Only the proceeds from the entry fees paid directly to the Deadline Club Foundation, pay for scholarships--not the lion's share of the monies paid for dinner tickets. (Credit: Deadline Club, screenshot, highlight added).

The signature from the foundation’s recently filed 2006 form, is dated six years late, on April 13, 2012 — after our contact with the Attorney General’s office.

The Deadline Club Foundation president and treasurer submitted –2006-2010–forms in 2012 after the NY State Attorney General’s office contacted them. Note above that the 2006 NY State annual form is signed in April 2012.

iMediaEthics asked Foundation president Novitz why the foundation missed eight years of filings required by the New York State Charity Bureau.

He replied that the Attorney General office’s “official laxity” and “lack of follow up” were to blame.

Novitz told iMediaEthics in May: “The Foundation is up to date [now] with regard to all requested forms. This despite official laxity in notifying low income Foundations, and lack of follow-up to the initial waiver, which was regarded as permanent status absent such notice, and is still in effect.”

However, despite Novitz’s confusing claims, there was no such “permanent status” or “waiver” in effect. The rules are clear. See Statues Booklet, 91.5 (b). All New York State charities must file annually.

We sought an explanation from the foundation’s president, Charles Novitz. He declined to participate via a May 16 e-mail that read: “With sincere best wishes for the best outcome in your endeavors, please remove me from your mailing list.”

Foundation president Charles Novitz at the 2009 Deadline Club Awards Dinner at the Waldorf-Astoria. (Credit: John Smock)

The Attorney General’s office told iMediaEthics in a statement:

“All charitable organizations operating in New York State are required by law to register and file annual financial reports with the Attorney General’s Office. This includes any organization that conducts charitable activities, holds property that is used for charitable purposes, or solicits financial or other contributions.”

iMediaEthics previously asked the Attorney General for comment regarding the Deadline Club’s eight years of delinquent filings, and what other legal actions the Attorney General’s office might take beyond its request that the Deadline Club filings be made up-to-date. They had no comment.  We have also submitted an open-records request with the New York State Attorney General’s Charities Bureau office for details.

Along with Deadline Club treasurer Peter Szekely, the club’s vice president, Michael Arena, also declined to comment, directing iMediaEthics back to Tarquinio, who hasn’t responded to our emails and phone messages since March 8.

We called former Deadline Club president Baker, formerly of the Journal News, at her new job as a staff writer for NorthJersey.com. We spoke to her editor and await a response.

Calls to SPJ Headquarters Produced Financial Review of Club

After Tarquinio wouldn’t reveal how many members the Deadline Club had, we reached out to SPJ headquarters directly.

SPJ headquarters immediately provided us with the total entries for their contests that require entry fees. In a March 7 phone call, SPJ director Joe Skeel said, “Local chapters [also] need to be as transparent as possible, from the national perspective.”

SPJ’s Skeel transferred our call to SPJ Membership Coordinator, Linda Hall, who told us that the Deadline Club has 226 paid members. The SPJ itself is the country’s largest journalist organization, with 8,000 members, and the Deadline Club is among its largest chapters.

Still, getting the local contest entries total was tricky. In a Feb. 22 phone call, Tarquinio said “(we) don’t publish the numbers that we get … just like every journalism contest out there.” In a March 8 email to iMediaEthics, Tarquinio wrote, despite the fact that all contest submissions go to the Club and the annual event is jointly paid, “I’m sorry that the Club does not know the number of entries last year, but we are not privy to the Foundation’s records.”

Deadline Club treasurer Peter Szekely at the 2009 Deadline Club Awards Dinner at the Waldorf-Astoria. (Credit: John Smock)

‘They’re journalists, for God’s sake!’

So iMediaEthics asked the SPJ ethics committee chair and former SPJ president Kevin Smith  for advice about the Deadline Club’s stonewalling. “I’m a little disappointed to hear this,” Smith said by phone. “They’re journalists, for God’s sake!” He added that “members are entitled to know” and recommended that we contact the current national SPJ president, John Ensslin.

Ensslin told iMediaEthics by phone that the Deadline Club’s refusal to answer iMediaEthics’ “legitimate questions” prompted him to launch a review of the Deadline Club’s finances. “I am going to make a formal request.” He continued, “I want to know, as national president.”

In a March 13 email, Ensslin wrote, “My understanding is that the Deadline Club board will be releasing to all Club members in early April, including information that answers some of your questions. This is something I’ve urged them to do. I think it’s in everybody’s interest to be transparent and make a complete report.”

Ensslin continued:

“I’ve appointed a committee of three national SPJ leaders from outside the chapter. I’ve asked them to conduct a comprehensive review of both the scholarship, contest and banquet records and policies. I’m also forwarding to them the issues you’ve raised and the questions you’ve posed. I’ve asked them to report back to me within two months.”

A June 1 call requesting information from Skeel went unreturned.  As of today, iMediaEthics still hasn’t heard an update, either directly from Ensslin or through the Deadline Club, of which iMediaEthics’ publisher, and co-author of this report, is a member and receives newsletter emails.

The Club, the Foundation and a Question of Boundaries
Two sets of books for one event; No disclosures?

iMediaEthics found that two different entities, both called “Deadline Club”— one a club and the other a foundation — share control of the Awards Contest.

In the case of the Annual Awards Dinner, under only the club’s purview, there is a questionable bookkeeping structure that splits the income streams of a single event between a non-profit but non-charitable professional organization (a 501(c)(6)) ^* and a charitable foundation (a 501(c)(3) public charity) of the same name.

The Deadline Club Foundation, founded in 2000, is the poorer cousin and collects the $70 entry fees from media to enter the awards contest. That money covers all contest expenses, including statuettes, mailings and scholarships, according to Tarquinio.

In a March 8 email, Tarquinio told iMediaEthics that the Foundation is “an entirely separate entity” from the Club that “receives all money from the contest and pays all of the contest expenses. Any surplus goes to awarding scholarships.”

The Deadline Club controls the awards and the dinner, keeps the dinner ticket proceeds and pays for the dinner expenses, Deadline Club Foundation president Novitz said by phone. “The Deadline Club and Deadline Club Foundation are two arms of the same body,” he later wrote by email.

See above how the 2011 event proceeds are split into two sets of books for the awards banquet. (Credit: Alberto Mena for iMediaEthics)

Novitz also informed iMediaEthics that in 2011 the Foundation had $20,457.53 of income from the award entries and sundry donations. Novitz told iMediaEthics that “one could estimate the number of entries by using $70 as a divisor,” which figures to be about 300 award entries for last year’s 31 categories.

(Oddly, despite the Deadline Club’s failure to provide basic information about its contest in previous years, the club recently revealed on its website that this year’s contest received “nearly 440 entries from more than 70 media outlets, a huge increase from previous years.”)

The Waldorf-Astoria confirmed to iMediaEthics that last year the banquet had 211 guests. Many of them surely were non-members, paying $270 or $295 apiece for dinner tickets. The Deadline Club’s IRS 990-EZ for last year stated the event grossed $53,863 — more than twice the income of the foundation take (at $20,457.53.)

Troubling co-minglings of Club & Foundation

Despite Tarquinio’s and Novitz’s assertions of a clean boundary between the Deadline Club’s and the Deadline Club Foundation’s finances and responsibilities (“entirely separate” entities), there are troubling co-minglings in descriptions of activities, solicitations of monies and supposedly separate fundraising and spending domains.

For example, if the club is responsible for the dinner and earning twice the revenue, why is the foundation, that pays for the contest and the scholarships, also paying for the expensive dinner invitations, postage and the dinner programs — reducing both its $20,457 take from the event income streams, and the foundation’s ability to pay for scholarships?

iMediaEthics asked Novitz, who answered, “Printing expenses (entry invitations and programs) are part of the responsibilities of the Foundation’s commitment,” revealing the financial “responsibilities” and “commitment” between the Deadline Club and the Deadline Club Foundation are not a simple matter of the club running the dinner and the foundation running the contest.

While the foundation is burdened with dinner expenses such as invitations (supposedly the responsibility of the club) and all contest costs, cutting into funds for scholarships, the Deadline Club seems flush by comparison. It is unencumbered by contest or scholarship costs — even the trophies for the 32 media awards winners given at the dinner are paid by the Foundation — but benefits from donors’ belief that the event funds the charity.

The fancy Annual Awards Dinner invitation for 2012, replete with a formal response card and envelope, conflates both the club and the foundation in its solicitation and use of monies. See below, emphasis ours: “Proceeds will support scholarships and other programs of the Deadline Club.”

The invitation wrongly suggests that all the proceeds to the awards event are charitable–they are not. Only the entry fees for the contest sent to the Foundation are charitable. See above the invitation for the annual awards dinner.

The Foundation pays for printing and postage for the deluxe dinner invitation but prints nothing to invite students or advertise the scholarship contest, its “sole” charitable program.

Club, Foundation can underreport by having two entities

Splitting the accounting — using two sets of books for one event comprised of awards, dinner and scholarships — also allows for underreporting of the Foundation’s revenue to the IRS and to New York State, which require different levels of detail in reporting of income greater than $50,000 and $25,000, respectively. The foundation has revenue below $25,000, given its revenue arrangement with the club, so it qualifies to annually file exemption forms, instead of 990 forms with financial numbers that are available to the public.

See New York State Charities Bureau (page 17).

Keeping the foundation’s annual accounts below $25,000 by only booking income from the media entry fees, and thus qualifying to not submit detailed accounting reports, the Deadline Club Foundation escapes public transparency and financial oversight around the Annual Awards Event.

If the club’s and foundation’s 2011 revenues for the charitable event were combined, for a total of about $74,320, the Foundation would have to be transparent about its finances and file with both the IRS and the Charities Bureau with specific financial information instead of an opaque exemption.

Without knowing the amounts generated or spent for the charitable event, how are donors to know how their money is being spent?

However, even when not-for-profit 501(c)(3) annual donations stay below $25,000, the Charities Bureau still requires an exemption to be filed — something the Foundation failed to do for eight years. (Page 12)

Since 2006, the IRS requires annual filing for charities. Not filing for three years triggers a cancelation of IRS not-for-profit status.

The Deadline Club Foundation didn’t file annually required forms with the IRS in 2009 or 2010. During iMediaEthics’ investigation, the Foundation submitted a 2011 filing on time, avoiding the cancelation. The Deadline Club Foundation’s 2009 and 2010 forms still do not appear on the IRS web site, as of last week.

The Deadline Club was also at risk for IRS penalties when not filing or late filing.

True charity events try to save costs

Fundraising dinners for charities are common in New York City. The income streams from a single event traditionally include dinner ticket sales, sponsorships and ads in dinner programs.

Because a single financial accounting for an event is the norm, donors, including media outlets, would be not expecting the split accounting conducted by the Deadline Club and the Deadline Club Foundation.

Moreover, a portion of any dinner tickets bought for a charitable event are typically tax-deductible. (The IRS requires that the cost of the meal is subtracted from the ticket cost. The difference can be a tax deductible charitable contribution). In the case of the Deadline Club Annual Awards dinner, the entry fees are tax deductible. The dinner tickets aren’t, as the club is not a charity.

All costs related to an event dinner are conventionally considered a fundraising expense.

To direct as much money as possible to the charitable purpose, responsible charities try to keep expenses down by acquiring in-kind donations, such as for food or wine. Unless underwritten by generous donors, not many charities shell out for the luxury of the Waldorf-Astoria with tuxedoed staff, as the Deadline Club did last year and will again tonight. According to the hotel, the club has been a customer for many years.

Anchor Tara Rosenblum and News Director Pat Dolan, News 12, (on right) at the 2011 Deadline Club Annual Awards dinner at the Waldorf-Astoria Hotel,Park Avenue, NYC. Tuxedoed staff (on left).  (Credit: Courtesy of Rick Maiman)

The reason for watching costs is obvious: It prevents dinner guests from having a glamorous evening at the expense of the charitable purpose. Except, that’s exactly what happens at the Deadline Club Annual Awards Dinner.

Simple decisions, such as not paying for a posh Park Avenue hotel, could put thousands more dollars into journalism students’ pockets.

It is iMediaEthics’s view that it is unfair and deceptive to raise monies using the fig leaf that the whole Awards event is charitable, when there is no explanation or disclosure — on the Club website or in its IRS 990 filings — that the event divides the money and costs between the non-profit club (whose aim is to benefit its members) and the foundation (whose charitable purpose is to benefit students). There’s no disclosure either that the lion’s share of the event revenue goes to the club and for no charitable purpose beyond throwing a party once a year.

 Combining the income streams into one reveals extent of expenses

If the event — comprising a fundraising awards and dinner — is for scholarships (a charitable purpose), then all revenue should be accounted for by a charity, in this case the Foundation, under basic accounting rules and charities’ accepted practices.

This would combine the two income streams in the 2011 event, $20,457 for the foundation and approximately $53,863 for the club for a total of $74,320.

This combined total of $74,320 from the foundation and the club’s 2011 revenues makes for dismal spending towards the charitable purpose. If the club earns $53,863, spending $45,014 on the dinner and the foundation’s take from earning is $20,457 and pays $14,457 in expenses, a total of $74,320, or 92 percent of funds, went to pay for the event. Meanwhile $6,000, or only 8 percent, went to scholarships.

Contests such as the Deadline Club awards can be an effective money-making practice for professional organizations such as the Society of Professional Journalists. SPJ national headquarters has two such contests in which the entry fees are paid for the possibility to win an award. SPJ national, like many other professional groups or clubs, created a fair and legal game plan to fund its nonprofit — but not charitable — operations.

The critical difference in the case of the local chapter’s Deadline Club Awards is the club’s claims of a not-for-profit mission and the foundation’s sole goal of providing scholarships for students.

Awards entry checks are made payable to the Deadline Club Foundation, reinforcing the impression that the awards, fees and dinner are all part of one charitable event benefiting students.

Charity watchdog groups and organizations such the Association for Fundraising Professionals scrutinize the fraction of fundraising expenses spent from the money raised for charitable purposes.

CharityWatch.org explains the “Percent spent on Charitable Purpose … is the portion of total expenses that is spent on charitable programs.”

“In CharityWatch’s view, ‘60% or greater is reasonable for most charities. The remaining percentage is spent on fundraising and general administration. Note: A 60% program percentage typically indicates a ‘satisfactory’ or ‘C range’ rating. Most highly efficient charities are able to spend 75% or more on programs.”

In other words, a reasonably effective not-for-profit spends 40 cents for every dollar raised and dedicates the other 60 cents to charitable purposes. A strong charity runs a good share more efficiently than that. The New York Post wrote April 29, 2012, that the Charity Navigator, another watchdog web site agrees that “most well run charities spend at least 75% on programs” and 25 percent or less on expenses and administration

So how does the Deadline Club Foundation hold up to this standard? Not well.

In 2011, the Deadline Club Foundation generated approximately $21,000 from 300 entry fees while disbursing only three $2,000 scholarships. That’s about 30 percent for charitable purpose with 70 percent for running the contest and dinner.

After asking Foundation president Novitz about the amount of scholarship money given, he told us the Foundation would give four $2,500 scholarships this year. Meanwhile, the Deadline Club’s website crows that in 2012 it will award at least three scholarships for $2,500 each, a total of $7,500 toward charitable purpose.

In an email, Novitz told iMediaEthics “The decision to go to four [scholarships] was taken this year … the awards were boosted to $2,000 each last year, further boosted to $2,500 each this year.”

We asked him why the Deadline Club’s website and newsletter state three or more $2,500 scholarships will be awarded this year when he told us in an email there would be four $2,500 scholarships. Did the Deadline Club Foundation change its mind? Novitz answered: “We promoted there would be NO LESS THAN THREE, leaving open the possibility of additions. Also, Foundation policy is not to spend funds we don’t have.”

But the numbers reveal that, far from doing better, the percentages have gotten only worse. With 440 entries in 2012 raising $30,800, the $7,500 in scholarships actually pushes the charitable purpose portion down 5 percentage points, to 24 percent.

The Deadline Club’s 3-to-1 ratio of expenses to charitable spending is almost a perfect inversion of how a strong charity would spend its money. Even a fourth scholarship would make about 32 percent toward charitable purpose, well shy of even the “reasonable,” “satisfactory” or “C range” charities.

But isn’t the amount of charitable dollars the foundation has for scholarships determined by how much money the club and the foundation spend in award and dinner expenses or how big a cut of the income they acquire from the event? Last year, the Deadline Club got only 37% of the total revenue for the Awards event. Most of the event income went to the Waldorf-Astoria.

So who gives the scholarships? The Foundation is “low profile”?

The Deadline Club benefits from the appearance that the Annual Awards Dinner is charitable. People can feel better and more generous about giving money. Everyone looks like do-gooders.

In reality, the foundation’s name rarely appears. The foundation has no website. According to the Salmagundi Club, the Fifth Avenue address and facilities that the Deadline Club uses, the Foundation and Club share a mailbox. A Salmagundi staff member confirmed that the foundation regularly sends people to pick up its mail.

The Deadline Club refers to “our” scholarships — not the Deadline Club Foundation’s scholarships. For example, on the website’s scholarship page it states (emphasis ours): “Deadline Club … invites students to apply for our annual scholarships.” As well, a newsletter from the club states that it, not the foundation, “will award the scholarships.”

We asked Foundation president Novitz by email if the scholarships are indeed the club’s, merely funded by the foundation. He replied on May 16: “The Deadline Club and Deadline Club Foundation are two arms of the same body.” Apparently the same body does not involve knowing each other’s finances. As cited earlier in this report, Deadline Club president Tarquinio claimed to not be “privy to the Foundation’s records.” Novitz himself agrees that the club is a separate entity with separate finances and wrote March 14, “I will not tread on the province of the Deadline Club board and officers.”

iMediaEthics asked again by email, “Why are there no details about the Foundation on the Club’s web site beyond your name and email address in two sentences in the top of the Club’s ‘About Us’ page?”

Novitz’s answer: “An omission perhaps. The Foundation embraces a low profile. We are there to serve, having in all cases served the Society, the Club and other journalistic entities during long, distinguished careers.”

iMediaEthics called and left phone messages for Leonard Sloane, the incoming Secretary-Treasurer for the Deadline Club Foundation, but received no response.

Scholarships Neglected

While the Deadline Club Foundation buys and mails the fancy invitations for the dinner, it has no website and does no mailings for the scholarships. It depends solely on the Deadline Club’s newsletter and website to solicit scholarship applications.

According to the club’s website, only students at six New York (city) area schools with SPJ chapters — Columbia University, Fordham University, Long Island University (LIU), New York University (NYU), St. John’s University and City University of New York (CUNY) — or students who belong to the Deadline Club qualify for scholarships.

But we found that not all of those schools have Deadline Clubs. The SPJ membership coordinator, Linda Hall, told iMediaEthics that NYU, Fordham and St. John’s don’t have “active charters” for chapters. The SPJ national website lists only LIU, Columbia and CUNY as having student chapters.

In fact, two of the three 2011 scholarship winners, NYU students, technically weren’t eligible under contest rules. NYU hasn’t had a student chapter for a decade, and its two winners weren’t Deadline Club members. The scholarship winners told iMediaEthics that they were “not aware” of any SPJ chapter on the NYU campus.

Deadline Club Foundation president Novitz was caught unaware of these facts. He persisted that NYU was a qualifying school with a SPJ student chapter. NYU is “carried by national SPJ as a campus chapter and we respect this standing, interacting wherever possible. All the 2011 winners and 2012 entrants were reviewed by the Club’s scholarship committees.”

Moreover, we found that none of the six schools had been called or had received promotional materials, such as posters for bulletin boards or calls, from either the Club or the Foundation.

We asked Novitz what promotion of the scholarship was done this or past years beyond the Deadline Club newsletter and web site? Any phone calls to the schools? Posters distributed?

Novitz wrote, “My understanding is that numerous phone contacts were made to faculty/advisors, along with word of mouth, solicitations and announcements at Deadline Club events.”

St John’s has no chapter but Nick Hirshon, adjunct journalism professor at St John’s, is trying to get a chapter active by working with Mark Prendergast, a fellow St. John’s instructor and a Deadline Club executive council member. Yet even Hirshon was in the dark on the free money for students. He wrote on March 16: “We haven’t had any dealings with the Deadline Club nor do I know about their scholarships.”

Not surprisingly, few students from the six schools knew to apply. Dr. Donald A. Bird of Long Island University was on the judges committee in 2011. He told iMediaEthics that judges had only 10 to 15 scholarship applications to review; Novitz later confirmed 14. This year, after we called all six schools about the scholarship during our reporting, more professors learned about the contest. Novitz said submissions doubled.

When iMediaEthics asked Novitz why the foundation was unaware that among the six schools cited in eligibility rules that some do not have SPJ student clubs? Novitz blamed the schools and the students.

Novitz wrote, “The Deadline Club is not a parent to campus chapters. Comprised of young adults, they must take responsibility to utilize our offer of participation. This means Club events and scholarships. As an example: Columbia this year was particularly active on all fronts.”

iMediaEthics’ View: Bring costs down, bring scholarship spending up.

For an organization that touts itself as focused on disbursing scholarships to worthy college kids, the Deadline Club is in fact much better at throwing a big annual party at a luxury hotel and giving trophies out.

So what about the Foundation and its back seat role? If scholarships are the “sole interest” and program of the Foundation, as Novitz told us, then the foundation’s mission suffers by letting the club spend profligately on an event it touts as charitable.

In practice, the Deadline Club Awards Dinner isn’t about raising monies to help journalism students. Rather it’s about giving journalists the chance to feel special and have access in the way that the people they often cover are special and have access. It’s about what the Deadline Club website says in advertising ticket sales: “Don’t miss this opportunity to mingle with journalists from The New York Times, The Wall Street Journal, The Associated Press…”

The Foundation pays for the trophies presented at the dinner–but the Club takes all the dinner proceeds. Shown above, the “coveted ‘Rube'” …”distinctive statuettes designed by the late Rube Goldberg” for the Club. (Credit: CharityEvents.org)

Those with modest journalistic accomplishments and affiliations — e.g. rank and file Deadline Club members — can buy tickets, pay to win a trophy, and rub elbows with media celebs. (See here Flickr photos of Newsweek/Daily Beast editor Tina Brown handling out trophies with last year’s Deadline Club president, Rebecca Baker.)

Alan Chernoff of CNN with former Deadline Club President Rebecca Baker and Newsweek/Daily Beast editor Tina Brown at the 2011 Deadline Club Awards. (Credit: Courtesy of Rick Maiman)

However, when only 8 percent of the Deadline Club and Foundation’s event proceeds go toward scholarships, the organization is clearly not focusing on its stated mission.

They should move the dinner off Park Avenue, get a decent wine and cheese sponsor, and entertain in surroundings more befitting a charity and, frankly, the economic reality of their profession at present. Bring costs down, bring scholarship spending up.

If journalists don’t turn out for the event, well, maybe all along they were more interested in being served by tuxedoed waiters at the Waldorf-Astoria and collecting their trophies than putting deserving students through school.

UPDATE: 6/4/2012 11:55 AM EST: Added in three photos.

UPDATE: 6/4/2012 2:45 PM EST: Added two more photos

* GuideStar, a database for information about non-profits, verified that the Deadline Club was a 501(c)(7). But since SPJ headquarters said it is a 501(c)(6), we have gone with their opinion as former president Baker and present president Tarquinio have not returned our calls to determine otherwise. 

Appendices

Who leads the Deadline Club Foundation and the Deadline Club?

Appendix I.tarqui

The Foundation has no website and only two sentences about itself on the Club’s site. “The scholarships are funded through the Deadline Club Foundation. … Students interested in applying for a Deadline Club scholarship should contact Deadline Club Foundation President Charles Novitz at evevideo@earthlink.net.”

Below is the list of board members for the Foundation iMediaEthics received after asking Novitz why the Club’s About us page did not include naming who is running the Foundation.

Appendix II.

Here is the Club’s “About us” page (link) from the Club’s website.

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