Tuesday, May 5, 2009

ProPublica: The Results Are In

ProPublica.org, perhaps the highest-profile experiment in nonprofit investigative journalism, just posted its audited financial statements for 2008, and they're worth a look for anybody interested in what it takes to build an online newsroom from scratch.

Not surprisingly, the biggest line item is for personnel. Salaries and the related cost of benefits and payroll taxes cost ProPublica a little more than $4 million, or about 65 percent of its $6.1 million in total expenses.

Keep in mind that ProPublica spent most of the year ramping up its newsroom, so the sustained burn rate will be about $10 million per year in 2009 and 2010, according to Dick Tofel, ProPublica's general manager.

At that rate, ProPublica will spend about $180,000 per year for each of its 31 newsroom and five administrative employees in 2009. That's no shoestring operation. But saving money isn't the point, Tofel said. The goal is to have maximum impact, and there's no shame in spending money to do it.

That is one of the biggest differences with other nonprofits, Tofel said in a telephone interview. “It is why we spend more money than anyone ever has before. ... Our theory from the very beginning is that is that if you want to do world class work, you have to hire world class people, and you have to hire them at market prices."

What does $10 million buy? About 50 "deep dives" per year - high-impact stories that ProPublica gives to newspapers and other media in return for crediting it as the source.

Like a lot of nonprofit startups, ProPublica has a long-term goal of becoming self-sustaining. But don't look for answers in the annual report. ProPublica is "just starting to think very seriously" about its future, and all ideas - including selling advertising - are on the table. But nothing - including selling advertising - promises to take the place of sustained foundation support. "We've got more questions than answers at this point," Tofel said.

ProPublica's biggest funder is the Sandler Foundation, which has made a rolling, three-year commitment of up to $10 million per year, Tofel said. Other foundations so far have put up a total of about $800,000.

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