Grading PolitiFact (Florida): The Word Police accuse Marjorie Dannenfelser

Words matter -- We pay close attention to the specific wording of a claim. Is it a precise statement? Does it contain mitigating words or phrases?
--Principles of PolitiFact and the Truth-O-Meter

The issue:

(image clipped from PolitiFact.com)

The fact checkers:

Amy Sherman:  writer, researcher
John Bartosek:  editor


Analysis:

PolitiFact tips off its complaint against Marjorie Dannenfelser, president of the anti-abortion/pro-life Susan B. Anthony List, in the deck material reproduced above.  The quotation marks setting off "profit" as a word clue us in that PolitiFact's fact check hinges on the word.

Paul Bedard used Dannenfelser as a source for a May 26 blog for U.S. News & World Report:

Marjorie Dannenfelser, president of the Susan B. Anthony List, said: “The truly ‘anti-woman’ organization here is Planned Parenthood and the party that continues to defend its taxpayer funding when it has raked in more than $300 million in profits over the past four years. Fifty-four percent of Americans don’t want to be coerced into contributing to an organization they don’t believe in just by paying their taxes—nor should they be.”

Somehow PolitiFact Florida got wind of this exciting development:

For this Truth-O-Meter, we wanted to check Dannenfelser's claim that Planned Parenthood "raked in more than $300 million in profits over the past four years." We'll focus on two parts: Is the dollar figure right, and is 'profit' the right word?

Off we go on the dollar figure fact check, hopefully bearing in mind the fact that the underlying message is the most important thing when fact checking a numbers claim:

We contacted SBA List spokeswoman Mallory Quigley, who referred us to "excess of revenue over expenses" listed in Planned Parenthood's annual reports. Here is what those reports show:

2005-06: $55.8 million
2006-07: $114.8 million
2007-08: $85 million
2008-09: $63.4 million

Total: $319 million.

While the total comes out over $300 million, in apparent justification of Dannenfelser's claim, the numbers fail to account for a investment loss of $78.1 million in the last of the four reports.

PolitiFact frets over Planned Parenthood's inconsistency in accounting:

In the reports from other years, the financial data does not refer to investment losses or gains, and Sye said those amounts were simply included in the totals for those years. The extraordinary losses when the markets plunged for almost all investors, presented differently in the 2008-09 report, makes it awkward to combine the four years since Planned Parenthood didn't detail its investment losses or gains previously. Subtracting the $78 million would leave the group with about $240 million in revenue over expenses in the four-year period. But how much more or less is unknown since we were unable to obtain the actual investment income for the other years.

 I say pish posh.

The value of investments ought to reflect in the total net assets reported.  The alternate accounting was probably a theatrical strategy intended to influence donors to donate.  Subtract the $78 million from the supposed operating surplus and the remainder matches the newly reported net assets for the year ending in June 2009.  Simply taking the net assets at the start of the string of reports and subtracting that figure from the net asset value at the end ought to provide a useful figure reflecting Planned Parenthood's yearly net income.

Unfortunately, the resulting figure was about $210 million--suspiciously lower than the figure PolitiFact ended up using ($240 million).  About $11 million of the missing amount was reported as "other changes in net assets" and the rest went suspiciously missing between the end of the second report and the start of the third.  That might prove interesting to a journalist.  Or maybe not.  PolitiFact showed no signs of noticing.

As to the raw numbers, if we use Planned Parenthood's dubious reports we can determine that Dannenfelser inflated Planned Parenthood's increased asset value by 43 percent.  PolitiFact's figures would result in a somewhat lower inflation amount of 30 percent.

We should note that PolitiFact has in the past granted Barbara Boxer a "Half True" rating for a claim resting on a figure that was off by 355 percent.  On the other hand, Michele Bachmann received a "False" rating for a figure that was off from 42 to 76 percent.  So it's anybody's guess what ruling is thus far implied by Dannenfelser's imprecision.

PolitiFact:

In the second part of our fact-checking, does the "excess revenue over expenses" constitute a "profit"?

We sent Dannenfelser's claim to experts in nonprofit management and heard back from four. Three disagreed with using the term "profit" to describe excess revenues over expenses: Christopher Stone, faculty director of the Hauser Center for Nonprofit Organizations at Harvard University; Herman B. "Dutch" Leonard, professor of public management at Harvard Kennedy School of Government and at the Harvard Business School; and Beth Gazley, assistant professor at Indiana University School of Public and Environmental Affairs.

Sound the pedantry alert for this trio of experts.

Pedant No. 1:  Explain yourself, please.

"Bottom line: a nonprofit’s surplus should not be confused with profit," Stone wrote in an e-mail. "Profits are generated by businesses to reward investors. Businesses also use profits to provide additional compensation (bonuses tied to profits) for employees who help generate the profits for investors. Because nonprofits may not use their surpluses for either of these purposes, these surpluses should not be confused with profits. All surpluses must be devoted to the charitable purposes of the organization."

To be fair, PolitiFact may have simply applied Stone's answer in a pedantic fashion.  At face value Stone is exactly right that a nonprofit's surplus cash should not be confused with the profits a business distributes to its ownership group.  But it's hardly clear that Dannefelser's claim commits that type of confusion.  Rather, Dannenfelser simply employs a different (widely accepted) definition of "profit" than the one Stone uses:

3 : net income usually for a given period of time

Merriam-Webster

Pedant No. 2:  Explain yourself, please:

And Gazley wrote: "But more to the point, the 'taxpayer'-funded portions of the Planned Parenthood affiliates’ budgets are either program grants or reimbursements for services eligible for Medicaid. So the government-funded parts of the (Planned Parenthood) budget would NOT be generating a 'profit' – they would be used in full each year. This means any excess of revenues over expenses (AKA 'profit') would have come from other sources – private donations, endowment income, etc. So Ms. Dannenfelser’s argument that the taxpayers are somehow subsidizing this 'profit' is misleading."

Hilarious.  Of course the taxpayers subsidize the profit, just like allowing oil companies to drill for oil on federal lands for free would subsidize oil company profits even though "any excess of revenues over expenses (AKA 'profit') would have to come from other sources."  Gazely's statement is far more misleading than Dannenfelser's.  Even the best accounting tricks can't hide the obvious in this case.

PolitiFact spares us the explanation from Herman B. "Dutch" Leonard, but we do get the explanation from the lone expert out of step with the other three:

Terri Renner, longtime CPA and lecturer at Indiana University's school of Public and Environmental Affairs, argued that "the excess of revenues over expenses is the accounting definition of profit."

Renner's argument is unassailable, given that she is correct in identifying the operative definition of "profit."

But the Word Police from PolitiFact take their cues from the pedants:

We said we'd examine both the dollar figure and the word "profits." We think the "more than $300 million" description is off base because of the $78 million in losses, but neither Planned Parenthood nor the SBA List is saying definitively what the investment gains or losses were for the four-year period. Still, there is some element of truth in that it's at least scores of millions of dollars.


In the second part of our ruling, we looked at whether "excess revenue over expenses" for a nonprofit is the same as "profit." Most of the experts we consulted say no. And the one who would call it profit agrees that it's not treated the same way as profit for a corporation. Companies distribute their profits to shareholders and owners, while nonprofits put their excess revenues back into the organization's work. We think the real sting in this claim comes from the word "profits," so we weighed that more heavily than the vague dollar figures in our ruling. We rate this claim Barely True.

Respecting the numbers claim, remember that PolitiFact's numbers indicate a 30 percent error by Dannenfelser aside from the uncertainty created by Planned Parenthood's inability/unwillingness to divulge more precise figures.

The ruling on the use of "profit" is pure pedantry.  Dannefelser's use of the term fits perfectly with a standard usage and creates no apparent barrier to understanding the statement in accord with the context in which it was offered:  Planned Parenthood operates substantially in the black and therefore does not require over $350 million per year in government money.


The grades:

Amy Sherman:  F
John Bartosek:  F

Journalists simply can't lend themselves out to pedantic experts or indulge in pedantry themselves by using the comments of experts as an ad hoc justification.  The trusting reader is rendered less intelligent by this fact check and therefore the special tag "Journalists Reporting Badly" applies.