The Windfall That Transformed NPR

From a Washington Post story by Paul Farhi headlined “The windfall that transformed NPR 20 years ago”:

On a fall day 20 years ago, Kevin Klose got a phone call from a man named Dick Starmann. Klose, then president of NPR, knew Starmann as a top adviser to the widow of Ray Kroc, the man who built McDonald’s into a global fast-food juggernaut. But he had no idea what was afoot.

“Are you sitting down?” Starmann asked Klose.

Joan B. Kroc, who inherited her husband’s fortune after his death in 1984, had died three weeks earlier, and Starmann was wrapping up her affairs as co-executor of her will. Klose had met her several times and had told colleagues that she might make a contribution to NPR — perhaps even as much as $50,000.

“You got a pencil and paper in front of you?’” Starmann continued. “Start writing down these numbers.”

He started counting out loud by the millions, beginning around $200 million. When Starmann dramatically landed on the total amount, Klose was “flabbergasted,” he recalled last month. Kroc had left NPR $222 million.

In a stroke, the late philanthropist transformed the fortunes of NPR, a nonprofit that had struggled since its founding to keep its transmitters humming. The contribution — which ultimately hit more than $230 million once the final amount was transferred several months later — was by far the largest in public broadcasting history and, at the time, the largest monetary gift to any American cultural institution. It was more than twice NPR’s annual operating budget that year.

All at once, an organization that had nearly gone bankrupt in the early 1980s had something it had never known: breathing room.

“I burst into tears,” recalled Susan Stamberg, one of the original on-air hosts for NPR, which began broadcasting in 1971. “Those of us who’d been there a long time had never lost the sense that we lived on the edge and might not make it through. … Suddenly, we had a future.”

NPR spent some of the donated funds, but most of it, $194.4 million, went into an endowment. NPR hasn’t touched this principal in 20 years. The annual interest and dividends flow into NPR’s operating budget — about $174 million to date.

Kroc’s generosity didn’t make NPR rich, but it did accelerate its national growth and international reach. Within the first few years, NPR added 70 new employees, about 10 percent of its workforce, according to Leora Hanser, NPR’s chief fundraiser. It also paid for new reporting bureaus in Shanghai; Dakar, Senegal; and Baghdad, and the build-out of its new West Coast studios in Culver City, Calif.

“It’s not enough so that the company can depend on it for everything it needs,” Hanser said. “It enabled us to dream bigger.”

There were a number of things the money didn’t, and couldn’t, do. The organization has endured multiple lean periods since 2003 as its expenses have grown and its annual revenue — fees from its member stations, corporate ads, other philanthropic contributions — have waxed and waned, triggering layoffs, programming cuts and furloughs. In February, it announced it was trimming about 100 workers, roughly 10 percent of its staff, in one of its largest cutbacks ever.

The windfall even created some unexpected fallout.

The independent public radio stations that broadcast NPR’s programs eyed its good fortune enviously, like relatives cut out of a rich aunt’s will. They pressed NPR to share its bounty by giving them a break on the annual “dues” they pay to air programs such as “Morning Edition” and “All Things Considered.” NPR agreed to do so for the next three years.

And while NPR still dutifully pays tribute to Kroc’s generosity — via those regular announcements acknowledging “the estate of Joan B. Kroc” — it may have dissuaded other donors. Some listeners get the idea that Kroc’s estate “is still writing checks,” said Lisa Napoli, the author of “Ray & Joan,” a 2016 biography of the Krocs, as well a book about the history of NPR.

That isn’t the case: Kroc’s roughly $2.5 billion estate was liquidated shortly after her death, with her largest bequest, $1.5 billion, going to the Salvation Army. But the continuing announcements create an impression that NPR and its stations are better funded than they actually are, Napoli said.

Said Stamberg: “I was shocked the first time a listener said to me: ‘Why should I write a check when they just got this whole large thing? Why would you need this money?’”

NPR says the announcements are simply a way to recognize the donation’s continuing value.

Kroc’s bequest has also periodically been invoked by congressional Republicans and conservatives intent on cutting the federal government’s annual outlay to public radio and TV. Most of those funds go to member stations; NPR receives almost no direct federal support. But that nine-figure gift from a multibillionaire remains a politically potent talking point.

Joan Mansfield grew up poor in Minnesota. She married her first husband at 17 and had her only child at 18. In 1957, at age 28, she was playing the organ in a St. Paul restaurant when a brash businessman named Ray Kroc stopped by.

He was nearly 26 years older than her, and both were married to others at the time. But apparently there was a spark. Joan and her first husband owned a McDonald’s franchise in Rapid City, S.D., and she reconnected with Ray more than a decade later at a franchisee convention. After divorcing their spouses, they married in 1969.

While Ray traveled the world spreading the gospel of Big Macs and french fries, Joan developed into a prodigious if idiosyncratic philanthropist. According to Napoli, Joan began giving away some of the couple’s fortune to dozens of causes, organizations and individuals beginning in the early 1970s. She was almost indiscriminate in her generosity, sometimes writing seven-figure checks to those she saw in news reports or encountered by chance.

Her larger charitable projects included alcohol-education programs (an outgrowth of her second husband’s battles with alcohol), the nuclear disarmament movement of the 1980s, AIDS research and hospice-building. She gave tens of millions to start “peace studies” institutes at Notre Dame and the University of San Diego, and $87 million to the Salvation Army in 1998 to build a recreation and arts center in San Diego, near her home in Rancho Santa Fe.

Starmann, a former McDonald’s executive who became her longtime consigliere, said Kroc’s largesse wasn’t driven by political or religious motivations. And she rarely gave to any organization that directly solicited her.

“If she found an area or a person she was interested in, she’d tell me, ‘Go check ’em out,’” Starmann said. “It had to be a great organizations with a good idea of what it wanted to do in the future, headed by a person she could connect with.”

Was she an NPR fan? Starmann maintains that Kroc was an avid listener, but others are less certain. When Klose first met Kroc a year before she made her bequest, “it was clear that Kroc did not listen to NPR,” Ken Stern, a veteran public radio executive who once served as NPR’s chief executive, wrote in 2013. Joan Kroc, he wrote, “frequently confused NPR (as many people do) with other public media organizations ranging from PBS to BBC to other public radio producers.”

By all accounts, however, Kroc was impressed by Klose, a former Washington Post foreign correspondent who became NPR’s leader in 1998. Klose met Kroc via an introduction from Stephanie Bergsma, a manager at KPBS, the public radio and TV station in San Diego. Kroc had made small contributions to the station after Bergsma’s husband wrote her in gratitude for funding the hospice in which he spent his final days. She later gave $5 million to the station posthumously.

Over the course of several meetings and conversations, Klose never asked Kroc to donate, Starmann said. But “she told him, ‘I’m going to help you.’”

In late 2002, Klose opened a Christmas card from Kroc. Inside was a check made out to NPR for $500,000.

The next summer, only a few months before her death, she invited Bergsma and Klose to a small party at her home for her 75th birthday. At one point, she took Klose aside and cryptically told him that they were going to do “great things” together.

Neither Klose nor NPR knew it, but Starmann had suggested that she consider donating to NPR the assets of two trusts holding more than $200 million in all. She agreed to do so before her death around mid-October of 2003, he said.

Ironically, Kroc had long intended to make a contribution to PBS, whose news and cultural programs Starmann said she watched often. Kroc had befriended Fred Rogers, the beloved Mister Rogers, and had contributed to his foundation.

But PBS never received a contribution from Kroc, before or after her death. Starmann said Kroc’s assistants got a recording when they called PBS while doing some due diligence. Time was growing short for Kroc, and she was impatient.

“She very distinctly said: ‘The hell with it. Let’s move on,’” he said. “The lesson is, you should always answer your own phone.”

NPR announced the receipt of Kroc’s donation at a news conference on Nov. 6, 2003. During lunchtime that day, NPR staffers celebrated by eating Big Macs.

Paul Farhi has been a media reporter at The Washington Post since 2010. Prior to that, he was a financial reporter, a political reporter and a Style reporter.