Buying Time in Chi-Town

Like many, I was disappointed to read Friday that the editorial team behind Chi-Town Daily News was giving up on its nonprofit business model in order to launch a new, as-yet-unnamed, for-profit news site about city news. In a blog post, editor Geoff Dougherty says the reason was that CTDN simply couldn't raise enough cash "to do a great job of covering a city as sprawling and complex as Chicago."

I don't know Dougherty, but I must say that I admire his ambition. He figures he needs $1 million to $2 million a year to do the job right. I'd bet that's still a fraction of what the Chicago Tribune or Sun-Times spends covering city government. But he's been at it with CTDN for four years now, and he still hasn't been able to raise more than $300,000 a year. Dougherty wants to get to the promised land, and he wants to get there now. I understand that.

The hard truth, though, is that it takes more than four years to build a donor base and diversify sources of revenue to sustain a nonprofit. The fact that Dougherty got to $300,000 in just four years is a major accomplishment. Sure, it's easy to look at an outfit like ProPublica and wish that you, too, could find a benefactor willing to put up $10 million a year to pay for your newsroom. But that kind of one-stop shopping isn't a business model; it's a lightning strike. -- something that the people who run ProPublica know better than anybody. In fact, ProPublica is using a $1 million grant from the Knight Foundation to hire a fundraising firm to help it figure out how to sustain itself when its initial funding taps out, according to general manager Dick Tofel.

I don't doubt that Dougherty and his team knocked on every door they thought possible before giving up on CTDN. But the great strength of the nonprofit model, I believe, is that it puts the needs of the newsroom ahead of all others. More importantly, it treats socially responsible journalism not as a product, but as a cause greater than any individual institution that serves it. When you bring on investors, they come first, even if they are "angel" funders. Maybe not this year, or the next, or even the third. But someday, they're going to demand a return.

So the question that lingers in my mind is this: What exactly is Dougherty getting from his new investors? As far as I can tell, he hasn't cracked the code of making a profit by selling socially responsible journalism. The fact is, it is likely to remain a money-losing proposition. So if he's using the money to do what he says -- scale up his news operation -- he's merely buying time until the next instance that his ambitions exceed his revenue base.

I wish Dougherty well, and I do think that we will see more hybrid organizations that blend nonprofit and for-profit activities. But if he plans to stay true to his mission -- providing "vibrant public affairs coverage" -- he's going to have to ask permission of his investors. Then we'll see exactly how angelic they are.

A postscript: In his post on Friday, Dougherty said he was in talks with some local nonprofits that might buy the CTDN website and continue its neighborhood reporting program. This is a reminder to self to check back in three years and compare what the new CTDN looks like next to Dougherty's next venture.