How Glenn Greenwald, Pierre Omidyar and The Intercept May Be Fleecing the IRS

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There’s an interesting story at Outside the Beltway today about The Intercept. Here’s how it opens:

A CJR investigation into the finances of the Intercept isn’t particularly interesting to me in and of itself. But two revelations in the story are. First, the wackiness of salaries in journalism.

First Look Media Works, Inc.—the tax-exempt 501(c)(3) side of FLM, and parent of The Intercept—paid Greenwald more than $1.6 million from 2014 to 2017, the last year for which there is a financial disclosure. In Donald Trump’s first year in office, his salary dipped to $369,847, during which time he produced a weekly column—over 50 pieces. The recipient of Edward Snowden’s NSA leak also composes more than 40 tweets a day, on average.

Greenwald’s salary peaked in 2015, hauling in more than $518,000, money that supports an envious life in a gated community on the edge of Rio de Janeiro. Betsy Reed, editor in chief of The Intercept, earned $309,243 in 2016 and $368,249 the year after. Overall, The Intercept spent $9.3 million in salaries in 2017, up $1.4 million from the year before. (Jeremy Scahill, an Intercept cofounder, earned $349,826 in 2015, the last time his compensation was included in a disclosure.)

The story also noted that David Corn of Mother Jones is “only making $171,298. I think I can guess why the lowly Corn “only makes” that amount, a fortune for most Americans: he sucks, as I exposed here.

The CJR story adds:

I don’t mind that Greenwald…is pulling in half a mil from a billionaire. I don’t understand how that gets written off as a charitable contribution, however.

In order to maintain its status as a “public charity,” First Look Media Works must receive “a substantial part of its support from a government unit or from the general public,” according to the Internal Revenue Service. Specifically, it must receive 33.3 percent of its support this way over five years; barring that, 10 percent, with a good enough explanation (“facts and circumstances”). If it were to lose this status, First Look Media Works would become a “private foundation,” and subject to rigorous scrutiny from the IRS.

Private foundations also are required to distribute 5 percent of their assets every year for charitable purposes; in 2017, First Look gave away 3.6 percent of its $25.9 million, and it could conceivably claim its salaries are part of its charitable giving. Foundations must also pay a 1 to 2 percent excise tax on investment income.

Of the $90 million in total disclosed support it has received, $87 million has come from Omidyar, meaning just 2.7 percent of its revenue can be characterized as “public support.” The level of non-Omidyar money to the non-profit side is indeed rising—6 percent in 2017—but First Look Media Works will require there to have been a lot more in 2018 if it wishes to reach the IRS’s more charitable 10 percent threshold.

Read the whole Outside the Beltway story here.

And we’ll be reporting much more about The Intercept and its top personnel during the next two weeks.

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