Thursday, October 29, 2009

Old School: Nonprofits on Education

Who'd have guessed it? While the nonprofit model has been getting lots of attention lately as a haven for socially responsible journalism (see links in the right hand column of this blog), a network of community-based journalism nonprofits has been covering local schools and higher education since AOL was the cool way to go online.

One such nonprofit, the Philadelphia Public School Notebook, has been digging up stories and holding officials to account since 1994. Now largely focused on its online presence, the Notebook still puts out a quarterly print magazine fice times a year.

The Notebook recently got a nice mention in the New York Times Magazine, in which author Michael Sokolove calls Notebook editor Paul Socolar "something like the journalist of the future. He is earnest, dedicated to a cause, foundation-financed and, to this point, read by a narrow audience."

The Knight Foundation apparently agrees. In December 2008, it gave a $200,000 grant to the Notebook "to take the magazine digital and add breaking news and user-generated content from a larger audience."

Others are joining in. Two thousand miles away, Education News Colorado began covering higher ed almost two years ago. "There are three of us working on the site full-time, with over 50 years of newspaper journalism among us," editor Alan Gottlieb told me in an email.

But will these nonprofits replace newspapers? Probably not any time soon, concludes the Times Magazine article, What’s a Big City Without a Newspaper? While it says that the Notebook "breaks stories and is notably well written," it also notes that "a broad audience and impact, two goals of traditional journalism, have been hard to attain."

Friday, October 23, 2009

Chicago's L3C Newsroom

For those keeping track of such things, take note: Journalism is about to get its first low-profit, limited liability corporation, or L3C.

The new Chicago News Cooperative, unveiled on Thursday by former Chicago Tribune managing editor Jim O'Shea, will begin life as a nonprofit, but will change over to an L3C after Jan. 1, when a new Illinois law takes effect, according to a Tribune report today.

The L3C is a hybrid corporation that straddles the line between for-profit and nonprofit enterprise. Vermont last year was the first state to pass a law allowing formation of L3Cs, and Illinois this month became the most recent. Several other states are considering similar legislation, as is Congress.

The Chicago News Cooperative doesn't appear to have investors yet. But it does have a major donor in the John D. and Catherine T. MacArthur Foundation. And it has a paying customer in the New York Times, which is planning a beefed-up Chicago-area edition, much like the Bay Area edition it announced earlier this month. There, the Times will partner with Warren Hellman's nonprofit Bay Area News Project.

Speculation and interest in the L3C model in journalsim has run high. Some have looked to the L3C model as a solution for newspapers because it allows a corporation to take on investors who are willing to accept varying rates of return - or possibly none at all. Foundations would be assured that their investment would qualify as a program-related investment - a crucial distinction under tax law - while socially responsible investors might be willing to settle for, say, a 3 percent return.

While CNC will partner with a newspaper, it remains unclear whether the model can be applied successfully to newspapers themselves. Jay Hamilton, director of the DeWitt Center at Duke University says newspapers likely may be reluctant to switch because of the legal uncertainties involved. Others who have written about the potential for L3Cs include Poynter columnist Bill Mitchell.

Perhaps the most attractive aspect of the L3C is that it automatically designates the company's activity as a "program related investment." Those are the magic words for a foundation, which must prove to the IRS that its grant furthers its mission and also benefits society.

While L3Cs are relatively new in the United States, they're old hat in the United Kingdom, where they're called "community interest companies." Although Vermont remains the only state to authorize the L3C, L3Cs formed in Vermont can operate in any state or territory. States such as Georgia, Michigan, Montana and North Carolina are considering similar legislation, according to a recent post in the California-based Nonprofit Law Blog.

Wednesday, October 21, 2009

What's In A Name? More Than $1M for TT

When John Thornton hired Evan Smith away from Texas Monthly to help him launch Texas Tribune, he knew he was getting a top-notch journalist. But as it turns out, he's also getting a major fundraising draw in the bargain.

Since Smith came aboard in July, the Tribune has raised nearly $1.5 million and already has hit its year-end target of $3.5 million, Thornton told me this week. The increase in donations following Smith's move was notable, he said, adding that he didn't anticipate Smith's celebrity power.

Thornton, who threw in $1 million of his own money, said that with the exception of a $250,000 grant from the Knight Foundation, all of the $3.5 million raised so far, has come from in state.

A lot of the money is coming from small donors. Thornton has signed up several hundred individuals. And, interestingly, he's gotten about three dozen corporate sponsors to throw in $2,500 apiece.

Thornton said he purposely kept the corporate sponsorship level to encourage participation and maintain editorial independence.

"If we have 50 and if Ev writes a nasty story about somebody, if it's somebody who gave us $2,500, so what?" he said.

Texas Tribune goes live on Nov. 3.

Investigate West Gets Foundation Grant

InvestigateWest, a nonprofit that opened shop in Seattle in July, has won its first grant from a foundtion -- $40,000 grant from The Bullitt Foundation, operated by the family that started KING 5 TV. InvestigateWest says it will use the money "to do in-depth, independent environmental reporting."

Here's a link to the story.

Monday, October 19, 2009

Downie Report: Affirmation and a Question

The forthcoming report on "The Reconstruction of American Journalism" by Len Downie and Michael Schudson offers both affirmation and a question for the nonprofit model.

First, the affirmation. In an op-ed in today's Washington Post that summarizes the report, Downie and Schudson make the following conclusion:

Accountability journalism in particular requires significant reporting resources with strong professional leadership and reliable financial support, which the marketplace no longer can be expected to sufficiently supply.

With this sentence, Downie and Schudson join the growing consensus that journalism -- the kind of accountability, watchdog and investigative reporting that helps provide checks and balances in a democracy -- has become a public good in the digital age. We all need it, but few are willing to pay for it in the form of a subscription.

So what to do?

Among other things, Downie and Schudson recommend creating a national "Fund for Local News" with fees collected by the Federal Communications Commission. I'm not so high on this idea -- I'm of the school of thought that government funding can't help but come loaded with potential for hidden political agendas and other challenges to transparency.

They also call for a more robust nonprofit sector in journalism, which they would accomplish with clearer IRS definitions for "new or existing news organizations." I'm all for this. But here's the question: What exactly is a nonprofit news organization? And who's going to tell the NRA -- the National Rifle Association or the National Restaurant Association, take your pick -- that their newsletter doesn't qualify?

This is an issue of journalistic standards, but goes quickly to the question of nonprofit governance. More and more nonprofits, both new and old, are doing journalism. Some of it is really good, and we know it when we see it. But putting a definition into the IRS code could be highly problematic.

The solution, I think, is for the broader nonprofit community to address this issue in a proactive way. Even if it can't produce a bullet-proof definition, it can identify practices and procedures that create a fairly bright line between journalism and advocacy.

At first glance, this might seem like a call to navel-gazing. But the lack of a defintion already is creating problems in areas like prize eligibilty and, more importantly, in deciding who gets access to places like the Capitol and the White House. Finding a solution sooner than later will help the nonprofit sector get past questions of legitimacy and credibility and get on to doing the kind of journalism that is most endangered in the digitial age.

Wednesday, October 14, 2009

ProPublica Adviser Manages Expectations

You might expect the consultant just hired by ProPublica to be optimistic, if not ebullient, about prospects for a tech-savvy, grassroots fundraising effort to help sustain the nonprofit for the long haul. But Madeline Stanionis, CEO of Watershed Co., pronounces herself "skeptical." "I've never drunk the Kool-Aid," Stanionis told me in a phone interview Wednesday.

Why the skepticism?

It has to do with donor expectations.

Stanionis thinks donors to political and other "citizen-powered" campaigns have been conditioned to believe that the candidate or institution that receives their donations will respond directly to their demands. But journalism does not -- and should not -- operate that way, she said. "I just think trying to force a journalistic endeavor into a hole created by these campaigns is not correct," she said.

Stanionis is confronting the central dilemma facing journalism start-ups, nonprofit and for-profit alike: How to create a strong, independent editorial voice while also keeping the revenue flowing. For ProPublica, the stakes are particularly high. Though it has a rolling, three-year commitment for as much as $10 million a year from Herb and Marion Sandler, it needs to build a long-term revenue plan.

Enter Stanionis, whose clients have included The Nation and Mother Jones. ProPublica hired her firm and another to focus on large grants -- New York-based Community Counselling Service Co. -- with a $1 million grant from the Knight Foundation. Like most grants from Knight, the money comes with the condition that ProPublica share the knowledge it gains. But how that will happen isn't clear yet, said ProPublica general manager Dick Tofel. "(We) need to identify outputs relevant to others before we can determine how to share them," he told me in a recent email.

Indeed, Stanionis said she's just getting started, but some things she has sorted out. For one thing, her previous journalism clients are different in that they have well-established brands that "border on a personal relationship with readers." But ProPublica, like new, regional nonprofits such as MinnPost, Voice of San Diego and Texas Tribune, has positioned itself as a non-partisan, non-ideological investigative news source. It can be difficult for an outfit with that kind of professed independence to tell readers it needs their help. "You have to be okay with saying over and over again, 'We need your support,'" Stanionis said.

There's also the issue of managing reader/donor expectations. There's definitely room for a two-way conversation with readers in which they provide data and other inputs, Stanionis said. But that doesn't mean they get to dictate what stories get reported and written. "The nuance is important," she said.

So what kind of grassroots strategy will work for ProPublica and other nonprofits? What might help, Stanionis said, is if a reward for donating is something "fun" -- like the ACLU membership card. But as CUNY's Jeff Jarvis also warned, Stanionis knows that focusing too much on premiums and other rewards carries risk of drift from the mission, which is a nonprofit's primary reason for existing.

"It becomes a coffee cup and totebag machine," Stanionis said. "Is that what we want to be doing? Is that where we want to be in 20 years?"

Tuesday, October 13, 2009

A Lesson from Chi-Town

Like a lot of people who are concerned about the future of journalism in the digital age, I'm still wondering what we're supposed to have learned from the demise of Chi-Town Daily News last month. So I called one of my favorite editors of all time, Jacqui Banaszynski, who sits on the nonprofit's board.

Turns out, Jacqui also is struggling with this question.

The need to raise money to replace Chi-Town's start-up funding from the Knight Foundation was well understood by the board, she told me. But what could have been done differently to keep Chi-Town going? That's much harder to pinpoint, she said.

Among the headwinds Chi-Town and founder Geoff Dougherty faced were the severity of the economic downturn, she noted. It also "was trying to keep the geography in journalism in a new digital and citizen-choice environment. No one has yet figured out the pay model for that."

But she also wonders, as I have, whether the skill set of a journalist necessarily translates to that of a nonprofit executive. As Jacqui said, "I’d hate to be judged for my success as a businessperson and fundraiser when what I really am is a journalist."

She suggests that foundations such as Knight that have invested so heavily in Chi-Town and other startups take an extra step -- help them develop the kinds of expertise they will need to sustain themselves. While ProPublica did get a $1 million Knight grant to get that kind of help, the rest are pretty much on their own.

"So if there’s a cautionary note here, maybe it’s to make sure new ventures are a partnership of people who know how journalism works and how money works," she told me. "Maybe the gracious foundations who are out front in their efforts to protect the vital role of journalism in society need to dedicate part of their funding support to develop business acumen while these start-ups find their footing."

Thursday, October 8, 2009

A Model Partnership in Charlottesville

A great post at the Nieman Lab site today by my colleague Mac Slocum. He writes about the partnership between The Daily Progress, the daily paper in Charlottesville, Va., and a local journalism nonprofit, Charlottesville Tomorrow, which focuses exclusively on growth and development issues.

Mac's article shows several of the strengths of the nonprofit model and its potential for partnering with traditional media that no longer can afford to perform basic watchdog functions for their communities.

A key point of Mac's article is that this was no shotgun marriage. It was relationship built on hard work and mutual respect. And, Mac notes, Charlottesville Tomorrow took several crucial steps to gain credibility: It put in place appropriate governance procedures; it took fundraising and financial management seriously, and it built a track record of good work.

This model might not work in every community, but it shows what role nonprofits can play at the local level in providing a service that technological and economic forces have revealed as a public good.

Tuesday, October 6, 2009

Fun With The CUNY Model

Advance warning: This post contains some dated and self-promotional material, but I did want to point to an article posted recently by Matt Sollars on the CUNY News Innovation site.

For the article, Matt asked me last month to look at CUNY's not-for-profit model and make an amendments I saw fit. When he and Jeff Jarvis rolled out their "New Business Models For News" project at the Aspen FOCAS09 conference in August, the first thing that struck me was the high expectation for advertising support (something like 50% of revenues by Year 3). But the more I looked, the more I thought that the model needed to reflect the maturation of a nonprofit's membership program.

Though community-oriented journalism nonprofits such as MinnPost are a recent phenomenon, nonprofits have been doing membership campaigns for a long time. And one common experience is that big donations tend to drive smaller ones. Call it a socialization effect or whatever you like, but people often follow the example of leaders in their community. Ultimately, the membership gift chart starts looking like a pyramid, beginning with a few big gifts at the top and filling out with growing numbers of smaller gifts at the bottom.

So back to the CUNY model: I used a typical pyramid from the Hank Rosso text on fundraising as a guide to adjust the number of donors over the first three years. It bumped up the potential revenues from membership campaigns by about $200,000 for an overall budget of about $3 million.

Of course, as helpful as the CUNY models are in helping us envision new journalism enterprises, they are at best informed speculation. The more important aspect of the membership campaign is that it helps keeps nonprofits attuned to the needs of the communities they serve. In that regard, a well-executed campaign is about more than money.

Saturday, October 3, 2009

Frank Daniels' Speeding Ticket

Not long after I landed my first reporting job at the Raleigh News & Observer in 1988, the publisher and primary owner, Frank Daniels Jr., walked into the newsroom one day, handed the cop reporter a speeding ticket he had just received on Interstate 40 and told the reporter to write about it for the next day's paper. As far as I know, it was the only time Frank ever demanded that a news story be published in his own newspaper.

Frank stayed away from his newsroom for one simple reason: He knew that meddling was a bad idea. No reporter or editor worth his or her salt would ever want to be associated with a newsroom where the publisher determined what beats got covered and what stories got written. If Frank's paper appeared to harbor biases or pick on certain politicians, that was a matter to be settled between the journalists and their sources. With that philosophy, Frank ran what was widely regarded as one of the nation's best regional newspapers.

For the sake of argument, let's assume that rather than sell the N&O to the McClatchy chain as he did in 1995, Frank created a foundation that ran the paper as a nonprofit. Would Frank then have started ordering up stories that he thought had been overlooked by his star reporters and editors?

I don't think so.

The point here is that journalistic bias is a function of human intention, not the business model under which the story is produced. For-profit, nonprofit, it does not matter. If a reporter or editor has an axe to grind, he or she is going to find a venue to grind it.

I offer this reminder as a coda to stories that followed Warren Hellman's announcement that he would put up $5 million toward a new, nonprofit newsroom to cover news in the San Francisco Bay Area. Among them was a critique from Slate's Jack Shafer that the recent wave of new nonprofit news organizations is somehow tainted because it doesn't meet some market-based test of acceptance. Shafer's rule of thumb seems to be: If it doesn't sell ads, it doesn't merit publishing.

I think back to the stories I used to write at the N&O. A lot of them were about marketing abuses by one of the major drug companies based in nearby Research Triangle Park. The CEO, a friend of Frank's, once called asking him to pull me off the beat. Frank's answer, relayed by my editor, was to tell the CEO to go to hell. The truth -- that the marketing abuses hurt people -- didn't sell ads. But by telling it, the N&O did its community a service that never could translate into an ad rate.

Frank understood the value of public service better than most, and that's what made him a great publisher. Will Hellman get it as well? I don't know him, so I can't say. But I do know John Thornton, founder of Texas Tribune, also mentioned in Shafer's piece, and I can say that he certainly does. Why would he plunk down $1 million of his own money to create his own vanity press? If that's all it amounts to, then nobody will read it. John's a smart guy, and he gets it, the same as Frank did.

So where does that leave us? Should we mourn the era of corporate media ownership that brought us the Los Angeles Times' Staples Center fiasco? Do we think there will be less publishing-side pressure on for-profit newsrooms now that so many newspapers are in bankruptcy or otherwise on their way to extinction? Or should we wring our hands about the undue influence of nonprofit publishers who long for the day when their local newspaper actually carried reviews of the ballet?

I'll take the latter. The nonprofit model isn't the only answer. But it is an answer to the problem of underwriting socially responsible journalism in the digital age. If nothing else, the nonprofit model offers a range of alternatives to addressing the problem of newsroom bias.

For one, there are unique governance structures. Many of the startup nonprofits of note have installed journalism advisory boards to oversee the work product. Could you imagine a regional paper like the N&O bringing in renowned journalists from places like the Washington Post or New York Times to evaluate their work? Of course not. But that's what nonprofits are doing.

And then there's the fundraising. Fundraising in every form -- whether memberships, foundation grants or corporate sponsorships -- is a test of a nonprofit's ties to its community and an opportunity to make the case that it provides value even to those who choose not read or to donate. Fundraising 101 teaches nonprofits that the path to success and sustainability is to build a diverse base of support. And that's exactly what successful journalism nonprofits are doing. Sure, donations come with conditions. But so do subscriptions. Would you keep subscribing to a paper that never got delivered in the rain or that dropped the cartoon that you and your spouse share over breakfast? Of course not. Fundraising keeps nonprofits connected to their communities.

The hard truth is that there is no way to outlaw bias, either real or perceived, from newsrooms. It has been a fact of life as long as there have been journalists.

Friday, October 2, 2009

Texas Tribune Gets Knight Grant

Hats off to John Thornton and Texas Tribune for securing $750,000 in grants, including $250,000 from the Knight Foundation. The grants are a big-time validation of John's vision for his site - and for the nonprofit model at the state and community level.