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Berkshire Hathaway Annual Shareholders Meeting Turns Omaha into Buffettville Destination

August 18, 2012 1 comment

If you’re a practicing journalist for very long in Omaha there are some local stories that will inevitably cross your professional path at one juncture or another.  For years I had known about and experienced some of the fallout from the annual Berkshire Hathaway shareholders meeting that literally brings thousands of folks from around the world to town for face or proximity time with the Oracle of Omaha, billionaire investor and Berkshire chairman Warren Buffett.  Until an Omaha Magazine assignment a few years ago I had never written about the event and while the gig didn’t call for me to actually cover the proceedings but instead to preview them I can at least say I’ve crossed off yet another Omaha tradition from my story bucket list.

 

 

 

©siliconprairienews.com

 

 

 

Berkshire Hathaway Annual Shareholders Tuns Omaha into Buffettville Destination

©by Leo Adam Biga

Originally appeared in Omaha Magazine

Berkshire Hathaway Inc.’s once modest annual shareholders meeting has morphed into what one pundit called “Woodstock for Capitalists.”

Thanks to chairman Warren Buffett’s “Oracle” status, the weekend event’s now a branded experience. Sure, Buffett and partner Charlie Munger’s witty Q & A is popular, but there’s also exhibits by subsidiaries, entertainment, parties, concerts, tours and immersion in-all-things-Omaha. People drop big bucks on buying-junkets at Berkshire-held Borsheims and Nebraska Furniture Mart, which reportedly did $30 million in sales for last year’s spree. Gorat’s and Dairy Queen do well.

Economic crisis or not, thousands will once again venture here from across the nation and globe for the May 1-3 bash. The Saturday May 2 meeting is when Qwest Center Omaha overbrims with activity. Annual meeting director Kelly Muchemore-Broz said she’s seen the event take on “a life of its own.” “The first meeting I attended there were 200 shareholders. When I started helping with the meeting, there were a couple thousand. Back then we were able to pass microphones to the shareholders to ask their questions. Last year we had 32,000.”

The scale, said Qwest Center director of event operations Stan Benis, “is probably the largest we handle from start to finish. People come early and stay late. The event is certainly in a class of its own. The closest would probably be the American Idol tryouts, but even that didn’t take the entire convention center floor space.”

So, what goes into making it all happen?

Months in advance Muchemore-Broz begins working with a core team to plan every element of the all-day event. The devil’s in the details. That includes a theme. This year’s is cowboys. “I try to select themes that are whimsical, colorful and offer a large canvas of creative possibilities,” she said. Designers lead crews that dress the facility — this time in a Western motif. Only the arena’s left untouched. “It’s all business in there,” she said, referring to the venue where the company movie, Q & A and business meeting unfold. Everything else is fair game.

A live reenactment of a stagecoach hold-up will break out right in front of the Qwest on 10th Street. A Wild West show, minus shootouts, is on display inside.

“Every year it’s amazing to see an empty exhibit hall become completely transformed,” said team leader D’Ann Lonowski of Mint Design. “It is an elaborate setup that usually contains a large, central focal point in the exhibit hall. From there we branch out with scenery and signage.”

Muchemore-Broz said the most time-intensive work is “finalizing meeting details —  designing, writing, printing, organizing, communicating and delivering meeting materials to both shareholders and attending exhibitors.” The most labor-intensive? “Stuffing envelopes,” she said.

All of it, the landscaping, centerpieces, booth displays and graphics, right down to passes and visitor guides, Lonowski said, must work together to “create a cohesive environment” and to “bring the theme to life.”

Then there’s the buzz. Think of Buffett as the iconic front man for a hot band whose star power gets shareholders to queue up hours before the meeting starts. “I believe the record was one o’clock the morning of the meeting. However, last year there was a gentlemen who arrived at 11 the night before,” said Muchemore-Broz. In terms of preparations, Benis said, “we treat it just like a rock show. The crowds are lined up outside and pass through a security checkpoint.” Once inside, he said, it’s a race of people “in suits-and-ties trying to get a front row seat.”

With attendance now at sold-out, stadium-concert proportions, demand on area service sectors, such as lodging, is great.

“The downtown hotels do sell out the summer before,” said Muchemore-Broz, “but room availability changes constantly –- right up to the weekend of the meeting. So it doesn’t mean you can’t get a room in Omaha.” However, she added, “If you wait until spring to get a room, it’s possible you could be as far away as Lincoln.”

Omaha Convention & Visitors Bureau executive director Dana Markel said its Visitor Center at 1001 Farnam Center sees double its highest traffic that weekend. “It’s just a spectacular event for Omaha and really nothing compares,” she said. “People come in from all over the world.”

The day of the meeting, Benis said, “parking is always a challenge but people seem to find spaces. A lot of attendees take the hotel shuttles or walk over.” As the arena can’t hold everyone, teleconferencing beams the meeting into the exhibit hall, the ballrooms and the concourses, where the overflow crowd mingles.

 

 

 

 

 

Accommodating all those visitors requires much coordination. Muchemore-Broz said countless people support the meeting and satellite events/activities. “My team members have their own staffs. Everyone at Berkshire works the meeting — including employees at a couple of our local insurance companies. There’s Qwest personnel, Omaha Police Department, Nebraska and Iowa State Patrol, Douglas and Sarpy County deputies. Many local residents volunteer to help. And, of course, the local restaurants, hotels, taxi companies, the airport –- the list goes on and on.”

At the Qwest, Benis said, “our event staff, including cleaners, is around 300 on the day of the meeting. Levy, our concessionaire, will have around 250 on site. Keeping the arena and convention center clean is always a challenge, but this event again is so different because of the length of time visitors are in the building.”

Muchemore-Broz said putting on the event is “a very exhilarating and fun grind. I’m thrilled when it’s over and everyone has had a terrific weekend but it’s sad too.  It’s a big emotional let down when the lights go out. Every year is a lesson in growth and fine tuning.”

Dick Holland Responds to Far Reaching Needs in Omaha

June 4, 2011 5 comments

Dick Holland is the proverbial fat cat with a heart of gold. The avuncular Omaha philanthropist has been a major player on the local philanthropic scene for a few decades now. He was already a highly successful advertising executive when he heeded Warren Buffett’s advice and invested in Berkshire Hathaway. Holland and his late wife Mary became part of that circle of local investors who could trace their incredible wealth to that fateful decision to ride the Buffett-Berkshire snowball that made millionaires out of dozens of ordinary investors. Unlike some donors who prefer to remain silent, Holland is not shy about expressing his opinions about most anything. This classic liberal makes no bones about where he stands on social issues, and you have to give him credit – he really does put his money where his mouth is. The causes that he and Mary put their energies and dollars behind have helped shape the social, cultural, aesthetic landscape in Omaha.

 

 

Holland Performing Arts Center

 

 

Dick Holland Responds to Far Reaching Needs in Omaha

©by Leo Adam Biga

Originally published in the New Horizons

When it comes to big time philanthropy in Omaha, a few individuals and organizations stand out. Richard Holland has become synonymous with king-sized generosity through the Holland Foundation he and his late wife Mary started.

If the 88 year-old retired advertising executive is not making some large financial gift he’s being feted for his achievements or contributions. In April he was honored in Washington, D.C. with the Horatio Alger Award “for his personal and professional success despite humble and challenging beginnings.” While his success is indisputable, how much adversity he faced is debatable. Closer to home Holland was presented the Grace Abbott Award by the Nebraska Children and Families Foundation “for his work in creating positive change for children through community.” No one questions his devotion to helping children and families, causes that legendary social worker Grace Abbott of Nebraska championed.

Several area buildings bear the Holland name in recognition of gifts the couple made, including the Holland Performing Arts Center in downtown Omaha and the Child Saving Institute in midtown. Mary was a CSI volunteer and benefactor. Her passion for its mission of improving the lives of at-risk children was shared by Dick once he saw for himself the pains that staff and volunteers go to in “restoring” broken children.

The couple made sharing their wealth, specifically giving back to their hometown, a major priority through the establishment of their foundation in 1997. Since Mary’s death in 2006 Dick, as he goes by, has continued using the foundation’s sizable assets, $60 million today and expected to be much more when he’s gone, to support a wide range of educational, art, health, human service and community projects.

True to his social justice leanings, Holland is a mover and shaker in Building Bright Futures. The birth-through-college education initiative provides an infrastructure of tutoring, mentoring, career advice and scholarship support for disadvantaged youth.

Like many mega donors he prefers deflecting publicity from himself to the organizations he supports. He makes some notable exceptions to that rule, however. For one thing, he vociferously advocates people of means like himself give for the greater good. For another, he believes in speaking his mind about issues he cares about and isn’t afraid to ruffle feathers along the way, even if those feathers belong to a political kingpin.

Just last March Holland took the occasion of accepting the NEBRASKAlander Award from Gov. Dave Heineman to criticize a stance by the conservative Republican leader.  Heineman publicly opposes renewal of government-funded prenatal services for low income immigrant women in America illegally. Holland, who supports the care, used the evening’s platform to editorialize.

“No one should be denied prenatal care in Nebraska,” he bluntly told the black tie audience and the governor. His comments were viewed as ungracious or inappropriate by some and as a strategic use of the bully pulpit by others.

Consistent with his Depression-era roots, Holland is not rigidly bound by the constraints of political correctness and so he doesn’t mince words or tip-toe around controversy when he talks. Neither does he hide his political allegiance.

“I’m a liberal Democrat and I underline that,” said Holland, a Unitarian who also prides himself on his free-thinking ethos.

 

 

Dick Holland

 

 

He recently sat down for an interview at his home, where he readily shared his frank, colorful, unparsed, unapologetic impressions on the state of America in this prolonged recession. Critics may say someone as rich as Holland can afford to be opinionated because he’s already made his fortune and therefore nothing short of a mismanaged investment portfolio can hurt his standing. Besides, dozens of organizations and institutions rely on his goodwill and they’re not about to object to his pronouncements.

Those who know him understand that Holland’s just being himself when he says it like it is, or at least the way he sees it. Most would concede he’s earned the right to say his piece because unlike some fat cats, he worked for a living. His proverbial ship came in only after he’d launched a highly successful business. It was after that he followed his gut and his head and became an early Berkshire Hathaway investor. The millions he accrued made him a Player, but he first made a name for himself as a partner in one of Omaha’s premier advertising agencies, Holland, Dreves and Reilly, which later merged with a Lincoln agency to become Swanson, Rollheiser, Holland, Inc.

All along the way, from young-man-in-a-hurry to middle-aged entrepreneur to mature tycoon, he’s been speaking his mind, only when you carry the clout and bankroll he does, and make the kind of donations he makes, people are more apt to listen.

The Omaha Central High graduate came from an enterprising family. His father Lewis Holland emigrated to the States from London, by way of Canada, where a summer working the wheat fields convinced him his hands were better suited for illustration than harvesting. Lewis settled in Omaha and rose to advertising director for Orchard and Wilhelm Furniture. He later opened his own ad agency, where Dick eventually joined him and succeeded him.

Before Dick became a bona fide Mad Man in the ad game, he began studies at Omaha University. Then the Second World War intervened and after seeing service in the chemical corps he returned home to finish school, with no plans other than to make it in business and study art. Indeed, he was all set to go to New York when he met Mary. Their courtship kept him here, where he found the ad world fed his creative, intellectual, entrepreneurial instincts. He built Holland, Dreves, Reilly into the second biggest agency in the state, behind only Bozell and Jacobs.

He was certainly a well-connected, self-made man, but by no means rich. That is until he started investing with fellow Central High grad Warren Buffett, who is 10 years his junior. Much like Buffett, he’s careful about where he invests and donates his money. When Holland sees a problem or a need he can help with, he does his homework before committing any funds.

“I’m not throwing money at it,” he said, adding that the best thing about giving is getting “results.” He said, “It’s always great to have ideas but somehow or other somebody has to pay, and pay big, in order to get something done.”

The socially-conscious Holland is keenly aware that in these financially unstable times the gap between the haves and have-nots has only widened, something he finds unforgivable in what is held out to be a land of plenty for all

“What has happened in the United States over the past 40 years has been to make a helluva lot of people poor and less wealthy and to make a few people much richer, and we’ve done that by taxation, by trade policies, by not controlling health insurance costs,” he said. “We increased poverty during this period by at least 35 or 40 percent, but the worst thing that’s happened is the middle class itself, which was coming along after World War II very well, suddenly starting making no gain, particularly when inflation’s  taken into account.”

He said the great promise of the middle class, that repository of the American Dream, has actually lost ground. The prospects of poor folks attaining middle class status and the-home-with-a-white-picket-fence dream that goes along with it seems unreachable for many given the gulf between minimum wage earnings and home mortgage rates

“It’s almost ridiculous,” he said. “We might as well say we’ve screwed ‘em. I mean, it’s a really sad thing because this country is supposed to be a liberal democracy. The general idea is to provide an equal opportunity and life for almost everyone you possibly can. It sure as hell isn’t having huge groups of impoverished people going to prison and posing all kinds of social problems. All these things should be brought under control by education. It is not supposed to be a South American republic with wealth at the top and a whole vast lower class at the bottom, and we’re headed in that direction unless we make some serious changes in the way we approach this subject.”

When Holland considers the deregulated environment that led to unchecked corporate greed, the Wall Street bust, the home mortgage collapse and the shrinking safety net for the disadvantaged, he sees a recipe for disaster.

“We began to deregulate everything, thinking that regulations made things worse and deregulation would make everything better, and the truth is there are a lot of things that need to be regulated, including human behavior in the marketplace,” he said. “We just ignored that. In fact, it’s almost like saying our social system is every man for himself, and that’s crazy. It’s not every man for himself, we’re interdependent on one another on everything we do. This whole thing is wrong. We’re beginning to see we have to make some changes, but the changes I’ve seen so far are not nearly as drastic as I think they should be.

“I guess I sound like a doomsday guy, but I really believe unless we correct some of these things the United States risks its future.”

The health care reform debate brought into stark relief for Holland how far apart Americans are on basic remedies to cure social ills.

“Why can’t we get together more on this?” he asked rhetorically. “I have a hunch that part of it is misunderstanding, a growing ignorance among a large body of the populace, not recognizing just exactly what has happened. Talking about health care reform, poor people or middle class people objecting to it don’t seem to understand all the benefits they’re going to gain from it, they’re worried their health care won’t be as good as it was when it’ll be just as good,”

He said health care reform will help the self-employed and small business employees get the coverage they need but couldn’t afford before and will allow persons with preexisting conditions to qualify without being denied. Someone who will benefit from reform is right under his own roof.

“I have a helper who looks after the house. She has a preexisting condition. I pay her insurance, and it’s just over $1,300 a month,” an amount the woman couldn’t possibly afford on her own. “It’s absolutely wrong,” he said.He said the ever rising cost of health care under a present system of excess and waste drains the nation of vital resources that could be applied elsewhere.

“There’s no question in my mind that a nation as wealthy as the United States having to pay 17 percent of its gross national product for health care versus every other advanced country in the world sticking around 10 or 11 is just leaving several hundred billion dollars on the table that should be available for education, which at the primary level is in terrible shape.”Education has become the main focus of Holland’s philanthropy. Years ago he began seeing the adverse effects of inadequate education. He and Mary became involved in two local programs, Winners Circle and All Our Kids, that assist underachieving schools and students in at-risk neighborhoods. The couple saw the difference that extra resources make in getting kids to do better academically.

 

 

Dick Holland with his late wife, Mary

 

 

He views education as the key to addressing many of the endemic problems impacting America’s inner cities, including Omaha’s. He wasn’t surprised by what a 2007 Omaha World-Herald series revealed in terms of African-American disparity. Blacks here experience some of the worst poverty in the nation and lag far behind the majority population in employment and education. He said he and other local philanthropists, such as Susan Buffett, were already looking into the issue and formulating Building Bright Futures as a means to close ever widening achievement gaps.

“I think one of the things we don’t really understand really well about cause is the effect of abject poverty,” said Holland. “Most people who have a decent life don’t understand that having no money, no transportation, not having an adequate diet or health care or stimulating opportunities for children in a very poor family is a straight line to prison and social problems. Those children, more than half of them, enter kindergarten not ready at all, with limited vocabularies of 400 words when they should have 1,200 to 1,500, and you can just go from there and it just all goes down hill.”

He said those critical of the job teachers do miss the point that too many kids enter school not ready to learn.

“That’s not because a bunch of teachers are dumb, that’s because there’s a bunch of kids that have not been looked after properly from the beginning. You can blame teachers until the cows come home, but I just say to you, How is a teacher going to teach a child who is that far behind? It’s almost impossible, and that’s the first great neglect. If we had been doing that differently, we would avoid an awful lot of this. In fact, we’d avoid most of it.”

When students enter school unprepared to learn, he said, there’s little that can be done.

“After they get into the grades, there again, there’s no family, no money, no reading, no looking after, no stimulation, no going places, and the net result is the child goes from 1st through 4th grade not catching up and instead starting to diminish. By the 7th and 8th grades they find out they can’t hack it and they get awfully damn tired of being regarded as dumb, and the net effect of that is dropping out.

“It’s as plain as the nose on your face this is what goes on and this is what we don’t do anything about. It’s a tragedy and one of the great national disasters.”

Things get more complicated for children who enter the foster care or juvenile justice systems. Teen pregnancy and truancy add more challenges. The entrenched gang activity and gun violence in Omaha, he said, has at its source poverty, broken homes, school drop outs, lack of job skills and few sustainable employment options.

He said the fact the majority of Omaha Public Schools students come from households whose income is so low they qualify for the free/reduced lunch program indicates how widespread the problem is. “When a child has to have a free lunch all you can say is something is terribly wrong,” he said.

To those who would indict an entire school district he points out OPS students attending schools in middle and upper middle class neighborhoods do as well or better than students in the Westside and Millard districts. He said the real disparity exists between students from affluent environments and those from impoverished environments.

“The way I sometimes put it to people is, ‘The kids make the school.’ It’s a funny thing how we don’t understand this. It’s very obvious to me,” he said, that on average children from “reasonable affluence” do better than children from poverty. He said Winners Circle and All Our Kids, two programs under the Building Bright Futures umbrella, are full of success stories, as is another effort he and Bright Futures endorses, Educare. Through these and other programs Bright Futures is very intentional in putting in place the support students need from early childhood on.

“We’re going to have a thousand kids this year in early childhood programs. We have organizations that are working in something like 12 or 14 schools. We’ve got five hundred volunteers of all kinds. And we actually have cases. From the very beginning it’s been shown that if we get a hold of a child, even after this bad beginning, and mentor him properly we can get him higher up in the education scale.  In All Our Kids we have 40 kids in college, 50 that have graduated, several with master’s degrees, and every one of those kids was a kid at risk. So we know what to do if we work hard enough on it. What we have to overcome is the kid who doesn’t think he’s so hot. At home an impoverished child often gets put down, diminishing his ego. We have to overcome that, and that’s one of the things we really try to do.”

Mary Holland recognized there must be a continuum of support in place all through a student’s development. Dick said that’s why she encouraged the merger between Winners Circle, whose focus is on elementary school students, and All Our Kids, whose focus is on junior high and high school students.

 

 

 

 

“We’re trying to take those kids all the way through the 11th grade, taking them every where and teaching them what college requires, what businesses are like, exposing them to the world,” he said. “Bright Futures is not a five or six year program, it’s a 15-year program. It’s gotta be done like that.”

The idea is to get kids on the right track and keep them there. Getting kids to believe in themselves is a big part of it. “If you don’t have a lot of self-confidence you don’t try things, and we try to overcome that. With some kids it works. Some find out, I’m better than I thought, I can do that.”

The goal is qualifying students for college and their attaining a higher education degree. Towards that end, Bright Futures works with students from 12th grade through college.

“We follow you there,” said Holland. “We’ve set up things in universities to help people. We’re still trying to bring it all together. It’s an effort to refresh, restore, make them understand what they have to achieve in order to do anything in life.”

Enough funding is in place that cost is not an issue for Bright Futures students.

“We have adequate scholarship money for thousands, we don’t even have to worry about that, and yet we don’t have enough people to take them that qualify. Just because you graduate from high school doesn’t mean you’re ready for college. Sometimes I think they (schools) get ‘em out of high school just to get ‘em out of high school.”

Holland has a better appreciation than most for the barriers that make all this difficult in practice. He and Mary mentored some young people through All Our Kids and they experienced first-hand how things that most of us take for granted can be stumbling blocks for others. He recounted the time he and Mary mentored a young single mother. Things started out promisingly enough but then a familiar pattern set in that unraveled the whole scenario. He said the young woman got a job, her employer liked her and her performance, but she stopped coming to work and she got fired. The same thing happened at another job. And then another. Each time, he said, the challenge of affording child care, getting health problems addressed and finding reliable transportation sabotaged both the young mother’s and the Hollands’ best efforts.

“She couldn’t hold a job, and we gave up,” he said. It’s not something he’s proud of, but he’s honest about the frustration these situations can produce. Other mentoring experiences ended more positively but still highlighted the challenges people face.

“You find out an awful lot about how tough this is because they don’t have the same kind of get up and go confidence like my daughters, who think that nothing is beyond them. You try to instill that, and when you see a little bit of it happening it’s worth the price of admission.”

He acknowledges that despite government cutbacks there’s still plenty of public aid to help catch people who fall through the cracks. But he feels strongly that a different emphasis is required — one that helps people become self-sufficient contributors.

“We have all kinds of government programs designed to grab these people as they fall off the cliff. The failure is to raise them so they can climb cliffs. There’s no question in my mind sooner or later it’s going to be a major government project. It has to be.”

Policies also need to change in terms of guaranteeing people a living wage, he said.

“Let me give you an idea of how we look at things,” said Holland. “We had a $2 (hourly) minimum wage in 1975 and that was adequate to get people out of poverty, it really was. But since the ‘80s the minimum wage has not kept pace with the cost of living and inflation. It’s kept people in poverty. The Congress of the United States, Republicans and Democrats alike, failed to really go after that. They failed to understand it.”

He said despite the minimum wage having increased to $7.25 in Nebraska and higher in other states, “it ought to be $10 or $11” to give families a chance of not just getting by but getting ahead. “We’re not looking at this problem the right way, we’re just creating it. There’s a dismissal of the problem by people that don’t have it.”

Similarly, he said early childhood programs must be learning centers not babysitting or recreational centers, that address the entire needs of children.

“We have a fractional help system. Somebody helps them after school, somebody sets up a club, somebody sets up something else over here. Some of those after school things make you feel better, they’re fun to go to, they’ve got cookies, but that doesn’t focus on their actual intellectual needs. There’s a lot of that that goes on.”

Holland calls for systemic change that comprehensively affects lives.

“I’m more and more positive it’s going to take a revolution. We’re going to have to stop what we’re doing and start doing something along the lines I’ve talked about. At various times there’s been various suggestions about poverty, but one thing that will help alleviate poverty a helluva lot is money, there’s no getting around it. If it takes 5 or 10 percent of the gross national product it will be a benefit over time because once you have a little money you begin to be able to do a few things, and then you begin to learn a few things, and your children do the same.”

A model approach in his eyes is Educare’s holistic early childhood education. “We’re (surrogate) parents there, that’s what we are,” he said, “and the people that bring their children there know what’s happening, they know that suddenly the whole world is opening for that child. When those kids enter kindergarten they’re ready, they’ve got these big vocabularies. We know it can be done, but we also know the price.”

To those who might balk at the $12,000-$13,000 annual cost of caring for a child in a state-of-the-art center, he said it’s but a fraction of what it costs to incarcerate someone or to navigate someone through the justice system or the foster care system.

Agree or disagree with him, you can be sure Dick Holland will continue putting his money where his mouth is and where his heart is.

Sun Reflection, Revisiting the Omaha Sun’s Pulitzer Prize-Winning Expose of Boys Town

April 28, 2011 6 comments

I remember when the Omaha Sun Newspapers’ investigative report of Boys Town’s finances came out in 1972 my very Catholic mother and my similarly persuaded maternal aunts took it as a low down, dirty attack against “our Boys Town.”  The Father Flanagan established youth care center has always been synonymous with the Catholic Church or at least seen as a Catholic institution, which in fact it has been for its entire life, always with a Catholic priest at its head and traditionally with the local archdiocese and archbishop as its ultimate authority. The story‘s major revelation was that Boys Town still portrayed itself as a poor, humble, perpetually in debt, and on the verge of closing home for boys when in fact it had accumulated a vast fortune through a systematic fundraising apparatus that kept right on churning out teary letters asking for donations — by the tens of million a year –and  taking in millions of dollars above and beyond what it cost to operate the place. Boys Town did not share this bounty with anyone and didn’t want anyone to know about it.  There’s no doubt the story spurred changes at Boys Town, just as there’s no doubt Boys Town is a very different organization today than it was then — now boasting multiple locations around the country and doing business in a very transparent manner.  As for the weekly Sun, which was owned by Warren Buffett at the time, it went out of business a little more than a decade after winning the Pulitzer Prize for the Boys Town investigative report.  The following piece I wrote for The Reader (www.thereader.com) takes a look at that report and, in effect, the story behind the story.

NOTE: Also on this blog see my profile of Stan Lipsey titled “Buffett’s Newspaper Man.”   Lipsey is back in Omaha for the 2011 Berkshire Hathaway shareholders confab and for an exhibition of his photography at KANEKO. He’s also participating in a panel discussion at KANEKO about a life of creativity in business.  For more on KANEKO, see my story titled “Open Minds.”

Of course, Warren Buffett and Berkshire are much in the news these days because of the scandal involving David Sokol, the once heir apparent to Buffett as head of Berkshire.

 

 

 Photo of Omaha Sun newsroom provided by Randy Brown


 

 

Sun Reflection, Revisiting the Omaha Sun’s Pulitzer Prize-Winning Expose of Boys Town

©by Leo Adam Biga

As seen in the The Reader (www.thereader.com)

When readers picked up their March 30, 1972 issue of the weekly Sun Newspaper, they could hardly believe their eyes.

The small but enterprising paper with multiple neighborhood editions had called out a venerable Omaha institution, Boys Town, in crusading journalistic fashion terms. No crime was alleged, but rather the violation of a public trust.

A front page headline asked accusingly, “Whatever happened to Father Flanagan’s dream?” That was followed by the stark declaration, “Boys Town: 700 boys with $209 million.” Thus the Sun set the incredulous tone and exploited the shocking results of a special eight-page report inside provocatively titled, “Boys Town, America’s wealthiest city?”

The subhead, “Give an account of thy stewardship,” was a Biblical admonition for a quasi-Catholic organization that cried poverty in syrupy mass donation appeals each Christmas, while hoarding a fortune no one was supposed to know about or, if they did, question.

 

 

 

 

Some movers and shakers were prominent characters in the story and in the story behind the story. Sun owner Warren Buffett pointed to the records that revealed Boys Town’s “hidden” assets. Publisher Stan Lipsey supported the investigation. Managing editor Paul Williams masterminded and ran it.

The power behind Boys Town lay with Monsignor Nicholas Wegner and Omaha Archbishop Daniel Sheehan. Aged civic-social leaders comprised a rubber-stamp board.

The Sun’s ambitious owner and brash newspaper took to task an organization grown fat, smug and out of touch with the times and its constituencies. Wegner, who succeeded Boys Town’s iconic founder, was still steeped in Depression-era thinking. During much of Fr. Flanagan’s tenure the home did struggle, but after the 1938 MGM movie Boys Town, donations sharply increased, particularly after fundraising pioneer Ted Miller designed a massive, frighteningly effective direct mail campaign.

Pleas for money continued even as fortunes swelled. Making matters worse, Boys Town did little with its wealth after a 1948 building project. It shelved new initiatives and rejected best practices, effectively standing still, stuck in time.

The Sun implied Boys Town betrayed Flanagan’s mission by staying mired in outdated attitudes and methods. Buffett would later write, “We reported the extraordinary contrast between decreasing services and mounting wealth.”

The story won the Sun seven national awards, including a 1973 Pulitzer Prize for local investigative specialized reporting, the same year the Washington Post’s Watergate series took the Pulitzer for Public Service. The papers earlier swapped in the same categories at the national journalism society, Sigma Delta Chi, awards.

More importantly, the Sun’s probing coverage compelled an organization that after Flanagan’s death in 1948 behaved like an imperious empire, paralyzed in what Williams termed “institutional inertia,” to enact long overdue reforms.

Today’s Boys Town hardly resembles that fossilized institution. Its entire methodology of youth care has been transformed. Boys Town is now recognized as a national leader in parenting and child speech-hearing impairment research and treatment.

The Sun was the liberal, plucky alternative to the conservative, timid Omaha World-Herald. Under Williams, the paper previously won awards for covering Omaha environmental issues and Omaha Transit Company irregularities. Boys Town, however, was a bigger target. While the report did the Sun no harm financially, the paper lost its edge when Williams left a couple years later. In 1980, Buffett sold it to a Chicago publisher. After an anti-trust suit against the World-Herald, the Sun disbanded in 1983.

Nearly 40 years since the story shook Boys Town’s foundation, The Readerspoke to key players who worked on the project.

Doug Smith, the youngest, least experienced member of the reporting team Williams assembled, says the irascible editor was the driving force behind “Project B.”

“Paul wanted that big recognition, he wanted that big prize … and he really went after it.

“I think he knew this was going to be the biggest story of his career, or not. I thought, maybe we all thought — he’s obsessed with this thing. When we got the announcement we won the Pulitzer one of the guys said, ‘Ahab has his whale.’ Paul was a great leader on this project. He did bring it home.”

“The story was really there for the taking by somebody with energy and enterprise, and that’s what Paul Williams had,” says Randy Brown, hired as associate managing editor just as the Sun launched the investigation. “He was the brains.”

As the team dug into the reality behind the carefully cultivated Boys Town facade, it became clear the wary institution was paranoid for a reason.

“I felt the story was really justified,” says Smith.

He and his colleagues knew the heart-tugging letters Boys Town sent out suggesting the boys would go hungry without donations were pure hokum.

“I’d say an unethical appeal considering they were sitting on a lot of money,” he says.

Team member Wes Iversen, the Sun business editor, was dismayed Boys Town made it appear “as though the wolf were at the door when they had a big pile of money they were doing nothing with.”

In the end, Boys Town was its own worst enemy.

“It was a case of they had lost their way, their mission,” says Smith. “It was the story of an American institution that had gone off track.”

When Smith asked Boys Town post office officials how much mail went through to try and gauge the scope of fundraising efforts, a reluctant staffer was quoted saying: “The reason they won’t let me give out the amount of postal receipts is because people will get everything misconstrued.”

It turned out up to 50 million appeal letters went out per year. The volume suggested a cash cow system returning huge revenues.

Boys Town officials repeatedly made ill-advised statements that came back to haunt them. In classic investigative fashion Smith and photographer Len Cook burst in on its secret direct mail apparatus, housed in a downtown building, to find 125 women typing the appeal letters and a flustered fundraising director trying to hush it up.

The Sun quoted the director as saying, “Please don’t mention this in your article. It’s so easy for the public to get the wrong idea. People will think we’re rich.”

Smith recalls Boys Town as remarkably unsavvy then in handling press inquiries. “At that time they were not equipped to handle this kind of assault by journalists,” he says.

Ironically, Flanagan had been a genius at promotion. He invited Hollywood to make two feature films on Boys Town. He cooperated with newsreels, he did national radio broadcasts, he toured the home’s band and football team nationwide, he made speaking appearances across the country and he welcomed celebrities to the campus.

By the early ’‘70s the cautious Wegner isolated Boys Town, making it an island cut-off from the world.

Bulldog reporter Mick Rood interviewed Wegner and caught him in several untruths, including the assertion Boys Town was in debt. Even when confronted by the facts, Wegner and, in a separate interview, Sheehan indicated the fundraising would continue unabated. Business as usual. The arrogant dismissal of serious questions, such as when would enough money be enough, made everything Boys Town said suspect.

“When you as a reporter or newspaper discover that,” says Rood, “that makes you want to dig. It makes you forget for a little while that the poor monsignor was in very poor health, it makes you forget that some people wouldn’t like the story because people don’t need to be deceived like that. That’s the motivation right there.”

 

 

Form 990

 

 

For that interview, Rood was armed with sensitive, though public record documents that delineated the true picture of Boys Town’s finances. Buffett had informed the Sun team of a federal tax statement, Form 990, that nonprofits were required to file. He had to file one for his own foundation and it dawned on him Boys Town did, too. It took much wrangling and waiting to pry a copy from the Internal Revenue Service. When all 100 pages arrived the scope of the holdings stunned the team. Boys Town stocks, bonds, properties, though undervalued, gave it a net worth exceeding Omaha’s largest bank, and an endowment surpassing all but a few universities nationwide.

“I didn’t know quite what to think of it because the numbers were enormous,” says Brown. “It was jaw dropping.”

Iversen says it was “a money machine.”

Until those documents were secured, the team had only been able to speculate about Boy’s Town’s riches. With the hard numbers in hand, all was exposed.

“This was the whole kit and caboodle,” says Rood.

The surviving team members readily credit Buffett with giving them the golden egg that pushed the project over the top.

“Without that it would have been a good story, but not a Pulitzer story,” says Lipsey.

 

Stan Lipsey

 

 

 

Buffet also helped the Sun analyze the Boys Town treasure chest.

“I worked with Warren compiling the numbers, making sure they added up, getting all the details straight, ready for publication,” says Brown. “And he insisted on double checking everything. We knew we were taking on an institution that’s beloved in the community and he didn’t want any mistakes — not 25 cents in the wrong column.”

Rood says Williams was methodical planning assignments and supervising their execution: “He made very thorough outlines … very detailed things, so we were all well aware of what we were supposed to be doing. It was also a way to make you accountable. I mean, if it was written down there you better have done it. There was no excuse. You had to have made that call you said you were going to make.

“We worked separately most all of the time. We had periodic meetings to compare notes. It was a very disciplined operation — one you wouldn’t expect from such a small paper. He was the best editor I ever worked for, ever will work for, and a good friend.”

Brown says, “everything was reread and reedited,” adding, “It was a grind.”

Iversen recalls months of slogging away, interspersed by occasional euphoria.

“A lot of it is just hard, heavy-duty grunt work,” he says. “At that time we had no easy way to check things. It’s just a lot of legwork, a lot of looking things up in books in libraries and county offices and you name it, running around checking various places and trying to piece things together. At times it could seem like drudgery, at other times when we would get a major insight everybody would say, Ah-ha, now we see where this is headed and we’ve made a breakthrough here.

“It was really heady times.”

Some intrigue did attend the story. Though the stakes were much different from the Post’s Watergate coverage, the Sun had its own Deep Throat in Claude Organ, a reform-minded Boys Town board member. Buffett met with Dr. Organ about the project and the surgeon-educator steered the Sun in the right direction.

“Everything was closely held,” says Rood. “We were more than sworn to secrecy.”

 

 

Warren Buffett

 

 

During the investigation’s last few weeks Williams took the precaution of the team working out of his home’s basement rec room for fear of losing the story to the Herald. Rood says a defensive Boys Town came to suspect the story was more than the routine historical piece the Sun painted it as. When the report broke, no one at Boys Town was prepared for its all-encompassing depth. The expose laid Boys Town bare.

Much more could have been published, team members say.

The Sun did many follow-ups over the next year and beyond as Boys Town changed its administration and board, opened the campus to consultants, replaced its warehousing of youth with a home-family model and developed new facilities and programs.

In 1974 a desperate Boys Town, still reeling from the fallout from the story, which went national and spawned new stories, hired Omaha PR man Bill Ramsey to help repair its tarnished image. It took time, but things turned around by the late 1970s-early 1980s.

Current Boys Town spokesperson Kara Neuverth says the institution did act on the reported misalignment of net worth and youth services:

“We listened to that feedback regarding some fund raising practices. What I can tell you about this organization today is that we are transparent and we pride ourselves on our experience. For an organization to remain at the forefront it must adjust its practices to stakeholder input, changing times, and new knowledge — just as we did 40 years ago. That is the lesson learned.”

The Sun investigative team scattered to the far winds. The shared Pulitzer opened doors for Rood, Iversen, Brown and Smith. Paul Williams left to teach at Ohio State. He also co-founded IRE, Investigative Reporters and Editors, and wrote a book before his untimely death. Publisher Stan Lipsey went on to head the Buffalo News for Buffett.

The story solidified Buffet’s long-held interest in newspapers — he soon acquired a major share of the Washington Post — and confirmed for him their vital role in a free society. In a letter to Berkshire Hathaway shareholders he wrote the Sun’s achievement “vividly illustrated that size need not be equated with significance in publishing.”

The Changing Face of Boys Town and its Finances

The following sidebar appears in the print edition of The Reader but not in the Web edition:

©by Leo Adam Biga

In 1972 you had to be a member of the Boys Town inner circle to see its balance sheet. Or, as in the case of the Sun Newspapers, you had to know about a new and therefore obscure tax form filing that required nonprofits to report their financials. Even then, it took the Sun time and expense to obtain the public records, documents and figures Boys Town dearly wanted to suppress.

Today, due in part to the Sun’s disclosures of Boys Town’s worth, the law requires nonprofits to be much more transparent about their assets.  The same information the Sun had to go to some lengths to get 40 years ago, anyone with access to a computer can easily and freely obtain today with a few keystrokes or mouse clicks.

In 2009, Boys Town, which now has a national reach, reported $1 billion in assets, $810 million in the Father Flanagan’s Fund for Needy Children (the institution’s endowment) and $122 million in liabilities for a net worth of $903 million. Five to six percent of the endowment supports annual operations.

Boys Town reports nearly 90 percent of every dollar received is spent on child care.

Charity Navigator awarded it a four-star rating for sound fiscal management. Boys Town’s accountability has earned it recognition as a Better Business Bureau Wise Giving Alliance accredited charity. These are all signs of how the organization does business very differently now compared to when the Sun rattled its cage.

A Shameless Plug: Lit Coach Erin Reel Highlights this Site, leoadambiga.wordpress.com, aka Leo Adam Biga’s Blog, Among Her Picks for Blogs That Work

March 31, 2011 3 comments

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A Shameless Plug: Lit Coach Erin Reel Highlights this Site, leoadambiga.wordpress.com, aka Leo Adam Biga’s Blog, Among Her Picks for Blogs That Work

©by Erin Reel from her blog site, The Lit Coach’s Guide to the Writer’s Life (http://thelitcoach.blogspot.com/)

The best blogs serve a purpose greater than sharing miscellaneous tid bits about the blogger’s day – they educate, inform, inspire, humor, enlighten – they share a unique perspective.

Today’s Blog That Works spotlight shines on Leo Adam Biga, Omaha‘s most prolific award-winning cultural journalist. Biga’s eclectic body of work spans from Omaha filmmaker Alexander Payne (SidewaysAbout Schmidt) tofashion and film making to Warren Buffett and just about everything in between. Rather than collect his published pieces in files, unexposed to new readers, Biga collected his published work and archived them on his blog. Why? To gain new readers and showcase his body of work to prospective clients.

Here’s what Biga had to say:

“My blog is primarily intended as a showcase of my cultural journalism. I want the visitor to the site to experience it the way they would a gallery featuring my work. This exhibition or sampling quickly reveals my brand — “I write stories about people, their passions, and their magnificent obsessions” — as well as the scope of my work within that brand, which is quite broad and eclectic. The home page features 10 of my stories, each in their entirety, and those front page stories, which change every few days or weeks, consistently reflect the wide range of interests, subjects, and themes found on the blog. The blog is set up so that whether the visitor is on the home page or clicks on to any page featuring an individual story the entire inventory or index of stories on the blog is always accessible, organized by tags, categories, et cetera. Visitors can also search the site by using key words.

The blog is not monetized. So why do I repurpose my work in this way? Well, every writer likes to have his or her work read, therefore on one level I do it in order to find a new, perhaps larger audience for the stories. The blog is an excellent way for me to have an expanded Web presence. In addition to it, I have a LinkedIn site, a Google site, and a Facebook site, among others, most of them linked to each other. I also use the blog as a portfolio I refer contacts and prospective clients to.” 

And Leo tells me showcasing his body of work blog style has allowed those interested in hiring Biga for new writing gigs has allowed them to get a good feel for his writing. He’s received more offers to write than if he hadn’t set up the blog as his massive online writing brochure.

Leo goes on to say, “The real satisfaction I suppose comes in having a public gallery of my work, even if it only is a small sampling of it, that I can refer or direct people to or that people can discover all on their own. In fact, it appears as if the vast majority of visitors to my site end up there by virtue of Web searches they do and their finding links to my blog as part of the search results that come up. Because I have so many stories out there on so many different topics my blog shows up as part of an endless variety of searches. It’s also kind of fun to have people I wrote about, in some cases years ago, find stories I did about them and contact me, reliving old times or bringing me up to date with what they’re doing today. “

Check out Leo’s blog. There really is something for every reader.

Buffett’s Newspaper Man, Stanford Lipsey


Another native Omahan who has achieved great things is Stanford Lipsey.  This publishing scion has enjoyed a full career in journalism.  A good deal of his newspapering life has been associated with billionaire investor Warren Buffett.  The two men are good friends. Lipsey retains strong ties to Omaha, where Buffett and Berkshire Hathaway are based.  This story appeared in The Reader (www.thereader.com) on the eve of the annual Berkshire shareholders meeting, which draws tens of thousands to Omaha for what’s been described as a Wooodstock for capitalists. Lispey and Buffett made journalistic history back in the early 1970s with the Omaha Sun Newspapers, when an investigative report into Boys Town’s vast financial holdings and wealth ended up winning the paper and its publishing team a Pulitzer Prize.  Buffett later hired Lipsey as publisher of the Buffalo News, a position he continues in today.

NOTE: See my new story on this blog about the Omaha Sun’s Pulitzer winning report on Boys Town during Lipsey’s reign as publisher.  The story is titled “Sun Reflection.”  Lipsey is back in Omaha for the 2011 Berkshire Hathaway confab and for an exhibition of his photography at KANEKO.  He’s also participating in a panel discussion at KANEKO about a life of creativity in business.  For more on KANEKO, see my story titled “Open Minds.”

Of course, Warren Buffett and Berkshire are much in the news these days because of the scandal involving David Sokol, the once heir apparent to Buffett as head of Berkshire.

 

Stan Lipsey with his wife

 

 

 

Buffett’s Newspaper Man, Stanford Lipsey

©by Leo Adam Biga

Originally published in The Reader (www.thereader.com)

 

Omaha native and veteran newspaper publisher Stanford Lipsey has seen and done it all in a six-decade journalism career that’s closely allied him to Berkshire Hathaway CEO Warren Buffett.

Lipsey climbed the ranks at the now defunct Sun Newspapers in Omaha to become owner-publisher. In 1969 he sold the Sun to Buffett, but remained as publisher. In 1972 Lipsey was at the helm when the Sun, acting on a lead from Buffett, poked into the finances of Boys Town. The Sun’s probing led to sweeping changes at the charitable organization and earned the paper a Pulitzer Prize.

Buffett later appointed Lipsey publisher of the Buffalo (N.Y.) News. Lipsey is still its publisher today. In 1988 he was named a Berkshire vice president. The old friends, inducted in the Omaha Press Club Hall of Fame in 2008, may or may not get together this weekend at Berkshire’s annual shareholders’ meeting in Omaha.

Lipsey, who got his start as a photojournalist, came out with a photography book, Affinity of Form (2009, powerHouse Books), that can be purchased at the Qwest Center exhibition hall during the May 1 meeting or at the Bookworm. He still shoots, only with digital equipment, not the Brownie or Speed Graphic he began with. Instead of snapping news pics, he makes fine art images for galleries and books.

His life as a news hound has spanned hot type, clattering typewriters, digital off-set presses, computerized newsrooms and newspaper web sites. His training began at Omaha Central High and the University of Michigan. While in the U.S. Air Force he served as editor of the Offutt Air Force Base publication Air Pulse.

He began working at the Sun in 1952, learning the business inside and out. Lipsey said the Sun “was small enough so I could do it all.” He considers a well-rounded newspapering experience an “invaluable” education most publishers “don’t have” today. “In the large daily business hardly anybody has it. They come from one field. They were either an editor or an advertising manager or a business manager, but they don’t have the crossover background between news and advertising,” he said.

Buffett said, “He’s a real journalist but he understands every aspect of the business, and that was one of the considerations why we wanted him up in Buffalo.”

Under Lipsey’s watch, managing editor Paul Williams guided the Sun expose of Boys Town when the still single-campus, dormitory-style, boys-only home used weepy mass mail appeals to portray itself as destitute. The Sun revealed Boys Town sat on a $162 million endowment dwarfing that of many national institutions. Property and building assets created a total net value in excess of $200 million.

“We knew there was a story there, but we didn’t know how to get it,” said Buffett. “I was sitting at home doing the tax return for my own tiny little foundation and there was something in the instructions that said my tax return would be public. All of a sudden it dawned on me if a tax-free institution such as this foundation of mine had to make the return public, Boys Town probably did.”

The story goes Buffett called on a well-placed source who sat on the Boys Town board to verify Sun suspicions the nonprofit had accumulated a fortune. Public records confirmed the rest. Public indignation was strong.

“It’s a helluva story,” Lipsey said by phone. “It was so well done.”

He said breaking the exclusive, which major news outlets picked up, was what the Sun needed to do to stay relevant opposite the Omaha World-Herald.

In Buffett, the paper had deep pockets and considerable clout. In Williams, who went on to help found Investigative Reporters and Editors, Inc., a solid newsman. In Lipsey, a crusading publisher.

“See, we didn’t have the advantage of being a daily, so when we came out we had to have something fresh, so we did investigative reports, enterprise reports,” said Lipsey. “Warren, Paul Williams and I would sit down and brainstorm — what’s the story, what should we go after, and then this thing came along — it actually came along on a tip from Warren. It made for a great story.”

Like Lipsey, Buffett still feels a sense of pride about what they did.

“That was a watershed. It didn’t do us any good commercially as a paper, but that was probably as interesting a month or two of my life as has ever occurred,” said Buffett.

The report upset the Catholic community. Defensive Boys Town officials attacked the Sun as “a yellow rag.” The gutsy coverage earned the Sun the first Pulitzer given to a weekly for Local Investigative Specialized Reporting. It’s the last Pulitzer, period, won by any Nebraska newspaper. The award also recognized the reforms the story instigated. A chastened, more transparent Boys Town embarked on a course serving at-risk youth in new, home-like environs across the nation. Boys Town also built the first of its major research facilities.

When Buffett acquired the Buffalo News in 1977 he asked Lipsey for help. “When I was in trouble up in Buffalo with the paper I called him,” said Buffett. At first Lipsey served as a consultant, commuting between Omaha and Buffalo, before accepting the role of publisher in 1983. The two men share an abiding mutual respect. “I admire Warren. I would say he’s someone who has taught me a lot. He’s a steady hand. He makes decisions that are totally moral, totally wise, and for the right reasons, and they’re not always necessarily for profit,” said Lipsey. “He won’t buy a company where the management isn’t in place. The only exception to that is me.”

 

 

Warren Buffett

 

 

The book The Warren Buffett CEO, Secrets from the Berkshire Hathaway Managers, devotes a chapter to “the turnaround” Lipsey engineered in Buffalo.

“You see a newspaper doesn’t really match what Warren buys in companies because this paper was losing money when he bought it but he always had enormous respect and love for newspapers. But then he was short — we had a very good editor but we didn’t have a good publisher here. He had to get one to come in, and he tapped me,” said Lipsey. “There was a daily newspaper here in competition called the Courier Express. It became one of these fights to the death type thing. I got very interested in that. That was an enormous challenge, and I wanted to make sure we survived.”

Buffett said Lipsey was well qualified coming from a small paper to oversee a big paper because he knew all phases of newspaper operations: “Stan knew the press room, he knew circulation, he knew ad sales, he knew the newsroom. Stan’’s been a terrific friend and business associate. He’s over 80 now and he goes to work every day with the same zest as always. There’s no one I trust more.”

With the dynamic pair behind it, the Buffalo News won out. Lipsey’s still in charge, but the shrinking place of printed newspapers in this digital age concerns him

“Certainly right now the newspaper business is challenging. We’re doing better than most papers, but we’re not doing well. All our numbers are way down. Circulation, advertising, profit, volume, everything, and I think you’ve seen the same thing with the World-Herald, and they were enormously profitable. The trouble with newspapers is they’re extraordinarily costly, so when you have a sharp fall off in revenue it’s hard to cut as much as you’re losing, because you have to so many people in the newsroom, so many people running the presses, so many people driving the delivery trucks. That’s the problem.”

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