The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [212]
Through other basic reporting, they got the institution’s property-tax records, educational records, and articles of incorporation. They found out that Boys Town had a history of strained relations with the state welfare department; Monsignor Wegner, who currently ran Boys Town, had refused to participate in program reviews by outside agencies despite the advice of his own staff.22 Williams used a Congressional source to get a report on the Boys Town post office and learned that it sent between thirty-four and fifty million pieces of fund-raising mail a year. This was a staggering number; fund-raisers for other organizations told them that, based on such numbers, Boys Town must be taking in at least $10 million a year. Using his financial knowledge, Buffett figured out that its operating costs could be no more than half of that.23 Boys Town was accumulating money faster than it could possibly spend it. It had undergone a major expansion in 1948. Assuming it had piled up $5 million a year ever since, Buffett thought it must have at least $100 million in excess funds. But so far, there was no proof.
Buffett had joined the board of the local Urban League, and from that connection knew Dr. Claude Organ, a local surgeon, the only black man on the Boys Town board. Buffett thought the doctor was a decent guy.
“We had breakfast over at the Blackstone Hotel right across the street. And I talked and talked and I tried to get him to tell me. He wouldn’t give me details, but he also told me I wasn’t wrong. He did even better than that. He let me know there was a story there, although I couldn’t get any numbers from him.”
Dr. Organ began quietly steering the reporting team, helping them stay on track without disclosing confidential information.24 The reporters had started talking to people around town but were not getting anywhere; most of the Boys Town employees were too afraid to talk. Buffett, playing newshound, roamed Omaha in his beat-up old tennis shoes, moth-eaten sweater, and pants covered with streaks of chalk.25 “It was a high,” he says. “Whatever was the male equivalent of Brenda Starr, Girl Reporter, well, that was me.” By now Warren had also adopted Susie’s friend Stan Lipsey, who remained the Sun’s publisher, as one of his new people, going jogging with him and playing racquetball in the Buffetts’ basement.
Then Warren had a brainstorm. He knew that Congress had passed a law that, among other things, required nonprofit organizations to file a tax return with the IRS.
“I was sitting there in the family room doing the Form 990 for the Buffett Foundation, and it just hit me—if I had to file a return, maybe they did too.”26
The reporters tracked down the Form 990 to the IRS in Philadelphia and waited impatiently for twenty days for the IRS to dig it out of its files.27
Two days later, the package arrived in Omaha. Paul Williams had hired Randy Brown, a new assistant managing editor, in part to help coordinate the Boys Town story, bringing the team to four reporters. “My first day at work, this 990 plopped down on my desk,” says Brown.28 Buffett, who had just bought See’s and was still mailing out boxes of candy to friends all over North America, nonetheless was so enthralled by Boys Town that he threw himself into helping Brown figure it out. Sure enough, Boys Town had a net worth of $209 million, which was rising at the rate of about $18 million a year, four times faster than the amount it spent to fund its operations. Buffett was elated. All his life, he had been waiting for a nun to commit a crime so he could expose the culprit by whipping out her fingerprints. Now he had used a tax return to nab a monsignor red-handed.
They moved desks, file cabinets, and three phones into Williams’s basement recreation room. In the end, “we tracked everything,