaw in that program...
...Are there organizations that need and deserve the encouragement government gives non-profits but aren’t getting it because of flaws in the rules...
...the same...
...The Society’s high style of living is not only made possible by the governmentbecause of the way non-profit rules work, it is actually encouraged by the government...
...At its headquarters building, white-jacketed waiters serve multi-course luncheons to Society officials in two private dining rooms...
...No doubt these are questions that have complex answers, but the trouble is that nobody is even asking them...
...So if officials of the National Geographic occasionally overstep the bounds of modesty, it’s perfectly understandable...
...Mainly, what the government is subsidizing is an expensively operated magazine, put out for the entertainment of an affluent readership and fiiled with innocuous articles an faraway places-something that, it seems, the readers ought to pay for themselves without any help from the non-reading puBlic...
...These organizations work hard to eat up their net income by artificially raising their overhead-hence the high salaries, the dining rooms, the free parking, the gleaming building, the generous investment portfolio...
Vol. 9 • September 1977 • No. 7
