When Vermonters are asked to donate to VTDigger, they’re told they’re supporting independent journalism. But recent IRS filings by its parent, the Vermont Journalism Trust (VJT), reveal a separation agreement with founder Anne Galloway that raises questions about how donor money is used.

According to Schedule L of the 2023 Form 990, Galloway entered into a consulting agreement “for a period of 3 years and five months,” with monthly payments of $9,166.66 and a final partial payment of $2,680.62. The same filing also states that the final payment will be made “on the 44th month,” which would extend the arrangement to three years and eight months. Taken together, the language and the dollar amounts do not perfectly reconcile, leaving a discrepancy in the official disclosure. The total payout is listed as $396,857.

The filing spells out her duties:

“Anne Galloway’s duties include attending and participating in fundraising events for Vermont Journalism Trust on mutually agreed upon dates and being available to provide advice, recommendations, or other analysis to the board and/or executive director.”

In other words, Vermont Journalism Trust is paying its former leader roughly $110,000 annually for occasional fundraising appearances and being “available” to give advice — nearly identical to the pay reported for the organization’s current CEO.

What the IRS Requires

The IRS allows nonprofits to compensate current or former executives, including through severance or consulting agreements. The test is whether pay is “reasonable compensation,” defined as what similar organizations would pay for comparable work. If compensation is excessive without services to match, the IRS classifies it as an “excess benefit transaction,” something tax-exempt organizations are prohibited from doing.

Nothing in the filing suggests illegality. The arrangement was board-approved and disclosed as a conflict of interest, which at least signals recognition that it could be questioned. Still, the optics are stark for a small Vermont newsroom. For context, ProPublica, a national nonprofit newsroom with a budget nearly ten times larger, reported a similar payout for a departing executive.

A Newsroom in the Red

The timing makes the arrangement harder to overlook. Vermont Journalism Trust has been running substantial deficits.

• In 2022, the Trust reported expenses of $3.78 million against revenue of $2.77 million, a deficit of just over $1 million.
• In 2023, expenses were $3.47 million against revenue of $2.75 million, another loss of about $726,000.
• Combined, that’s nearly $1.7 million in losses over two years — a figure confirmed in reporting by Seven Days in 2024, which also noted staff cuts and belt-tightening as grants ran out.

Vermont Journalism Trust still has reserves — about $1.9 million in net assets as of 2023 — but those are being eroded. That makes six-figure payouts for light consulting duties stand out even more.

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The Larger Question

For some, the Galloway agreement may be standard nonprofit practice: a founder transitioning out, staying involved with fundraising, and being compensated along the way. But for donors who give $10 or $100 thinking they’re funding watchdog reporting, the details on Schedule L may come as a surprise.

At a minimum, it raises questions of stewardship:

• Should a nonprofit with repeated operating losses be committing nearly $400,000 to a former executive?
• Is it truly “reasonable” compensation for the duties listed?
• Were readers and small donors ever informed that contributions were partly underwriting this arrangement?

A Matter of Trust

The irony is hard to miss. Vermont Journalism Trust exists to hold government and institutions accountable, demanding transparency and disclosure from others. Yet it took an IRS filing — not a press release — for Vermonters to learn about a nearly $400,000 payout to Digger’s founder while the newsroom was shedding staff and running deficits.

This isn’t about Anne Galloway’s legacy or whether she deserved recognition for building VTDigger into a major news outlet. It’s about whether the nonprofit’s governance and financial transparency match the standards it expects from others.

The IRS gives broad leeway to nonprofit boards, but Vermonters deserve to know how their donations are used. If watchdog journalism is to keep its moral authority, it has to apply scrutiny inward as well as outward.

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Dave Soulia | FYIVT

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