Ed Brayton is a journalist, commentator and speaker. He is the co-founder and president of 
Debbie Schlussel has another follow up on Hannity in which she insists that he did not pay for all those private jets, hotel suites and limos himself when hosting those Freedom Concerts. A lot of it is based on an unnamed source, so it's impossible to judge whether it's accurate or not. But the basic allegation is that you have the Freedom Concerts and the Freedom Alliance, owned separately.
Freedom Alliance is the non-profit that gets $4 from every ticket sold to the Freedom Concerts, which is a private company owned by Hannity's agent. And while it's technically correct that Freedom Alliance doesn't pay for all that travel, Freedom Concerts does.
In fact, despite the written denials of both North and Freedom Alliance chief Thomas Kilgannon, Sean Hannity did NOT pay for his own private jet flights to the various Freedom Concerts. In fact, the money for his expensive travel came right from the revenue of the Freedom Concerts, a big, profitable business, which isn't owned or operated by Freedom Alliance. While the charity is technically correct that Freedom Alliance didn't pay for it in recent years, in fact Freedom Concert revenue, which is controlled by Hannity's speaking engagement agents, did. The operant question here is, who owns the Freedom Concerts?The answer, according to an insider, is apparently Premiere Speakers Bureau, owned by Duane Ward, Oliver North's longtime PR man, and the speaking engagement agent for both North and Hannity, as well as many FOX News and other conservative personalities. Premiere runs the Freedom Concerts and owns the FreedomConcerts.com domain name, sells the Freedom Concerts merchandise, etc. While only a $4 surcharge on Freedom Concert tickets goes to Freedom Alliance, the rest is controlled by Ward and his various companies. I contacted Duane Ward via e-mail (duane@premierespeakers.com) and telephone. He did not respond to questions, which included a request for Freedom Concerts' financial records and an accounting of Freedom Concert revenues and Premiere travel arrangements for Hannity to fly in high-style to the events. And the inside source-who asked to remain anonymous because of legitimate fears of retaliation by Ward and Hannity-says it's a huge profit center for Ward and Premiere.
None of this strikes me as problematic, though. If all that is promised is that the $4 surcharge on each ticket goes to the Freedom Alliance, and it does, then there's really no problem with that. The company can spend whatever they want to get Hannity there to host it.
The real problem here remains with Freedom Alliance itself and the very small percentage of its revenue that goes to those it claims to help. A legitimate non-profit should have no more than 20% overhead; Freedom Alliance has at least 80% overhead, and it has gone as high as 95% over the last few years. That's the problem.
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While it may be legal to separate the two functions, it seems highly immoral to publicize a concert as helping charity but put in the fine print that only a small ($4) portion actually does so.
I am assuming there is fine print and that most purchasers would not expect that only $4 of the ticket price goes to charity. That 80% of the $4 'charity' is used to pay salaries and perpetuate the lie of providing huge amounts of help to vets adds poop to the soap icing on that cupcake.
Posted by: MikeMa | March 29, 2010 9:45 AM
There, fixed it for you. I agree that it's not legally problematic, but as a PR issue, it could be a real problem for them, which is why they'll never let Schlussel get her hands on their records.
Posted by: James Hanley | March 29, 2010 10:14 AM
Here's a pointer to the source of the $4 "donation", though the original page is no longer available:
http://www.dailykos.com/storyonly/2007/8/6/6165/93743
And this is the language they use on the Freedom Concerts Home Page:
A "$4 donation" and "all net proceeds" are most definitely not the same thing (unless a lawyer is involved, I guess). Perhaps the policy has changed since 2007, but it would seem to me that the onus is on Hannity's Freedom Concerts to clarify how much of each the ticket price does go to charity. It would not be that hard to do, after all.
Posted by: tacitus | March 29, 2010 10:38 AM
Freedom Concerts are owned by an entity owned by Ollie North's PR guy? I wouldn't be surprised if this arrangement had been made right after -- and in direct response to -- controversy first surfacing about Hannity's extravagent travel style. This arrangement, if true, has "legal fiction" written all over it.
Posted by: Raging Bee | March 29, 2010 10:45 AM
Actually, I would say unless a tax accountant is involved. If you write up your expenses properly, the net proceeds could be $4 per ticket. I have a friend who grosses thousands of dollars a year in consulting fees, but nets only a couple of hundred. His expenses are substantial, all perfectly legal, and they keep the money out of his ex's hands. So I don't think Freedom Concerts would find it too hard to make this work out that way.
Posted by: James Hanley | March 29, 2010 11:00 AM
This is a shell game. Setting-up two companies is a vital part of this fraud. If you go to the website., they make it appear as if Freedom Alliance and not Freedom Concerts is running the show. There is no mention that Freedom Alliance only gets four dollars. It makes it sound as if a much higher proportion of the money is going to the Freedom Alliance. Tickets are being sound for anywhere from $125~$75 dollars. If that four dollar mark is true, then at best the charity is getting 5% of the proceeds, and for the most expensive tickets, right around 3%.
The worst part is that they did this con so poorly. They got greedy, (um...greedier..) All of the skimming should happen when the money is in the hands of the Freedom Concert. That way, when the little bit of money does trickle down to the Freedom Alliance, they can give a much higher percentage to the actual stated cause. They could claim that 90% of the Freedom Alliance money was going directly to the soldiers, and have the documents to prove it. It would get most people off their backs. And they could do that while pocketing up to 95% for the concert proceeds.
Posted by: Holytape | March 29, 2010 11:11 AM
Freedom Alliance, in it's Summer, 2009 newsletter (prior to the 2009 Freedom Concerts) claims that it has received $9M proceeds from the 2003 - 2009 concerts.
That ticket price breakdown posted in the Daily Kos appears to be the only source for this $4 claim, yet it has become gospel to Ms. Schlussel (and to many others). But if that was true for all of the concerts, to generate $9M in proceeds to Freedom Alliance, it would require there to have been 167 concerts, each attended by 15,000 people paying the $4 surcharge.
Obviously, this did not happen. Therefore, it is highly likely that if Freedom Alliance did receive $9M in proceeds, that the statement on the Freedom Concerts website is correct, and that Freedom Alliance receives the net of gross receipts minus costs to produce the concert.
If Freedom Alliance did receive $9M in proceeds from the Freedom Concerts and Premier Speakers, than what does that do to Ms. Schlussel's claims that Premier Speakers is doing something wrong?
Regarding the expenses of Freedom Alliance, I have looked over their site, newsletters and tax returns posted on the site. Ms. Schlussel did not discuss several of their programs, such as troop appreciation dinners, where as many as 155 soldiers and their families at a time are treated to a dinner function at a steakhouse, golf tournaments where 100 troops play in their own tournament, gift packages sent overseas which account for much of the postal expense, and finally, a youth military leadership camp.
The expenses for these events and others are embedded in the "Program Services" portion of the tax returns, but are not broken out separately.
Ms. Schlussel is bothered by the idea that injured soldiers received small, individual grants that she deems are paltry compared to the soldiers injuries. The problem is that she either didn't read, or ignored the information on the site, that indicates that these grants are designed to assist the soldier with short-term financial issues, such as flying a spouse to the hospital to visit the wounded soldier, pay for groceries before military benefits kick in, or even day care for children while the spouse visits.
Finally, the scholarship program is set up as a trust that is designed to award scholarships to children of the dead and 100% disabled as they (the children) reach college age. In some cases, the awards are large enough to pay for a full year of school, in others, they appear to be partial, perhaps augmenting other scholarships or previously established college funds. This fund is expected to deal with increasing numbers of students over the next 15 - 20 years.
Yesterday afternoon and evening, I respectfully made comments regarding all of these points on Ms. Schlussel's blog. Today, as of one hour ago, all my comments are missing from her site.
FWIW, I have no connection to Freedom Alliance, Freedom Concerts or Premier Speakers, and have never attended a Freedom Concert.
Posted by: Dave in Reno | March 29, 2010 11:49 AM
BTW, I did not address the issue of Hannity's travel expenses, first because I am somewhat ambivalent about them, since Hannity is both a draw to the concerts and entertains at these shows, and secondly, because I think that this issue is secondary to Ms. Schlussel's attacks on the two organizations.
Though quite conservative, Ms. Schlussel has a bone to pick with Hannity, possibly due to a claim of hers that Hannity quoted her work without attribution during his radio or TV show. She often refers to him as "Vanity". Real mature.
Her opinion of Hannity and apparent desire to discredit him may be her main motivation for writing this series of articles.
Posted by: Dave in Reno | March 29, 2010 12:11 PM
The original page is no longer there, but there is little doubt that the link to the page promoting a Freedom Concert in 2007 was active at the time the Kos post was written, so I see little point in casting doubt on that source.
The Freedom Concert organization could easily lay the controversy to rest by detailing how much of the ticket's price is donated to Freedom Alliance "musical talent, production, promotion and venue expenses". So why don't you send them an email, Dave in Reno, and ask them yourself for that information?
Posted by: tacitus | March 29, 2010 12:19 PM
Tacitus,
I didn't mean to imply that whoever posted that info to the Daily Kos was lying. I should have been more specific.
What I should have said -- but thought it would be too long -- was that the charges shown may have only applied to that one concert at the Coors Amphitheatre in Chula Vista (near San Diego), CA.
Note that the $4.75 "facility fee" is broken out. This is most likely a tax imposed by the city on the venue.
This "donation breakout may have been California specific, due to the vast number of regulations in the state (one of the reasons I left the SF Bay Area after living there my entire life).
The point is, the Freedom Concert website says that FA gets gross minus expenses.
If I were Ms. Schlussel, before publishing an article that could be considered libel, I would have contacted several concert promoters to do a "sanity check" on the costs of putting on three-act amphitheater and arena shows.
I feel no need to email Premier or Freedom Concerts, as it was Debbie's job to perform her due diligence and research before publishing this series of incendiary articles.
Finally, why did she not challenge my comments on her site instead of removing them? All of them were as polite and non-confrontational as this one.
Posted by: Dave in Reno | March 29, 2010 12:56 PM
Ed writes:
I don't think that's quite the case. As I pointed out on the last thread you had about this, a little less than 30% of their total revenues have been put into a scholarship fund, which is a legitimate thing to do with the money. Schlussel contends that this money will never go to its intended purpose, and that's certainly possible, but it's just speculation on her part. If she cared she could run the numbers and show that they don't make sense, but as far as I know, she hasn't.
When you add another 10-20% that goes to aid wounded vets, that would bring the total to 40-50%. That's still pathetic. But the rest isn't just overhead. Their overhead does appear ridiculously high ($170,000 salary for the president, millions for conferences and meetings, etc.), but I would guess that at least half of the remainder goes to their leading "program activity", which is spreading paranoia about a one-world government and training up future conservative military officers (as if there weren't enough of those). Obviously these activities are useless to veterans, unless you buy into some pretty strained premises.
Again, there's nothing wrong with a non-profit being a propaganda shop. They exist all over the ideological spectrum. But it's rather sick to front yourself as a charity that helps wounded vets when the better part of your resources go to something else.
Posted by: Steve Reuland | March 29, 2010 1:42 PM
Dave in Reno writes:
The youth military leadership camp has squat to do with helping veterans. And while some of their exorbitant postage costs may be going to care packages, the bulk of it is probably going to mailing out newsletters, magazines, and other publications that promote their ideological cause (read: propaganda). An important clue is their even more exorbitant printing and publication costs. Unless FA is sending in-house porn to the troops overseas (not likely), their massive printing bill isn't because of care packages.
I'm sure the small handful of troops who got steak dinners and golf tournaments had a good time. As far as I know there is no breakdown for how much money goes to these things, but even assuming they account for anything more than a tiny fraction of total expenses, I cannot imagine a more wasteful means of "helping" vets. A golf tournament is a PR spectacle and an indulgence, not charity.
Posted by: Steve Reuland | March 29, 2010 2:03 PM
Steve,
Youth military leadership may do nothing for veterans, but it is a program that is outlined on Freedom Alliances website, so potential donors know about it, and can specify whether their donation can go to this program, or not.
Regarding the troop appreciation events, Freedom Alliance states on page 2 of it's 2008 form 990 filing that,
"During 2008, the support our troops program sponsored sixty-nine troop appreciation events for several thousand service members and their families."
http://www.freedomalliance.org/images/pdf_and_largepics/2008_990.pdf
They declare on that page that $1.277M (including over $550K in cash grants) were sent on troop support. As with the leadership camps, a donation can be made specifically to fund troop support and the appreciation events.
Debbie's main complaints have been about the scholarship program and the size of personal grants to soldiers and their families. I've shown in an earlier post that she hasn't done her homework in determining how the scholarship program works and that she has mis-characterized the reason for the grants to the injured soldiers and their families.
The Freedom Concert proceeds go directly to the scholarship program. The question is: Are the proceeds determined by a $4 surcharge that can be proven to have been levied at only one concert, or are they actually total "gate" minus reasonable expenses?
Debbie hasn't proven it either way.
Regarding donations to the various programs, anyone who wishes to make a donation via the FA website has an ability to earmark their donation towards scholarships, troop support, leadership programs or general use. Therefore, if a potential donor doesn't like some aspect of what FA does, they can specify that it doesn't go to that program.
Posted by: Dave in Reno | March 29, 2010 2:36 PM
Dave:
That's actually worse than I thought. Their total revenues are in the neighborhood of $8-12 million a year. That's a measly 10-15% going to troop support, which is somewhat less than what I assumed originally.
This means that over half of their money is going to things that are of no benefit to the troops or their kids.
Unless they keep separate budgets (and it appears they do not), then this is largely meaningless. Any money that is not earmarked can be moved from one program to another to balance out the money that is. Or to put it another way, if you give a drug addict $10 and tell him to spend it only on food, he may well do that. It's just that he'll later spend an extra $10 on drugs that he would have otherwise been forced to spend on food.
If they were serious about keeping the funding streams for these projects separate, they would either put them on separate budgets, or better yet, have separate charities. What exactly does fomenting anti-UN propaganda have to do with helping wounded troops and their kids anyway? (Other than the fact that listening to the UN would have meant fewer wounded troops, that is.) By all appearances, the charitable arm is a front to help raise money for political advocacy.
That may be. I'm not trying to defend Schlussel, and you're right that she either missed or unfairly downplayed the significance of the scholarship fund. I'm just pointing out that regardless of what Schlussel says, FA is a shit-stain of a charity, if you actually judge it on the basis of its being a charity.
Posted by: Steve Reuland | March 29, 2010 4:05 PM
Steve,
That $1.277M doesn't include the $802K in scholarships plus another $436K in expenses to run the scholarships program. BTW, they don't charge the expenses to run the fund to the trust fund, but it is part of the program expenses.
So in 2008, we're looking at $1.277M for troop support, plus $1.239 for the scholarship program and $2.324M for education and -- as you put it -- propaganda, for a total of $4.84M in program expenses attributable to these three items. In the 990, they list program service as $5.317M. I can't account [yet] for approximately $500K difference, but I'm not sure that it's worth the trouble.
I understand your concern about the "propaganda", but on their "About Us" page, FA states that they are:
"... a 501(c)3 educational and charitable foundation, ..."
http://www.freedomalliance.org/index.php?option=com_content&task=view&id=2172&Itemid=21
So they are a combination advocacy group and charity.
I agree with you that money is fungible.
Regarding the $8M-$12M income per year, yeah, they've taken in various amounts over the years, but when you look over the tax filings available on the site, for every year when they run a "profit", the "temporarily restricted funds" line on the tax filing goes up a commensurate amount.
The restricted funds are mostly (90+%) the scholarship fund.
IOW, the income line includes all donations, and doesn't break them out by intended use, but by the time you get down to the "Revenue minus expenses line" you're mostly looking at what will be put into the scholarship fund.
In 2007, they took in $12.5M, spent $6.1M on program services, $365K on management and general, and $1.1M on fundraising, leaving $4.998M in "excess".
A few pages later, they show restricted funds increasing from $9.89M at the end of 2006, to $15.15M. So that excess rolled into the trust fund, plus -- probably -- some capital gains.
In 2008, they only received $8.78M, spent $6.75M and had an excess of $2.04M. The restricted funds increased by only a few hundred thousand, however, as their investments suffered a $2M loss (bad yes, but I haven't looked at how much income those investments had in prior years).
So you see, Steve, you can't look at only the total income, versus the program expenses, but have to look at how much is going into the trust fund as well.
Posted by: Dave in Reno | March 29, 2010 5:10 PM
Okay, I did not account for the current year's scholarship money. But this doesn't change the math much. We're talking about 30% for the scholarship fund, and about 15-25% for current aid, for a total of 45-55%.
Of course the "expenses" to run the scholarship fund should be accounted for as overhead. Don't you think it's a little suspicious that 1/3rd of the scholarship money was expenses? What are they doing, flying Chuck Norris in on a helicopter to hand-deliver the checks? (Cue Airwolf theme music.)
This we have established. My beef is with the nature of a charity that leads people to believe that their donations are helping out wounded vets, when nearly half the money goes to something else. One thing I've noticed is that very few supporters or detractors of FA seem to realize that they spend gobs of money on political advocacy. FA themselves don't mention it anywhere in their response to Schlussel, merely referring to "program activities" as if the money all went to the same thing. It's hard to believe this is accidental.
But I've done that. Going from memory, the 2008 tax return lists $15M in the scholarship fund vs. $51M of total revenue (including investment gains and losses) up to that point. That's where I get the 30% figure from.
Posted by: Steve Reuland | March 29, 2010 6:53 PM
Steve,
I'm not sure why there's $436K in expenses, other than that may go to salaries for the employees managing the distribution, web site costs, investment management, etc. That $436K is about 3% of the total fund. Whether that is reasonable or not, I just don't know.
I see where you got your 30% figure. Of course, that would leave about $35M, or $7M/year on average in. The question is how efficient they are with getting the money out.
I understand your concern about the mixed activities of FA. The Freedom Concerts have always stated that the proceeds are to be used for scholarships, so IMO there's no problem there, but it would be interesting to know how many other donors are aware of the full range of things FA does.
All of our answers may be answered soon, however, as I've just read online that a couple of left-wing groups are suing Premier, Freedom Concerts and Freedom Alliance to find out where the money is going/coming.
I haven't read the full filing, but it appears that they're basing their argument on Hannity's imprecise language that all proceeds go to the scholarship fund, without including the phrase "after expenses", and this phrasing falsely led attendees to think that all of the ticket price would go to the charity.
http://www.huffingtonpost.com/2010/03/29/washington-watchdog-veter_n_517096.html
One of the two definitions of "proceeds" in Webster is:
"the net amount received (as for a check or from an insurance settlement) after deduction of any discount or charges"
http://www.merriam-webster.com/dictionary/proceeds
So it's possible that a judge might throw this out based on the fact that common usage can mean "net".
I don't know how stupid they think people are, that they wouldn't figure out that there are costs involved in putting on a concert.
I should have seen this coming.
Posted by: Dave in Reno | March 29, 2010 8:28 PM
I was wrong about the CREW's complaint being a lawsuit.
My guess is that Hannity will simply be more precise in his language going forward.
Posted by: Dave in Reno | March 29, 2010 8:48 PM
I disagree. It is a problem and misleading when Hannity claims that all money goes to help fallen soldiers. Ok, I'm sure it can be spun with all kind of fox news excuses and propped up words, but anyone who listens to Hannity will get the impression that every penny that is donated goes to charity.
Bottom line, millionaire Hannity depicts the morale hypocrisy of the conservative base.
Posted by: jack | March 30, 2010 11:36 AM
On page 25 of the 2008 pdf of the tax return it says that
301,162 went for meals,sporting/family events and care packages.
266,651 went for cash assistance.
802,250 went for scholarships.
That's the 1,370,063 given out. Out of 7,791,267 taken in. That's very poor.
My question is what do they plan on doing with the 19 million they have just sitting there in cash and investments.
I also see that they are renting out their mailing list.
Posted by: Ron | March 30, 2010 1:22 PM
Jack wrote:
"It is a problem and misleading when Hannity claims that all money goes to help fallen soldiers."
That's not what Hannity says. What Schlussel, CREW and VoteVet are alleging is that Hannity says all donations got to the Scholarship fund, and they don't believe this is true.
The problem is with language. Hannity sometimes says "proceeds" and sometimes says "donations". As I showed above, Webster says that "proceeds" can mean either the total amount received or the amount after expenses.
As confusion of this has happened over the years, Hannity and Freedom Concerts have become more specific, referring to net profit after expenses.
With due respect, most who attend a benefit realize that there are costs involved and that the charity receives the "profit".
Regarding the word "donations", the net proceeds from the concerts ARE the donation, and 100% of them does go into the scholarship fund. The expenses to run the scholarship are taken out of the general funds. So here again, Hannity hasn't misstated anything, though perhaps he should give a more complete explanation.
Posted by: Dave in Reno | March 30, 2010 2:07 PM
Ron,
The real information is on page 10 of that return. Steve and I went back and forth on this yesterday, but essentially, you have to look at the costs attributable to performing these activities in addition to the actual grant amounts.
You may not like some of their activities (the ones that Steve refers to as propaganda) but these are valid activities for an organization like Freedom Alliance.
Regarding $19M in cash and investments, roughly $15M is the scholarship fund designed to be payed out over many years as the children of the killed and 100% disabled come of college age. I'm not sure about the remaining $4M.
Posted by: Dave in Reno | March 30, 2010 2:17 PM
Dave in Reno has been all over every story about this alleged scam since it broke.
Duane, is that you?
Posted by: lurker | April 1, 2010 8:08 PM
You can forget about any enterprise Mr. Hannity has anything to do with as being totally on the up and up - he started scamming very early on, in High School. Someone else took his College Entrance exams for him (SAT's), and he and his friends involved in the Freedom Concerts are most likely of the same mindset: Show me the MONEY! - while he shamelessly sells it as a solely charity event. At least there is a charity attached to all of it that will provide substantial sums to people who deserve it. But if you buy the selflessness pitch - you're the idiot. And they still laugh all the way to the Bank after they put the minority of the revenue in the Funds.
Posted by: TGGary | July 28, 2010 5:01 PM