Auditing and Financial Management:

Public Radio and the Role of Federal Funding

GAO-11-669R: Published: May 19, 2011. Publicly Released: Jun 20, 2011.

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This report documents information that we presented to Congress on March 31, 2011, in response to a congressional request that we examine the extent to which federal funding is used to support public radio. The Corporation for Public Broadcasting (CPB) was established pursuant to the Public Broadcasting Act of 1967 and receives federal payments through the annual appropriations process. CPB distributes the federal payments it receives in accordance with a statutory formula. Under this formula, the majority of each annual federal payment must be distributed to public broadcasting television and radio stations and program producers, such as National Public Radio (NPR), typically in the form of grants. This report addresses the following questions: (1) What are the missions of CPB, NPR, and local public radio stations? (2) What are the processes through which CPB receives federal payments and disburses them to grantees? and (3) What are NPR's sources of revenue, both federal and nonfederal?.

We found the following: (1) CPB is a nonprofit organization that was established to facilitate the growth and development of public television and radio for the purposes of instructional, educational, and cultural programming. Founded in 1970, NPR was established as a news-gathering, production, and program-distribution company governed by its member local public radio stations, which pay annual dues. Local public radio stations must be licensed by the Federal Communications Commission as noncommercial educational radio stations, and most are run by local entities such as universities and nonprofit community organizations. As of March 31, 2011, 818 local public radio stations were NPR members. (2) Congress provides federal payments to CPB through the annual appropriations process. As a nonprofit corporation, CPB is not subject to the same federal fiscal controls as are government agencies. However, Congress may place requirements on CPB's expenditures through authorizing legislation and appropriations laws. For example, under CPB's authorizing legislation, approximately 89 percent of CPB's federal payment must be allocated through its grant programs. Beneficiaries of CPB's radio grant funding include local public radio stations and programming producers, such as NPR, American Public Media (APM), and Public Radio International (PRI). Allowable uses for grant funds vary with the type of grant program, and may include the costs of production, programming, and management. (3) While NPR does not receive any federal appropriations, it was awarded approximately $6.4 million in CPB grants during fiscal years 2006 through 2010. NPR also receives grants from federal agencies for programming and other special projects. An estimated 70 percent of NPR's annual revenues comes from membership dues, fees paid for its programs, and from nonfederal grants, contributions, and sponsorships. Because local public radio stations may use all, none, or any portion of their CPB grants to purchase NPR programming and because, as the CPB Inspector General recently reported, not all stations maintain proper documentation that separately accounts for expenditures of CPB grant funds, limitations may exist in determining the total amount of CPB grant funds local public radio stations use to purchase programming, including NPR programming.

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