Updated at 4:38 p.m. ET
WASHINGTON - NPR president and CEO Vivian Schiller resigned Wednesday under pressure, a day after an undercover video showed one of her executives on a hidden camera calling the tea party racist and saying the news organization would be better off without taxpayer money.
The shake-up comes at a critical time. Conservative politicians are again pressing to end congressional funding for NPR, money the organization said it needs to keep operating public radio and television stations in some of the nation's smallest communities. The White House defended the funding, saying there remains a need for public broadcasting.
Vivian Schiller also faced criticism for her firing of analyst Juan Williams over comments he made about Muslims. She told The Associated Press that the recent remarks made by her fellow executive Ron Schiller were outrageous and unfortunate, and her staying on would only hurt NPR's fight for federal money.
"I did not want to leave NPR. There's a lot of pressure on NPR right now," Vivian Schiller told AP.
On Tuesday, conservative activist James O'Keefe posted a video showing NPR executive Ron Schiller bashing the tea party movement. The video shows two activists, working for O'Keefe, posing as members of a fake Muslim group at a lunch meeting with Ron Schiller, who is not related to Vivian Schiller. The men offered NPR a $5 million donation and engage in a wide-ranging discussion about tea party Republicans, pro-Israel bias in the media and anti-intellectualism.
"The current Republican Party is not really the Republican Party. It's been hijacked by this group that is ... not just Islamophobic but, really, xenophobic," Ron Schiller said in the video, referring to the tea party movement. "They believe in sort of white, middle America, gun-toting it's scary. They're seriously racist, racist people."
NPR has long been a target of conservatives who claim its programming has a left-wing bias. The budget bill passed by the House last month would end funding for the Corporation for Public Broadcasting, which supports programs distributed on NPR and PBS.
Similar efforts to strip funding from public broadcasting in 2005 and in the 1990s were unsuccessful.
Vivian Schiller was criticized for last year's firing of Williams after he said on Fox News that he feels uncomfortable when he sees people in "Muslim garb" on airplanes. She later said she was sorry for firing Williams over the phone and that he deserved a face-to-face meeting.
"We took a reputational hit around the Juan Williams incident, and this was another blow to NPR's reputation. There's no question," she told AP.
Schiller said she and the board concluded that her "departure from NPR would help to mitigate the threat from those who have misperceptions about NPR as a news organization."
NPR board chairman Dave Edwards said NPR would make a strong case about the importance of federal funding.
"It is absolutely true that without federal funding, a lot of our public radio and public TV stations in the system could go dark, and that will happen in some of the smallest communities we serve," Edwards said. "In some cases, public broadcasting remains that community's primary connection with the outside world."
O'Keefe, best known for wearing a pimp costume in hidden-camera videos that embarrassed the community-organizing group ACORN, posted the NPR video on his website, Project Veritas. The group said the video was shot on Feb. 22.
O'Keefe also pleaded guilty last May after he was accused of trying to tamper with the phones in Sen. Mary Landrieu's office. He pleaded guilty misdemeanor charges of entering federal property under false pretenses and was sentenced to three years probation, 100 hours of community service and a $1,500 fine.
NPR said it was appalled by Ron Schiller's comments. Schiller, who was president of its fundraising arm and a senior vice president for development, told NPR he planned to leave to become director of the Aspen Institute Arts Program before the video was made public. The Aspen Institute confirmed Wednesday that he would not be taking the job, in light of the controversy.
"While the meeting I participated in turned out to be a ruse, I made statements during the course of the meeting that are counter to NPR's values and also not reflective of my own beliefs. I offer my sincere apology to those I offended," he said.
O'Keefe asked supporters to sign a petition urging Congress to review NPR's funding.
"We've just exposed the true hearts and minds of NPR and their executives," O'Keefe said on his website.
CPB is getting $430 million in the current fiscal year, although NPR only gets about 2 percent of its revenue from the federal government. Government funding accounts for about 10 percent of the budgets of its member stations.
"It is very clear that we would be better off in the long run without federal funding," Ron Schiller said in the video, saying it would allow the organization to become an independent voice and clear up the misconception that it is largely government-funded.
House Majority Leader Eric Cantor, R-Va., said in a statement that NPR's executives have "finally admitted that they do not need taxpayer dollars to survive."
Sens. Jim DeMint, R-S.C., and Tom Coburn, R-Okla., introduced a separate bill Friday to cut off funding for CPB.
White House spokesman Jay Carney said the administration opposes calls to eliminate funding for NPR and the CPB, and characterized both operations as "worthwhile and important priorities." Carney noted both Democratic and Republican presidents have supported such funding in the past.
"There remains a need to support public broadcasting and NPR," he said.
PBS said it also was contacted by the same fake Muslim group that met with Ron Schiller. PBS spokeswoman Anne Bentley said an executive there had an initial conversation with the Muslim Education Action Center, but concerns were raised about the group and PBS couldn't confirm the organization's credentials, so they halted discussions.
The Muslim Education Action Center's website said it was an element of O'Keefe's "Project Muslim Brotherhood" project. The site solicits donations to O'Keefe's Project Veritas.
Another NPR executive, Betsy Liley, was at the lunch with Ron Schiller. She said little in the video, although she can be heard laughing when one of the men says his group referred to NPR as "National Palestinian Radio." She has been placed on administrative leave.