<< ARI Watch

The Objectivist Gravy Train

The Ayn Rand Institute took in  $ 10,895,393  during the fiscal year ending September 30, 2015,  the latest fiscal year for which such financial information is publicly available.  Other ARI Watch articles investigate the source of this revenue, [1]  here we look into how it was spent.

Internal Disbursements
Key Employees

Though incorporated as a nonprofit ARI rewards many of its employees with, in effect, a handsome profit of their own. In FYE 9-30-2015 – we’ll call it simply 2015 – ARI’s board of directors compensated its key employees, in some cases themselves, as follows:

 Key Employee          Position  Salary + Benefits $ 
 Yaron Brook  President & Dir.  441,718 
 Mark Chapman  VP Development  327,795 
 Katherine Cross  Gift Planning Mgr.  150,882 
 Jerelyn Eagan  COO / Secretary  330,000 
 Julie Ferguson  VP of Bus. Oper.  187,590 
 Onkar Ghate  CCO  212,155 
 Elan Journo  Policy Research Dir.  127,216 
 Rachel Knapp  Treasurer    94,405 
 Duane Knight  Dir. of Development  184,371 
 Anu Seppala  Dir. of Outreach  154,868 
 Steven Simpson  Dir. Legal Studies  186,391 
 Linda Zinser  Dir. of Outreach  161,253 

... Hey Linda, here I am.  Reach out to me !

Froggy, “outreach” is bringing information or services to people. Now please be quiet.

The above figures are from ARI’s  “Return of Organization Exempt From Income Tax”  better known as Form 990.  The U.S. Treasury Department, IRS division, requires nonprofit corporations to submit this form not long after the end of each fiscal year. It is public and several websites that monitor charities make them available online. [2]

Our table doesn’t cover all of ARI’s employees, not even those pulling down six figures. The Form 990 rules require disclosure of an employee’s compensation only if he meets certain criteria. As long as he is not too high up in the organization and his compensation is less than  $ 150,000 then ARI needn’t disclose his compensation, and with ARI need not means shall not. [3]

However the form does contain this item:

“Total number of individuals ... who received more than  $ 100,000 of reportable compensation from the organization”
after which ARI entered the number 14.  So there are three more six-figure people besides the 11 (of the 12 key employees) above, and their compensation was less than  $ 150,000.

Of the part-time key employees one was well paid, Tara Smith. She received  $ 5,500 for two hours work per week. As a rate this is equivalent to  $ 110,000 for a 40 hour week.

The board has always known how to compensate themselves. Back in 1993 they proposed to pay Harry Binswanger and Peter Schwartz a total of  $ 45,000 – about  $ 75,600 in today’s dollars – to teach one course each, lasting six or seven weeks. When the Reismans (George and Edith) objected to the cost they were declared immoral and thrown out of ARI. “They” being the Reismans, in case that wasn’t clear. [4]

For several years past two of Mr. Brook’s children have been employed part-time at ARI. One was still employed in 2015. Under the heading “Business Transactions Involving Interested Persons” we find that his compensation was  $ 21,415.  The form doesn’t provide the hours per week.

The total cost (including payroll taxes) of all employees, key or otherwise, was  $ 5,171,237. [5]  This was about half of ARI’s total expenses.

These figures are only part of the whole picture, they leave out some substantial perks. Mr. Brook frequently lectures outside the U.S. urging people to be selfish – Britain, Europe, Scandinavia, China, Southeast Asia. As I write Mr. Brook is preaching to the heathen in Bogotá, Colombia. Doubtless for these trips ARI pays his transportation, hotel and restaurant bills. In a BlogTalkRadio show not long ago he told the audience he wants to lecture in New Zealand because he would love to visit that country.

Mr. Brook is not the only globetrotter at ARI, and he and other ARI people travel within the U.S. as well. Form 990 doesn’t break down the cost by employee or destination but there is an item called Travel after which is Total Expenses:  $ 377,716.

... Join the army and see the world !

Froggy, lecturing in Asia and so forth reflects ARI’s globalist perspective. Donate to ARI and help convert the Chinese to something or other, it’s not clear what anymore.

The compensation for ARI people has increased steadily over the years. For example take Mark Chapman, who began at ARI in 2003. His compensation for the next fiscal year (considered instead of the first to ensure he had worked a full year) was  $ 127,833, and as we have seen by 2015 it had grown to  $ 327,795 (same job title). This far outstripped inflation over the same period, which was about 25%.

I don’t know what being Vice President of Development entails but I can imagine ARI replying that Mr. Chapman was always worth 328 thousand and was grossly underpaid to begin with at only 128.

Mr. Brook began at ARI in 2000.  In 2002, the year of the earliest Form 990 available online, Mr. Brook’s compensation was  $ 160,000 ( $ 211,400 in 2015 dollars ), and as we have seen by 2015 it had ballooned to  $ 441,718. The grand total of his compensation from 2002 to 2015 comes to  $ 4,677,404.  If we include conservative estimates for the two years 2000 and 2001, and the so far undocumented year 2016, then at the time of this writing (2017) Mr. Brook’s accumulated compensation has been well over five million dollars.  Taking into consideration that the dollar was worth more in the earlier years, Mr. Brook’s accumulated compensation amounts to six million of today’s dollars.  At ARI charity begins at home – on steroids.

Yet at times Mr. Brook pretends — well, let him tell us. In a talk given March 26, 2014 called “Anti-Capitalism and Anti-Semitism” he said, and self-righteously, “I’m not rich.”  Next month, April 17, in a debate with James Galbraith called “Inequality: Should We Care?” he said that someone might choose to make a lot of money or else “They might choose to be a professor or teacher, like myself or Dr. Galbraith, and condemn themselves to a life of lower middle class-hood.”

In round numbers,  $ 44,000 a year and he’s lower middle-class, one misfortune away from sinking into poverty.

... Hey, you misplaced the decimal point !

In round numbers,  $ 440,000 a year and he’s lower-mid— oh skip it.

Yet at other times Mr. Brook might boast of his high pay. Before working at ARI  he co-founded (in 1994) a company called Lyceum International that specialized in what he called Objectivist conferences and distance-learning courses. One collection of seminars Lyceum offered in 1999 was titled  “Profit is Moral Seminars”  evidently directed at corporate executives. The first of these seminars was  “Executive Pay: The Sky’s the Limit.”  Here’s how Lyceum’s website described it:

“An executive has the right to make buckets of money for himself. In doing so it is to everyone’s mutual benefit from a janitor to a secretary to a consumer. This seminar explains the producers’ motive for making money. We unmask the envy that motivates your enemies.”

So let’s not hear any talk about Mr. Brook and friends grabbing too much of the money you donated to ARI.  They deserve their baskets of money.

... Buckets.  He said buckets of—

Buckets, baskets, however they carry it around doubtless they see themselves, as the saying goes, “making money doing good” or “doing well doing good.”  The good of promoting the Iraq War;  the good of working to brown over America with Mestizos, Asians and Africans;  the good of boosting Israel;  the good of urging us to vote for Hillary Clinton in order to defeat Donald Trump. [6]  And if getting barrels of money for it annoys you then you must hate the good for being the good.

The term “nonprofit corporation” is misleading. Any business, even a nominal nonprofit, runs on money. Money has no meaning to an inanimate object or thing, it has meaning only to people, and as we have seen it is possible for people who control a nonprofit to extract a lot of money out of it.

Internal Disbursements
Non-Key Employees

According to Form 990, in 2015 non-key employee salaries and wages totaled  $ 2,737,346.  (Supposedly this includes the three people earning between  $ 100,000 and  $ 150,000 not listed in the table of key employees we began with.) [7]

Per the form, ARI had 64 employees. [8]  In addition there were 103 volunteers.

... Hey people, I saw him type “suckers” and then backspace over it.

That’s enough out of you Froggy. Perhaps there were some volunteers who understood what ARI’s idea of “changing the culture” really means – the Cultural Leftist “long march through the institutions” – and agreed with it.

Non-Charity External Disbursements

So much for ARI members’ pay, what might be called ARI’s internal disbursements. How about external disbursements, money ARI gives to people outside of ARI.  After all, this is supposed to be a charitable organization.

ARI’s external disbursements do not all go to charity however, there are operating expenses to pay such as electricity, water, phone lines, office space, Internet service, etc. Regarding outflow, let’s consider the non-charity part before we consider the charity part.

As we already noted Form 990 provides a fair amount of information about total dollar amounts but is weak on individual breakdown. However it does list individual contractors that received over  $ 100,000. Here they are for 2015:

      Company       Service   Comp. $  
 Blitz Digital Studios  Design & Marketing  620,061 
 Silk Marketing Group  Project Management  131,290 
 Specialized Marketing Services    Mailing and Database    249,278 
 Westamerica Graphics  Printing Services  135,815 

... Hey ARI people, I’m a management consultant. Save a ton of money and do in house what you pay Blitz for.  I charge a piddling  $ 50,000 for this valuable advice.  Here’s my bucket !

Froggy, you will never, ever, be an ARI contractor.  We will give a complete list of external disbursements, including more non-charity ones, later.

Charity External Disbursements

Now for charity—

... Hey ARI people, here’s my empty hat !  Can you spare  $ 5,000 for a cup of coffee ?

Froggy, that’s ridiculous.  You can get a nice cup of coffee for three dollars.

... Yes, but I want to drink it in Bogotá while Yaron Brook lectures me about being selfish.

Good grief.  As I was saying, now for charity.  ARI’s advertising makes much of two programs:  giving away copies of Rand’s books to high school and middle school students and teachers, and sponsoring essay contests for students.

Giving away copies of Rand’s novels is little to boast about. Most every intelligent high school student finds out about Rand’s novels on his own. If Leonard Peikoff wanted to make the books more accessible he would lower the retail price. Instead, right after Rand’s death he raised it substantially, even as the print quality went down. [9]

ARI’s free book program has a steep downside in that each book comes with an advertisement for ARI printed on the cover. Seeing this and visiting ARI’s website, the hapless neophyte learns about the unalloyed goodness of unlimited immigration, the necessity of supporting Israel, that we must blow up Iran – and that all this follows from Objectivism.

As for the essay contests, the total awards is chump change. Per Form 990 there were 84 essay contest winners and they received a grand total of $32,030.  ARI spends more on postage.

... Hey you ARI people, what happened to my essay?

Froggy, I told you enclosing that selfie was a bad idea. Now the problem with the essay contest is that it is ARI people who judge the essays. If your essay were to argue that restricting immigration is per Objectivism selfish, that the Immigration Act of 1965 was the most evil piece of legislation ever, with second place going to most of the Civil Rights Act (which took away freedom of association and that violated private property rights on a massive scale), you can forget about ARI awarding you a prize no matter how well you argue and write.

Form 990 contains a section headed “Describe the organization’s program service accomplishments ...”  Only a small fraction of the listed accomplishments are benevolent. The rest contain a significant dose of malicious propaganda which ARI calls education. The food may look good but it’s salted with arsenic.

Several of ARI’s accomplishments for 2015 have an internationalist bent (paraphrasing):

Arranged for ... 66 speaker events in 19 countries outside the US, in cooperation with think tank and university partners in Europe, Israel, and Latin America.
Launched four foreign-language websites.
ARI speakers were interviewed on international, national and local radio and TV shows.
ARI op-eds and articles were published in written and online publications around the world.

Yaron Brook gets paid for those repellent BlogTalkRadio shows of his (paraphrasing):
Began hosting a weekly BlogTalkRadio show, as well as a regular radio show located in Chicago, Ill.

ARI Archives no longer deals exclusively with Ayn Rand’s papers, they have branched out (paraphrasing):
Began work on acquiring two papers collections, John Lewis and John Ridpath.
– the first a hack historian who promoted the invasion of Iraq by citing the history of the Peloponnesian War, the second a mental lightweight who did the same thing with the biography of George Washington, believe it or not. [10]

To repeat, there are a number of other educational items and the trouble with them is that they are ARI’s idea of education. In what follows ARI usually precedes a count by “more than.” This is an advertising gimmick. If the number is more enough to write then ARI ought to write it, if necessary using the modifier approximately.  In 2015 ARI (paraprhasing):
Developed a new strategy for ARI’s eLearning website, “Campus.” Execution began by designing the look of the website and creating content.
Promoted the ideas and authors of two books that [allegedly] apply Rand’s ideas.
Besides the 66 speaker events in 19 foreign countries, arranged for 68 in the US.
Provided support to 15 campus clubs. [ARI is really catching on, LOL.] Provided speakers for 47 national campus events hosted by student clubs or professors. Offered 18 students a three-week internship including classes, discussion, and professional experience.
Etc.  It might sound good, and some of it would be good if not for the rest.

Besides educational accomplishments undercut by “invade the world, invite the world,” ARI posthumously published a novella by Rand, Ideal, based on the play. It’s sure to be worth reading but you can be just as sure that if there was anything in the manuscript politically incorrect by Cultural Leftist standards then it didn’t make it into the book. [11]

ARI could easily have given the manuscript to a reputable publisher to prepare, publish and advertise. ARI publishing the book further associates their pernicious ideas with Ayn Rand.
·   ·   ·

Here is a complete list of ARI’s non-payroll expenses:

 Description  Expenses $ 
 Grants to domestic organizations  15,000 
 Grants to domestic individuals 108,805 
 Grants to foreign organizations 90,759 
 Legal 36,302 
 Accounting 56,316 
 Professional fundraising 586 
 Advertising 139,661 
 Office 47,432 
 Royalties 17,626 
 Occupancy 669,870 
 Travel 377,716 
 Conferences 16,045 
 Interest 13,931 
 Depreciation 64,196 
 Insurance 19,171 
 Outside services 2,298,706 
 Books 393,830 
 Events 259,156 
 Postage 212,753 
 Other 606,760 
 Total  5,772,587 

“Occupancy” is the cost of office space, including utilities, but what is that “Grants to foreign organizations” that comes to  $ 90,759 ?  There is another part of the form headed “Grants and Other Assistance to Organizations or Entities Outside the United States” that shows two items:  $ 8,881 to “Europe” for “Sponsorship” and  $ 74,443 to “M East / N Africa” for “Outreach.”  (That leaves  $ 6,435 unaccounted for if that is the breakdown of  $ 90,759.)  The instructions for filling out Form 990 restrict the region entry to one of ten choices. The region “Middle East and North Africa” includes Israel, which is probably where the  $ 74,443 went.

ARI’s Form 990 for 2013 under “Grants to foreign organizations” shows a grant of  $ 100,000 by wire transfer to the “Middle East” region for “Outreach.”  ARI established the Ayn Rand Center Israel in October 2012, which probably accounts for this.  The following year, 2014, the amount to the same region for the same purpose was  $ 74,138.  And as just mentioned, in 2015 it was  $ 74,443 except the region was listed as “M East / N Africa.”

ARI’s payroll expenses:

 Description  Expenses $ 
 Compensation of officers, directors, key employees  1,358,808 
 Compensation to disqualified persons [12] 388,687 
 Other salaries and wages 2,737,346 
 Pension plan contributions 52,196 
 Other employee benefits 306,234 
 Payroll taxes 327,966 
 Total 5,171,237 

ARI’s total expenses (payroll plus non-payroll) comes to  $ 10,943,824.  ARI’s total revenue was  $ 10,895,393.  Thus it would appear they were in the red  $ 48,431.  Elsewhere the form says ARI’s total expenses were  $ 10,615,858, and that they were in the black  $ 279,535 – they had something left over for next year. The second figures are probably correct and some payroll expense is included in our non-payroll list.

Conclusion

In other articles we saw how the people at the self-described Ayn Rand Institute corrupt its namesake’s ideas. In this article we see them becoming millionaires while they do it. Ortho-Objectivism is where the money is.

That they are getting rich isn’t the problem. If they called their organization “The Frankfurt Institute” or “The Neocon Institute” or “The Anti Defamation League, Irvine Branch” this article wouldn’t be necessary. What disgusts is that they are getting rich milking the name “Ayn Rand” while perverting her ideas.

·   ·   ·
Well Froggy, what do you think?

... Boring.  All those numbers.

The numbers represent dollars, and the recipient of enough dollars can exchange them for what he desires. Think of those parades of digits as magic numbers.

... ARI won’t give me any magic numbers.  I’m going to start my own charity.

Froggy, you will never—

... I know, never ever.  You’re so pessimistic.

I like to think I’m realistic.  A frog— why are you waving that little clipboard in front of me?

... Would you like to take a free personality test?

What?

... The Oxford Capacity Analysis. It is the only test of its kind that delivers measurable, accurate analysis, followed by one-on-one consultation with practical recommendations tailored to your needs, based on your results.

I get it. First the free personality test then you take the sucker for every dime he’s got. Is that your charity?

... You’re right, I can’t do it.  How about this:  Green lives matter !  Pesticides are the Devil’s work !  Frogs of the world unite, you got nothun to lose but your chains !

I don’t th—

... I will be heard !

And your source of funding?

... What’s George Soros’s phone number?

You’ll probably have to go through an intermediary.



1  The bizarre story of Carl Barney, ARI’s largest donor, has its own webpage,  Who Is Carl Barney?  The high points are recapitulated along with further analysis in  Response to Barney Revelations.  The other donors to ARI will be the subject of a future article.

2  “Return of Organization Exempt from Income Tax”  –  in other words, the tax return for an organization that is exempt from the corporate income tax.

ARI’s fiscal year straddles two years, running from October 1 to September 30. On Form 990 the beginning year is prominently displayed at the upper right but websites that monitor charities always label the forms with the ending year. Also accountants always refer to “fiscal year ending” not “fiscal year beginning.” Thus we refer to fiscal year ending September 30, 2015 as “2015” though “2014” dominates the top of that fiscal year’s form.

At the end of its fiscal year a non-profit / charity has five months to submit Form 990 and they can get a six month extension, which ARI always seems to take. Then there is a few months delay before the IRS makes the form available to the public. ARI’s form for fiscal year ending September 30, 2015 wasn’t online (hosted by the private organizations that monitor charities) until 2017.

Here are links to ARI’s 990 forms currently available from Foundation Center, the latest first. Though ARI began in 1987 the earliest is for fiscal year ending September 30, 2002. Maybe an accountant type of person can find something interesting that I’ve missed:
September 30, 2015

September 30, 2014
September 30, 2013
September 30, 2012
September 30, 2011
September 30, 2010
September 30, 2009
September 30, 2008
September 30, 2007

September 30, 2006

September 30, 2005

September 30, 2004

September 30, 2003

September 30, 2002

The next footnote (3) tells where to find instructions for filling out Form 990.

For what it’s worth, for 2015 Charity Navigator gave ARI a Financial rating of two stars out of four, and an Accountability & Transparency rating of four stars out of four. I gather that means their financials aren’t so hot but at least they’re open about it.  Not so open however as to provide their Form 990s on their website.
www.charitynavigator.org/index.cfm?bay=search.summary&orgid=8345
Note that Charity Navigator does not include benefits in their compensation figures. For example, Mr. Brook’s salary of  $ 415,018 is 3.9 % of expenses, but with his  $ 26,700 in benefits it is 4.2 % of expenses. It is misleading not to include benefits in with compensation. Health and dental insurance, etc. means extra cash in the bank now or later.

We don’t compare ARI with other charities. If you compare ARI with X, what about X? The trouble is that many nonprofits, even those doing good work, are milked by their board – look at the NRA – so comparing one with another isn’t very helpful.

3  When I wrote ARI asking why Jeff Britting, ARI’s head archivist, was nowhere mentioned on the latest Form 990, a “Donor Services Specialist” eventually replied:
“Our accounting department informs me that Mr. Britting’s compensation does not require disclosure. You are welcome to review the IRS rules regarding disclosure ...”
and provided a link to  “Instructions for Form 990 Return of Organization Exempt from Income Tax” of the Internal Revenue Code. The relevant section is 501(c) pages 25 to 31 and beyond:
www.irs.gov/pub/irs-pdf/i990.pdf
Later I discovered the same information in website form at
www.irs.gov/instructions/i990

4  See the first two memos / letters referenced in  ARI vs. George Reisman  on this website.

5  This does not include the employer’s S.S. tax that matches the employees’, some of which they receive after they retire, or the employer’s Medicare and workman compensation tax.

6  About ARI promoting the Iraq War see  Relentless Propaganda,  about their promoting unrestricted immigration see  ARI on Immigration,  about their reaction to Trump’s victory over Clinton see  The American Spirit – all on this website.

About the last, so far Trump has been disappointing in many respects but one hugely positive action was his appointing Jeff Sessions Attorney General. A lukewarm positive was appointing Neil Gorsuch Supreme Court justice. We would have preferred someone even more “conservative”; earlier in his career Gorsuch has been something of a “cuck” on immigration. In any case, imagine what we would have today if the people at ARI had had their way:  second editions of Obama, Holder and Ginsburg, the last for life.

7  The numbers don’t quite add up. Non-key plus key comes to  $ 5,301,490. According to the form that should be  $ 5,171,237 and it references a Part IX. Trouble is, only Parts I through VII are in the pdf file available online. In any case  $ 130,253 doesn’t seem to be much money to these people.

8  For the number of employees the form switches from FYE 9-30-2015 to the calendar year 2014.

9  I emphasize students in high school because those in middle school – what used to be called junior high – are probably too young to be reading Rand’s novels.

It doesn’t cost much more than a dollar per copy to mass manufacture a low quality paperback. After adding in the cost of warehousing and distribution there is still plenty of room to reduce the retail price and continue making a good profit. It looks like Rand herself preferred more readers to a higher retail price.

10  See our review of Mr. Ridpath’s  America Needs a Leader Like George Washington.”

11  Jennifer Burns had access to the manuscript of Rand’s journals while working on her biography. She noticed that some entries were omitted in the published Journal. For example, one entry contained “a pessimistic musing about the degeneration of the white race.”  Can’t have Rand being concerned about the white race, it isn’t fit for us to read.

12  “Disqualified person” is tax jargon for someone who is able to exercise substantial influence over the affairs of the organization.