Spare change for news

Is going nonprofit the best way for journalism to get by? Take the word of leading editors who already have their hand out.

Published April 13, 2009 10:59AM (EDT)

It's the newspaper journalist's worst nightmare: His own obituary has become front-page news. Today, the headlines in your local paper are as likely to be about the pitiable death throes of that very rag as the war in Afghanistan or the sorry state of the economy.

As newspaper newsrooms around the nation cut back or shutter, an urgent conversation is taking place about where the reporting that exposes corruption and holds public officials accountable will come from. What new models for financing professional journalism will spring up?

One topic that has shot to the top of journalism-biz charts is nonprofit funding. If serious news and investigative reporting will never earn a dollar in the bottom-line-driven media market, maybe it's time for journalism to be supported by nonprofit institutions and enterprises. If this is the way forward, the path is lighted by experience, as nonprofit news organizations have been operating for years, and their ups and downs have plenty to teach us.

First, a brief recap of the bad news: From San Francisco to Detroit, Seattle to Boston, the ink-stained newspaper hack now has much in common with the American autoworker. In Colorado, the last issue of the 149-year-old Rocky Mountain News went to the great recycling bin in the sky in February. As of March, the once mighty Seattle Post-Intelligencer exists only as with a skeleton crew, and in Detroit the daily papers are now oxymoronically not delivered daily.

The Tribune Co., which owns the Baltimore Sun, Chicago Tribune and Los Angeles Times, has filed for bankruptcy protection, while the New York Times, which bought the Boston Globe in 1993 for a cool $1.1 billion, recently threatened to close that paper down altogether.

In 2009 alone, more than 8,000 jobs have been lost through layoffs or buyouts at American newspapers, according to Paper Cuts, a blog that tracks the newspaper industry's decline. No wonder there's a blog called Newspaper Death Watch with no shortage of material to write about.

Like so many other industries, newspapers are reeling from the epic recession, which has hammered advertising spending. But their woes are hardly a temporary problem that would be solved by an uptick in economic fortunes. In recent years, newspapers have struggled to cope with increased costs for printing and distribution. At the same time, readers have flocked online to read the news free and to place classified ads on Craigslist without an entry in their checkbooks.

But newspapers have been driven to the brink by the expectation of making the kind of double-digit profits that large corporate owners demand, and by the financial shenanigans, including loading up on debt, that corporate ownership has brought. That's why some observers, notably financial experts, believe the future of the news business is not business at all.

On the Op-Ed page of the New York Times, David Swensen, chief investment officer at Yale University, and Michael Schmidt, a financial analyst, argued that newspapers should operate through endowments, like universities. San Francisco investment banker Warren Hellman convened a meeting about possibly taking the San Francisco Chronicle nonprofit in an attempt to save it from extinction.

The challenge for nonprofit journalism is both daunting and exciting. Long before the current recession and radical cutbacks, many newspapers had lost their community watchdog function, no longer bothering with the expensive and time-consuming work of investigative reporting. A 2005 survey by Arizona State University of the 100 largest U.S. dailies found that 37 percent had no full-time investigative reporters, and the majority of the major dailies had two or fewer.

"The watchdog role is disappearing at the county, city and state level," says Robert Rosenthal, executive director of the Center for Investigative Reporting, in Berkeley, Calif. He was the former executive editor of the Philadelphia Inquirer, as well as managing editor of the San Francisco Chronicle.

The Center for Investigative Reporting signals one way forward for nonprofit journalism. Founded in 1977, it has a long history of collaborating with other news organizations, including Salon, to conduct and publish original reporting. Its annual budget is $2.5 million. Recent stories have included immigration sweeps, sex trafficking and the Mexican drug war. It funds reporting that finds a home in multiple outlets -- on the Web, in print, and on TV and radio. And it's now starting a California-focused reporting initiative to try to pick up the slack as Golden State newspapers shrink.

And it's not all economic doom and 20-inch features on Lindsay Lohan at newspapers. Independent papers have shown that imaginative programs can support serious journalism. Rather than feed the bottom line of media conglomerates, the Anniston Star in Alabama, St. Petersburg Times in Florida, and the New Hampshire Union Leader in Manchester channel their profits into programs that train aspiring journalists at local schools and universities.

The talk of the journalism town, though, is Web sites. Recently the buzz has been about the Huffington Post, which recently launched an "Investigative Fund" with an initial budget of $1.75 million. More flush is ProPublica, founded in 2007 and edited by Paul Steiger, former managing editor of the Wall Street Journal. It's underwritten mostly by the family foundation funded by billionaires Herb and Marion Sandler's mortgage fortune, which has committed $10 million a year to the project. The newsroom consists of 28 journalists, producing stories given away free to other media outlets, including newspapers and Web sites. (Salon has published ProPublica stories.) Most recently, ProPublica used public records to post financial details about Obama administration officials online, including the skinny on the stock-option holdings of Secretary of Energy Steven Chu, and the book deal of Assistant Treasury Secretary Alan Krueger.

At the local level, small nonprofits are having a big impact. Fed up with the coverage provided by the San Diego Union-Tribune, retired venture-capitalist and philanthropist Buzz Woolley used his own money to start the Voice of San Diego in February 2005. Why would an established businessman put his own cash into fighting city hall with a laptop? "To have an operating civil society, the citizens need to have a certain level of information," said Woolley with a conviction that could make a journalism school professor proud. "If they aren't getting good information, we're going to have a lot worse society, whether it's info about the social system, environmental concerns or the function of government."

With a budget of about $1 million a year, and a newsroom with fewer than a dozen journalists, the Voice of San Diego has gotten some big scoops. In May 2007, it caught the chief of police blatantly misrepresenting local crime statistics before the city council and on TV. The site has won multiple journalism awards, most recently one from Investigative Reporters and Editors for stories exposing scandals in the city's two nonprofit redevelopment organizations, which led to a shake-up among officials at the agencies and a federal grand jury investigation. About 10 percent of the site's revenues come from advertisements. In a strategy becoming common with online news sites, Voice of San Diego asks readers, or "members," to donate. To date, 800 members have each made a donation to the site of $1,000 or less. The balance comes from philanthropists, including Woolley himself, and foundations.

Andrew Donohue, 30, the Voice of San Diego editor, says that the best thing about being a nonprofit is the clear sense of mission. "When you step into our newsroom, the one thing you're doing is public service journalism," he says. "We measure our success solely in the impact and the quality of our stories. We don't measure our success in hits."

Without the legacy costs of printing and distributing a paper, not to mention ongoing union contracts, Voice of San Diego can operate more cheaply than a daily. But at the same time, the Voice of San Diego is not aspiring to be a substitute for the wide variety of coverage that a local newspaper would traditionally include, such as international news, national politics, sports, culture and the arts. The focus in this newsroom is to seek out and break news about local scandals, which you won't find replicated in the San Diego Union-Tribune.

In Minneapolis, offers a mix of local reporting on politics, business and the arts, employing a staff of refugees from the declining local newspapers, as well as articles by local citizens. (MinnPost and Salon have co-published stories.) Joel Kramer, the editor and CEO of MinnPost, started the site two years ago as a nonprofit. "Quality journalism does not work as a consumer good anymore," he says.

Kramer, who is the former editor, publisher and president of the Minneapolis Star Tribune, argues that the regional monopolies that newspapers used to enjoy have broken down. The big change, he explains, is that Mr. Newspaper Publisher can no longer kick back in his office with a cigar and establish ad rates. "The pricing power of publishers for advertising is dramatically deteriorated," Kramer says. "That is the core issue, not whether readers love the stuff."

In 2008, revenues from online advertising totaled a record $23.4 billion, about a 10 percent increase from the previous year, according to the Interactive Advertising Bureau. Today, online advertising makes up just shy of 10 percent of all advertising. But with the Internet essentially giving everyone with a Web browser a printing press, there is now an ocean of places to advertise. "There are so many publishers that the value of any one publisher automatically goes down," Kramer says. "It doesn't mean that they all have equal value, but there is a tremendous oversupply of places to advertise."

Can you blame a local newspaper exec for being nostalgic for the good old days when businesses had few choices but the newspaper to get the word out? Now, each newspaper looking for ad dollars must compete with search engines -- like Google, Yahoo and Microsoft -- news aggregator sites, and even millions of bloggers. Meanwhile, with a few exceptions, like the Wall Street Journal, newspapers have failed to find ways to get readers to pay for stories online.

Kramer's solution: Fund local journalism by getting readers to pay. Like Voice of San Diego, MinnPost invites readers to become members of a local nonprofit. Right now, MinnPost has about 1,350 members, paying from $10 to $20,000 for the privilege, although anyone can still read their stories for free. "My view is that unless readers begin to pay a substantial portion of the cost of public affairs journalism," Kramer declares, "there will be a dramatic reduction in the amount of public affairs journalism being created."

With both Kramer and his wife, Laurie, director of memberships, working pro bono, MinnPost's budget is now about $1.2 million annually. About 75 to 80 percent of that goes to news. (That's a much greater percentage than newspapers have traditionally been able to devote to news, since printing and distribution costs have accounted for large chunks of their budgets.) In 2009, MinnPost expects to cover 60 percent of its expenses from memberships, fundraising events, advertising and sponsorship, with the other 40 percent covered by foundations. The long-term goal is to be able to "keep the lights on" without any foundation support at all by 2012.

Jay Weiner is one of MinnPost's star reporters. A former sportswriter, his relentless coverage of the Norm Coleman-Al Franken recount case at MinnPost won him the Frank Premack Public Affairs Journalism Award for excellence in breaking news. The 54-year-old Weiner, who has been a full-time daily journalist for 31 years, took a buyout from the Minneapolis Star Tribune in June of 2007. At the newspaper, he made $80,000 a year with a pension, health insurance, vacations and overtime. Weiner, who has two kids in college, now makes $700 a week, working as many as 60 hours a week with no vacations, no overtime, no healthcare and no pension, on contract for MinnPost.

"Now I have to work 52 weeks a year to make $35,000 and pay for my own Internet access, phone, notebooks and pens," he says. Yet even as he wonders how long he can continue to afford to do this gig, he revels in the excitement of working at a start-up news organization, not a shrinking newspaper.

"I am so happy to not be at the newspaper," he says. "We're growing, there is freedom, we're all involved in a product that we really want to make as good as possible. Everybody has a certain amount of optimism that this can be something great." For the moment, Weiner cobbles together other freelance projects on the side to supplement his income from MinnPost.

Chip Giller, the president and founder of Grist, has in the past 10 years built a leading source for environmental news online, mostly with funding from foundations. (Grist and Salon have collaborated on several projects over the years.) Grist now spends about $3 million a year and takes in about $650,000 from earned income like sponsorships, with the rest coming from foundations and individuals.

Giller, though, believes foundations aren't the ultimate answer for  journalism. "The nonprofit world can be a bridge to a bigger solution, but I don't think that there's enough dollars in the nonprofit world to support the infrastructure to do the kind of investigative journalism and bird-dogging and watchdogging that's required for a vibrant society," he says. Besides, due to the recession, foundations' endowments are down around 40 percent, which makes them less likely to try to take on the role of funding news gathering, given their many other urgent priorities.

In late March, Sen. Benjamin Cardin, D-Md., proposed legislation called the Newspaper Revitalization Act, which would help newspapers go nonprofit. While the papers would no longer be allowed to make political endorsements, they would operate much like public broadcasting with all the attendant tax benefits, including donations from readers.

But Kramer doubts his nonprofit model could save the big newspapers. "I don't think that if the New York Times or the Boston Globe went nonprofit tomorrow they could sustain the size newsroom that the old model did," he says. "I don't think that the nonprofit model will get you there. I think it can create a lot of small success stories, but there is no way our model will support hundreds of journalists. It's just not going to happen."

Is there anything else this former editor of a big city daily, and now the CEO and editor of a nonprofit news site, would like to add? "Yeah, tell people to send us money."

By Katharine Mieszkowski

Katharine Mieszkowski is a senior writer for Salon.

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