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Newseum’s Executives Raked In Huge Salaries While Organization Lost Millions

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Will Racke Immigration and Foreign Policy Reporter

The Newseum, a hugely expensive museum celebrating the history of American media and the First Amendment, is again on shaky financial ground.

Its principal benefactor, the Freedom Forum, announced Monday that Newseum president and CEO Jeffrey Herbst would step down after failing to lead the museum to financial self-reliance.

“It has become obvious that the current model — where the Freedom Forum is the primary funder of the Newseum — cannot continue indefinitely at this level,” Freedom Forum chief executive Jan Neuharth said in a statement. “Left unchecked, this deficit spending rate would eventually drain the Freedom Forum’s entire endowment, and the annual cash drain prevents us from allocating any new capital to First Amendment programs that are at the heart of our educational mission.”

The Freedom Forum has poured nearly $500 million into the Newseum since 1997, reports the Washington Post. By far the largest chunk of that expenditure came in 2008, when the museum moved from its modest digs in Arlington, Va. to a gleaming, $477 million glass-and-steel building on Pennsylvania Avenue, just a few block away from the U.S. Capitol.

The Newseum has also spent lavishly on staff and salaries, even as attendance continues to fall well short of targets and the enterprise burns cash.

Salaries, benefits and payroll taxes totaled more than $19 million for 263 employees in 2015, or about one-third of the museum’s $61 million in total expenses for that year, according to a Washington Post review of the Newseum’s tax filings. Compensation for executives has been especially high: Herbst earned $259,108 for five months’ work in 2015, and his predecessor, James Duff, took home $1.2 million in 2014.

The big spending continued unabated while the Newseum consistently hemorrhaged millions every year. From 2011 through 2015, the nonprofit museum suffered an average annual loss of $5.1 million, according to IRS Form 990 returns compiled by ProPublica.

The Newseum’s financial woes are largely due to a lack of interest in its product. When Freedom Forum leadership originally proposed the Pennsylvania Avenue facility, they projected the museum would eventually attract over a million visitors annually. Last year, the museum pulled in about 800,000 visitors.

As critics have noted, the Newseum charges $24.95 for adult and $14.95 for youth tickets, while many of the nearby museums on the National Mall are free. The high price of admission makes it hard to compete with popular destinations like the Smithsonian Air and Space Museum, which receives 7 million visitors per year.

The Freedom Forum is now undertaking a comprehensive review of the Newseum’s finances. Options for generating cash include entering into a joint venture with outside investors or an outright sale of the seven-story, 250,000-square-foot building.

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