Herb Sandler: I’m Hit, But ProPublica’s Fine

A recent Bloomberg account was unclear; we fix the record

Readers may have wondered about the future funding of the new investigative-news organization ProPublica, if they saw an October 30 Bloomberg wire story on the impact Wachovia’s share decline has had on philanthropists Herbert and Marion Sandler (a link isn’t available online).

Herbert Sandler is ProPublica’s chairman, and The Sandler Foundation is a key ProPublica funder. It gave a $1,250,000 grant to the embryonic organization in 2007, and followers of the media scene know that Sandler has projected his commitment to be “long term” (they also ought to know that his company Golden West was a huge purveyor of the “option ARM” mortgages that greatly exacerbated the mortgage crisis and a key reason for the collapse of Wachovia).

So one particular paragraph in the Bloomberg story, sprung from a Bloomberg TV interview, might set off alarm bells:

Wachovia’s 84 percent share decline this year has hurt the Sandlers’ personal holdings and their philanthropic giving, Sandler said in a Bloomberg TV interview today.

Then, by way of explanation:

The Sandlers received $2.4 billion in cash an Wachovia shares in October 2006 when they sold [savings and loan holding company] Golden West [Financial Corp.], which they founded, for $24 billion. They then set aside $1.3 billion for their family’s San Francisco-based foundation.

We put in a call to ProPublica General Manager Richard Tofel, in an effort to clarify the situation regarding his organization. Informed of Bloomberg’s comments on the Sandlers’ philanthropy, Tofel told us:

We’ve had no indication of that with respect to ProPublica. In fact, strong indication to the contrary.

Thanks to money from The Sandler Foundation and other sources, said Tofel, ProPublica’s board has approved a 2009 budget of $10 million.

Okay, sounds good from ProPublica’s side. But what about that drop in philanthropic giving Bloomberg told us about?

We put in a call to The Sandler Foundation. Herbert Sandler himself called back to clarify the situation. Much of the foundation money is in cash, he said, and so not vulnerable to the decline in Wachovia shares. What the Wachovia drop has affected is the Sandlers’ personal holdings, meaning that less will go to the foundation after Sandler’s death.

So did Bloomberg get its own TV interview wrong? Sort of. Here are the relevant comments, verbatim from the Sandler interview:

We put 1.3 billion dollars into our foundation to give away, and the remainder, which we held on to, which comprised a lot of Wachovia stock, was also going to the foundation. So it’s not like we enriched ourselves….The only thing that’s gonna happen as a result of the losses that we’ve taken on the Wachovia stock we held is there’ll be that much less money to give away in a philanthropic manner.

Now it does not, at first glance, seem wrong to summarize this interview clip as the writer did, with reference to Wachovia’s negative impact on “the Sandlers’ personal holdings and their philanthropic giving.”

The problem is that the situation looks a bit different when you know more.

We don’t get enough details from Sandler’s Bloomberg TV appearance—clarifying the way in which the foundation differs from his personal holdings—because the interviewer didn’t ask the relevant follow-up questions.

The fault here is neither the interviewer’s nor Sandler’s, because this was just a small segment in a larger interview and in such a context details weren’t necessary. But when Bloomberg in print took that small segment and made it the focus of an entire, albeit brief, article—titled “Wachovia Stock Collapse Didn’t Spare Golden West’s Sandlers”—it didn’t fill in the necessary details.

Good news for ProPublica fans. Not as good for fans of precise journalism.

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Elinore Longobardi is a Fellow and staff writer of The Audit, the business-press section of Columbia Journalism Review.