• by Ray Schultz , Columnist, January 8, 2024

Here’s some proof positive that we need strong, independent newspapers at the local level. 

Nonprofit salaries rise dramatically for top executives, when newspapers disappear, according to a forthcoming study by the University at Buffalo School of Management.  

The study -- to be covered in an upcoming article in the Journal of Accounting and Public Policy -- found that executive compensation rises by 32% at local nonprofits when a newspaper goes out of business.

On average, that amounts to a $38,000 pay hike.

Nonprofit executive spending goes up the same year a local newspaper closes, and that persists over the next three years.

Does this imply that nonprofit executives are paid more when a newspaper is placed under their leadership?

Hardly. First, the study doesn’t seem limited to nonprofits that take over newspapers. 

Yet residual cash and donations declined during that same year, without long-term investments or changes in program spending.

Rather, the authors speculate that this may be happening because the newspaper is no longer there to expose large pay hikes and other abuses. 

“Donors and volunteers expect their contributions to go to the execution of the nonprofits’ mission, rather than leadership salaries, so unreasonably high compensation represents a serious problem for these organizations,” says study co-author Joshua Khavis, assistant professor of accounting and law in the UB School of Management. 

Khavis adds: “Newspaper closures exacerbate problems within these agencies, particularly when they lack internal governance and auditing.”

But here are two things to consider. First, residual cash and donations declined during that same year after a newspaper failed, without long-term investments or changes in program spending.

We don’t mean to quibble with the study, but it could be that newspaperA are also needed to get the word out about nonprofits.

Secondly, this study doesn’t reflect all nonprofits. Many newspapers that are dying out have been taken over and revitalized by nonprofits — indeed, that is the new model for combatting news deserts.