A Modest Proposal For (De-)Funding NPR

Shortly after the November midterm election, resurgent House Republicans proposed cutting funding to National Public Radio -- which incoming Speaker John Boehner called "a left-wing radio network" -- by forbidding local stations from using government funding to buy NPR programs.

It was a ham-fisted approach inspired by NPR's firing of commentator Juan Williams and it went down on Nov. by a vote of 239-171 with lame duck Democrats helping provide the big margin of defeat. No doubt, NPR will be a target again once the new Congress is sworn in. So how can NPR -- which in actuality gets the much of its funding through various forms of philanthropy and sponsorship -- make its case for government support?

Like Boehner, a lot of Republicans think NPR is biased against them, despite evidence to the contrary. But maybe the real problem is one of constituency. Maybe Republicans don't feel like they have much at stake in sustaining NPR.

If that's the case, maybe they're right.

NPR doesn't get funding directly from the federal government. Member stations receive grants from the Corporation for Public Broadcasting, the independent nonprofit that distributes federal money to public broadcasters, and that was the pressure point of the Republican proposal. Those stations pay fees to NPR for programming and technical services, which together account for about half of NPR's annual revenues.

Each grant is considered on its own merits. But when all those grants are added up by state, a clear pattern emerges: Some states get a lot less than others on a per-capita basis. And if you look at a list of the have-nots of the CPB grant system -- the 20 states that got less than $4 million apiece in 2009 -- the list includes 12 of the 22 states that John McCain won in the 2008 presidential election. In other words, the issue might be that Republican-leaning states don't have as much at stake. So if Republican members of Congress go after NPR, they are unlikely to suffer political consequences.

So here's a modest proposal for the incoming Republican House majority: With $478.8 million in grants in 2009, CPB represents less than a rounding error in the nation's $1 trillion-plus deficit, and any proposal to de-fund CPB is certain to be dead on arrival in the Democratic-controlled Senate. So why try to kill it? Instead, why not reallocate CPB money in a way that benefits Republicans and their districts?

It wouldn't be hard at all. House Republicans could devise a new formula that allocates CPB money to states according to the number of people who voted for McCain in 2008, a big Democratic year. Such a formula would go a long way to help places that arguably could use additional boost for local media. Alabama, for example, would get more than twice as with big funding increases include Mississippi, Oklahoma and South Carolina. And if they don't like the programming that NPR is sending them, they have the leverage of their increased grant money to demand change.

I'm not a big fan of government funding of journalism. But the fact of the matter is that government subsidies are everywhere -- from CPB grants to favorable mailing rates and tax deductions for individuals' grants to 501(c)3 organizations such as the Franklin Center. If Republicans really want to cut government funding of journalism, they have a lot more work to do than "executing" NPR, as GOP elder statesman Pat Buchanan suggests. Until then, they shouldn't kid themselves about what they would accomplish by blocking NPR's public revenue stream.

+++++++++++

Public Media "Have-Nots": The 20 states with the lowest CPB grant totals in 2009

Rhode Island $774,711
Wyoming $982,129 *
Maine $1,582,392
Montana $1,623,470 *
South Dakota $1,636,221 *
Vermont $1,693,422
West Virginia $2,192,000 *
Idaho $2,192,525 *
Mississippi $2,225,238 *
New Hampshire $2,227,215
Hawaii $2,522,417
Connecticut $2,834,282
Alabama $2,887,913 *
Arkansas $2,952,858 *
Oklahoma $3,146,341 *
Nevada $3,184,697
Kansas $3,356,566 *
North Dakota $3,386,257 *
South Carolina $3,513,303 *

* denotes state won by McCain in 2008

Source: Corporation for Public Broadcasting

Andy Alexander's Wake-Up Call

Nonprofit news organizations got yet another wake-up call Sunday morning from Washington Post Ombudsman Andy Alexander.

In his regular column today about an environmental story produced by the Center for Public Integrity, he took Post editors to task for publishing the story without telling readers what CPI is and why the Post is publishing its work.

More than a dozen readers simply hadn't heard of CPI, Alexander wrote. But one reader he cited by name -- Douglas H. Green of Washington, D.C. -- took issue with CPI. Green said CPI "often gives a biased, anti-business view on environmental topics," according to Alexander.

What's troubling here is that although CPI has a 20-year track record of excellence, and although Alexander's own investigation found that the story had been thoroughly vetted by Post editors, the Post's failure to explain itself and CPI to readers opens it to accusations of bias from readers who have their own interests to protect.

As we learn from Alexander's column, Green is a lawyer who represents electric utilities on environmental issues. As it so happens, the story, entitled "Obama administration gives billions in stimulus money without environmental safeguards," names electric utilities that got stimulus money for job-creating projects while also being granted "exemptions from a basic form of environmental oversight."

Are these companies among Green's clients? Quite possibly. It might be that Green has some skin in the game and in fact is the party that harbors a biased view of the issue. We don't know because that information isn't disclosed, either.

But we do know that accusations of bias -- whether because of funder pressures or reporters' own political views -- remains one of the great, nagging criticisms of nonprofit news organizations. To protect themselves, and indeed, to remain viable news providers for the long haul, they and their publishing partners among legacy media need to do a better job of explaining how the model works and why it benefits readers.

RIP, New Mexico Independent

On Wednesday, the New Mexico Independent ceased operations after its parent organization, the American Independent News Network, ran out of money to keep the online publication going. By all accounts, the Independent was aggressive in covering state government, and its presence will be missed.

But the lesson here is one of the importance of building a sustainable model -- and how hard that is to achieve. The Independent, which has eight sister publications still operating in states from Colorado to North Carolina, ran out of money in part because it had received grants from supporting foundations on a year-to-year basis, according to David Bennhehaum, president and CEO of the American Independent News Network.

Here's part of what he said to the New Mexico Business Weekly:

Bennehaum concedes one problem with the business model was that the creators of the network only secured one-year commitments from foundations for what was a multi-year project. Many of those commitments expired in the first quarter of 2009 — right after the financial meltdown in fall 2008. As a result, many funders were not in a position to recommit.

Ouch.

Could Bennehaum have anticipated the impact of a downturn in the economy? Maybe. Should he have insisted on multi-year commitments such as the rolling, three-year, $10 million-a-year commitment the Sandler Foundation has made to ProPublica? Again, maybe. But had he done so, he probably never would have gotten off the ground.

Nonprofits Among The ONA Finalists

Congrats to the many nonprofits named among the finalists for the Online News Association's 2010 Online Journalism Awards. They cleared out all competitors in the general excellence, micro- and small-site categories, and placed one of three finalists in each of the medium- and large-site categories.

Here are the highlights:

General Excellence in Online Journalism, Micro Site
* California Watch and the Center for Investigative Reporting
* Gotham Gazette
* St. Louis Beacon

General Excellence in Online Journalism, Small Site
* ProPublica
* The Texas Tribune | texastribune.org
* voiceofsandiego.org

General Excellence in Online Journalism, Medium Site
* Mother Jones

General Excellence in Online Journalism, Large Site
* NPR: NPR.ORG

Gannett Foundation Award for Innovative Investigative Journalism, Small Site
* The Center for Public Integrity: Sexual Assault on Campus: A Frustrating Search for Justice
* ProPublica, the New Orleans Times-Picayune and Frontline: Law and Disorder
* voiceofsandiego.org: Out of Reach

Gannett Foundation Award for Innovative Investigative Journalism, Large Site
* NPR, ProPublica, Frontline: Brain Wars: How the Military is Failing the Wounded

Do-It-Yourself Nonprofit Journalism

At last: A comprehensive tool kit for those interested in starting their own nonprofit news sites, courtesy of Brant Houston, Andy Hall and the Knight Citizen News Network.

The best thing about the tool kit may be the advice that comes with it -- things like taking time to assess whether you're really up for all the work and frustration that comes with launching a new enterprise. And some great tips, like finding another 501c3 to act as fiscal agent.

Brant and Andy clearly put a lot of time, energy and passion into this project. Kudos for a great job.

Government-free* Nonprofit Journalism

Here's a test for nonprofit journalism and its stakeholders.

The following sentence comes from the "Contribute" page of a nonprofit journalism organization. What's wrong with it?

The (organization) neither accepts nor receives any government or taxpayer-financed grants and relies solely on the generous support of our donors.

The answer is ... nothing is wrong.

Ha! It was a trick question. The website belongs to organization that claims to help produce independent journalism and doesn't like the idea of government supporting its work. No problem.

But in the same breath, the organization informs its potential donors: "Your donation ... is tax deductible to the fullest extent of the law under Internal Revenue Service Code Section 501(c)(3)."

Now we have a problem.

The organization I am zinging here, the Franklin Center for Government and Public Integrity, says tax deductions aren't the same thing as government support. "Our generous contributors are not funding government support of journalism when they donate to the Franklin Center," Jason Stverak, the group's president wrote in an email. (Complete response below.)

Economists disagree.

Charitable deductions are known within the realm of economics as "tax expenditures," and according to Stanley Surrey, the former assistant Treasury secretary who coined the term, they're no different than direct government spending.

"Whatever their form, these departures from the normative tax structure represent government spending for favored activities or groups, effected through the tax system rather than through direct grants, loans, or other forms of government assistance," Surrey wrote in 1985 with co-author Paul McDaniel (emphasis, mine).

The Heritage Foundation offers a similar definition. It says in part: "The word 'expenditure' is used to highlight the similarity between the use of the tax code to provide advantages to a select group and the more traditional method of giving the group a slice of the federal budget."

Last month, I took WikiLeaks to task for promoting itself as a cutting-edge proponent of transparency in government while failing to disclose much of anything about its own funding and expenditures. My gripe, in a nutshell, was that WikiLeaks' adherence to a double standard undercuts not only its own credibility, but also that of the entire nonprofit sector in journalism.

Like WikiLeaks, the Franklin Center seeks to "advance the cause of transparency in government" while it also withholds information about its own finances. But it slides further down the slippery slope when it condemns the idea of government support for journalism and then makes that condemnation a central selling point in its case for philanthropy -- tax-deductible philanthropy, no less.

The Franklin Center isn't alone.

In Idaho, the Idaho Freedom Foundation, publisher of the nonprofit Idaho Reporter says this on its "Donate" page:

The Idaho Freedom Foundation relies solely on the generosity of individuals, foundations, and corporations that share its commitment to freedom. IFF does not accept any government funding. IFF is a tax-exempt organization under section 501c3 of the Internal Revenue Code. U.S. citizens will find their contributions to be tax-deductible to the extent allowable by law.

Some of the biggest names in the world of Washington think-tankdom commit the same offense.

They include the Progress and Freedom Foundation and the Heritage Foundation, both of which slammed the idea of government policy changes that could help support journalism as old business models crumble. Bottom line for both of these big-name foundations: Government support is bad -- except when it helps them stay afloat.

I'm not here to flog the Franklin Center or any of these other organizations for their ideology. I know from a decade of reporting on Capitol Hill that it's darned hard to maintain one's purity when money is involved. But those who count themselves among the nonprofit sector in journalism should walk their own talk. Any nonprofit organization that says it "relies solely on the generous support of our donors" while also promoting the charitable tax deduction available to its donors is issuing, at best, what the late Ron Ziegler might have called an inoperative statement.

The fact is, government subsidies for journalism are everywhere. In addition to the charitable tax deduction, they include mechanisms such as favorable postal rates and revenue-producing legal-notice requirements. Geoffrey Cowan and David Westphal of USC identified these government subsidies to journalism in a report earlier this year and argued that they were intended by our founding fathers to help support a vigorous press.

If you don't buy their argument, another proponent of the view that tax deductions constitute government support is view is Sen. Chuck Grassley. The Iowa Republican has been a tireless watchdog over the nonprofit sector, and the charitable tax deduction has been his entry point to investigations of hospitals, athletic booster clubs and other 501(c)(3)s.

So what to do in a world of ambiguity?

One solution would be for journalism nonprofits that eschew government support to refund the value of donors' tax deductions to the U.S. Treasury. The Franklin Center recently named an advisory council that includes well-known journalists such as Tucker Carlson, and maybe that body could take up the idea at their next meeting. But I'm not holding my breath for that to happen.

Here's another scenario: What if Grassley slipped in a legislative rider ending the charitable tax deduction for organizations involved in journalism? I bet the nonprofits mentioned above would howl like holy heck.

Perhaps the best thing would be for these organizations to acknowledge the reality of their dependence on government support and focus instead on journalism. They have a lot to contribute from their point of view, and that should be reason enough for readers to support them.

Until then, a little more transparency might be in order. If journalism nonprofits want to denounce government support while promoting tax deductions for donors, they should add an asterisk and a disclaimer to their solicitations for support.

It's the transparent thing to do.

++++++++++++++++++++++++++++++++++

I asked representatives of several journalism nonprofits whether they thought tax deductions constituted government support. Here is the full response I got from Jason Stverak of the Franklin Center.

Our generous contributors are not funding government support of journalism when they donate to the Franklin Center. In fact, the Franklin Center strongly believes that government intervention in media will create greater problems than the struggling newspaper business is currently enduring. If government intervenes in the news industry, journalists will no longer be able to report credibly on stories that matter to the people, but ultimately only on what matters to officials. Journalists may ignore scandal and corruption for fear of losing government funds. They could become political flacks and write to appease government instead of investigating it.

Drawing the conclusion that every donation to a non-profit 501 c3 is supporting the government in some way is incorrect. Tax deductions for gifts to houses of worship are not funding government support of religion and tax deductable (sic) donations to health care associations are not supporting government healthcare.

Googling Serendipity

Twelve years ago, when I was reporting on the pending Microsoft antitrust case, I learned that what was really at stake wasn't immediately apparent in the legal briefs. It wasn't the browser market (remember Netscape?) or whether Windows should be able to run somebody else's word-processing program. Rather, it was how control was exercised over the places where we learned, created and engaged in critical thought.

One of the best thinkers on the topic was Ben Shneiderman, founding director of the Human-Computer Interaction Lab at the University of Maryland. He told me at the time that the critical question for Microsoft was not whether the company encouraged innovation -- it did -- but rather how financial pressures dictated which innovations it adopted and which it let wither. The Microsoft software suite, he noted, wasn't very accessible to people with learning disabilities or those with low incomes.

Fast-forward to 2010, and now we hear from Eric Schmidt, CEO of Google, another powerful technology company that controls the tools of creativity and expression. Schmidt recently talked to the Wall Street Journal about the potential for applying artificial intelligence to search, suggesting that the search engine of the future would figure out what we meant rather than find what we actually typed.

Schmidt seems to be pushing the idea that the future -- or, more accurately, each of our individual futures, interests and passions -- all can be plotted by algorithm from now until our dying day. The role of serendipity in our lives, he said, "can be calculated now. We can actually produce it electronically."

Really?

According to Webster's, serendipity is "the faculty or phenomenon of finding valuable or agreeable things not sought for." So if the essence of serendipity is chance or fortune or chaos, then by definition, anything that a search engine brings to you, even on spec, isn't serendipitous.

I don't know whether Schmidt's comments should be chalked up to blind ambition or to quant-nerd naivete. But it's troubling that Schmidt seems to discount the role that human nature plays in our everyday lives and, ultimately, in guiding our relationships with technology.

It might be that Schmidt's vision for the search engine of the future would serve us well in finding a new restaurant, movie or book. But if Google really wants to take the guesswork out of our lives, we should be asking the same question that Shneiderman put to Microsoft. How might financial pressures shape Google's "serendipity algorithm"? What content -- journalism and otherwise -- will it push our way that will shape our worldview? And, to Shneiderman's point, what limits does it impose?

I think it's safe to say that some good ideas don't lend themselves to being monetized online -- witness the rise of nonprofit startups in bringing us investigative, public affairs and explanatory journalism. How might they fare in Schmidt's world order?

I caught up with Shneiderman on Monday, and he agreed that this is one of the key questions that should be debated as we depend more and more on a "recommender system" in which companies like Google or Amazon use massive databases to anticipate our needs and wants. Public interest groups and other nonprofits that can't afford the right keywords could be most vulnerable in these systems, Shneiderman said. "How far down the list do the concerns of civic groups get pushed?" he asked.

It's fair to ask companies what considerations and factors might be weighted in their search formulas, Shneiderman said, but it isn't clear what level of transparency should be expected. "What is a reasonable a request to make without exposing their algorithm and their business practices?" he said.

I can't say either. But I do think there are some lessons that Google can take from the history that Microsoft has helped write.

One lesson is that what's good for the bottom line doesn't always jibe with what's best for consumers. A dozen years ago, the Netscape browser was regarded by many as more as more functional, but Microsoft saw it as a threat. So it bundled its own Explorer browser in its operating system and effectively priced Netscape out of existence.

Another lesson is that it isn't always possible to divine what people will want in the future based on a profile of what they (or people like them) have wanted it the past. Indeed, some of the most successful technology companies -- Google included -- have succeeded precisely because their vision for the future was radical, new and compelling. Microsoft once played that role to a monolithic IBM. But today, as Microsoft's market valuation has been eclipsed by that of Apple, it has become debatable whether Microsoft remains a consumer-driven company.

None of this should be interpreted as an anti-capitalistic rant. We're all better off for Google's search box, and it'll be interesting to see where Schmidt's vision takes the company.

Rather, it is a suggestion that even the most elaborate algorithms and high-touch e-marketing can't address every human need.

One of the best vacations I ever took was when I pulled out of my driveway in Raleigh in late August 1991 with no particular destination. Two days later, I found myself in North Dakota, discovering places I never would have appreciated based on my past interests or those of my friends and peers. The experience was so compelling to me precisely because it was serendipitous.

That trip has served as an important reminder to me ever since. When we don't know what we want, sometimes what we really need is to figure it out for ourselves.

NPR's Folkenflik on Texas Tribune

NPR's David Folkenflik checked in on the progress of Texas Tribune in a profile that was aired on Weekend Edition yesterday.

The transcript doesn't quite capture the full experience -- including David's attempt to make the pop-up thought-bubble noise from the Trib's "Stump Interrupted" feature -- but it's a quicker read if you're in a hurry.

Some of the most interesting comments come from the editors of newspapers that now are partnering with Texas Tribune.

"We are picking up their stories and publishing them in the print newspaper because it gives us another well of political content," says Christopher Lopez of the El Paso Times.

Not long ago, no self-respecting newspaper editor would publish statehouse coverage from what would appear to be a competitor. Now, it's standard operating procedure.

My, how attitudes have changed.

ProPublica's 990: A Closer Look

ProPublica posted its Form 990 report to the IRS on Monday and -- predictably -- the only Google-able coverage, which comes courtesy of New York Fishbowl, zeroes in on the salaries paid to Paul Steiger, the organization's president and editor in chief.

Yes, Steiger made a lot of money -- $571,687 -- but this isn't news: This is essentially the same salary that Steiger made and disclosed the year before. We can argue (again) over whether that's appropriate at a nonprofit -- he probably made lots more than that at the Wall Street Journal -- but it's hard to summon outrage at this late date.

Potentially more interesting was the schedule of contributors included in the filing. Among other things, it shows that the Sandler Foundation, controlled by ProPublica founders Herb and Marion Sandler, kicked in just $4.5 million last year -- far short of the $10 million they had offered to front.

But there's no change in the Sandlers' rolling $10 million-per-year commitment, GM Dick Tofel explained in an email.

"We just came into the year with a lot of cash, requiring less during the year," he wrote. "The Sandlers’ commitment is unchanged."

Other big donors include the Knight Foundation ($985,000), the MacArthur Foundation ($500,000) and board member Mary Graham ($208,000 worth of Washington Post Co. Class B stock).

There's still work to be done filling out ProPublica's donor pyramid, however.

After Graham, the next-biggest contribution came from the Kohlberg Foundation ($50,000), meaning that ProPublica's five biggest donors accounted for 98 percent of the organization's $6.36 million in total revenues.

Rick Edmonds: Newsweek as a Nonprofit

A few days ago, Poynter's Rick Edmonds put up a thoughtful post on the possibility that Newsweek magazine might be converted to a nonprofit by its new owner, 91-year-old Sidney Harman.

He makes a compelling case. Among other things, he cites Harman's interest in Newsweek as a "national treasure" and Harman's close relationship with Walter Isaacson, CEO of the Aspen Institute and a former editor of Time.

My only nit to pick with Rick's argument is that he says "a nonprofit would provide continued subsidies and a commitment to a public service mission."

Public service mission, yes, but subsidies, no.

The state-of-the-art models are all predicated on the notion that foundation money is seed money to build a business that can be sustained by diversified sources of revenue, including events, memberships and other means of revenue generation. Subsidies aren't part of the plan for those thinking long-term.

WikiLeaks and a Failure of Transparency

In all the kerfuffle this week around WikiLeaks and its disclosure of 91,000+ documents in its Afghan War Diary, it seems to me that a fundamental irony has been overlooked: A nonprofit journalism organization dedicated to imposing transparency on reluctant governments seems to think the rules don't apply at home.

Go to the WikiLeaks "about" page, and you can see what I mean. There's lots of rah-rah about rooting out corruption, freedom of the press and why the site is "so important." But there's not a peep about organizational governance, where their money comes from or where it goes.

In some cases, such opacity is by mistake. But in WikiLeaks' case, it is by design. Just two weeks before Afghan War Diary was released, Wired published an enterprising story on WikiLeaks' finances. The reporter, Kim Zetter, tracked down a vice president of the Berlin-based Wau Holland Foundation, which apparently handles most contributions to WikiLeaks. The story provided some idea as to the scale of the WikiLeaks budget -- the group needs about $200,000 a year for basic operations -- but the vice president offered only a promise of more disclosure next month. And from WikiLeaks founder Julian Assange? No comment.

I understand the need to protect whistleblowers and other sources. But when it comes to the group's finances, can't they cut out all the James Bond stuff? I don't need names and addresses of donors, but can't we have a little more transparency and accountability?

This isn't just a matter of idle curiosity. Love or hate WikiLeaks, the organization is doing more than its share to transform journalism. And it is doing so in dramatic fashion by fully unharnessing the power and creativity of the nonprofit model. As Ruth McCambridge noted in the Nonprofit Quarterly earlier this week, WikiLeaks "may be the soul of nonprofithood."

If that's the case, then the stakes involved in WikiLeaks' own willingness to operate with transparency are quite high.

Perhaps the most-repeated criticism of the nonprofit model in journalism is that an organization that relies in whole or in part on philanthropy will become beholden to its funders and will compromise its journalistic principles in order to ensure continued funding.

That's simply not the case -- not any more than the newsroom of a for-profit newspaper would have a self-imposed ban on negative stories about car dealers, department stores and other (remaining) major advertisers.

But the secrecy invites speculation. A July 3 post at Cryptome.org from a "WikiLeaks insider" alleges that the organization had become overly dependent on "keep alive donations" from left wing politicians in Iceland. It warns ominously: "Sooner or later it will be payback time. And payback will be in the form of political bias in WIKILEAKS output."

WikiLeaks does its part to fuel the speculation and undercut its credibility as well. In the Q&A on its "about" page, WikiLeaks raises this question: "Is WikiLeaks a CIA front?" I'll save you a click back and tell you that the answer is no. But do we really need this kind of drama from an organization that presents itself as an honest broker of information? Of course not. It only serves to undercut WikiLeaks' credibility.

If WikiLeaks really wants to promote transparency, it should start with its own operations.

Diane Rehm's Take

In case you missed it, here's a link to Diane Rehm's recent radio show focusing on nonprofit journalism.

There are some familiar themes -- the astounding numbers of cuts in newsroom jobs, for example -- but Rehm also pushed hard to get her four guests to tout the benefits of the nonprofit model in addressing readers' distrust of news media.

The best answer came from Ken Doctor, who said the nonprofit model can help newsrooms pursue a "purer mission in a way" than traditional, for-profit media that always have had to balance news judgment against commercial considerations. The key, however, is transparency, Doctor said. "Readers can come to a better idea of exactly what they're reading," he said.

Another good answer came from Evan Smith of the Texas Tribune, who talked about the benefits of membership in generating engagement and support from the community the nonprofit serves.

Texas Tribune: "Lone Star Trailblazer"

If you're not on the Texas Tribune e-mailing list, you might not have seen the profile that appears in the latest issue of Columbia Journalism Review. Here's the link, and enjoy the read, courtesy of Jake Batsell.

The profile is notable for a couple of reasons.

One is the level of detail it offers in examining the challenges that face the regional nonprofit news organizations that have cropped up around the country the past few years. Batsell spent a lot of time with the Tribune's staff and leadership, and it shows. He picks apart the business model as well as he does the journalism.

Another is that the piece asks (and to the extent possible, answers) the right questions in the right context. For example, Batsell, like the leadership of the Tribune, examines on how the enterprise can be sustained for the long haul. (Answer: They still don't know, but they're adding to the playbook every day.) Questions about whether the Tribune harbors the economic and/or political biases of its funders aren't any more relevant here than they would be in a profile of a newspaper or magazine, and they're treated in the context they deserve.

One piece of news (at least for me) that got buried: The Tribune is talking to the New York Times about providing content for a regional edition, much like it has with the Bay Citizen in California and the Chicago News Cooperative.

Steiger Speaks at All Things D

In case you didn't have the $5,000 it cost to attend, the folks who put on the All Things Digital conference earlier this month have now posted some of the interviews and presentations, including this intriguing match-up of Paul Steiger of ProPublica and Richard Rosenblatt of Demand Media.

Warning: The full video goes on for 35 minutes. But if you've got the time to spare, it's a great exploration of the two contrasting business models -- Demand Media, driven with ruthless efficiency to produce only content that its algorithms predict will turn and profit, and nonprofit ProPublica, with its commitment to digging up stories that have broader impact on society.

It was nice to see Steiger, formerly the top editor of The Wall Street Journal, making the case for nonprofit journalism. It still doesn't seem to come naturally for him. But he does stand firm, despite some mild cajoling by moderator Kara Swisher to admit that he doesn't like having to accept philanthropy from millionaires.

Example: Asked if he was disheartened about the state of journalism, Steiger replied: "I'm really excited. We're in the first inning." And asked if he thought ProPublica's brand of public service journalism ever could be put into a profitable package, he replied: "Conceivably. But I can't think of what it is."

Making It Legit: Six Best Practices

Back in February, I posted an essay in this space posing the question: What makes a nonprofit news organization legitimate? It’s a question that nonprofits and their critics have been wrestling with for some time now. And as more nonprofits launch into the news business, having a good answer – one better than Justice Potter Stewart’s “I know it when I see it” – will be crucial to their survival as credible providers of news.

In that post, I raised the idea that journalism nonprofits could use something like a Good Housekeeping seal – a test of relatively simple, objective standards to which compliance could be demonstrated plainly. Not that checking boxes provides an iron-clad guarantee of anything. But like the Good Housekeeping seal, it would indicate in a public way that the nonprofit in question is making every effort to produce reporting that qualifies as journalism. I kicked off the conversation by suggesting some indicators that could be considered indicators of legitimacy, and the feedback I got helped guide my research in the months that followed.

One of the best comments came from NYU’s Jay Rosen. He took issue with some of the journalistic standards I suggested such as whether a given nonprofit news organization adhered to the SPJ code of ethics or had been accepted into a major prize competition – “shortcuts,” he called them.

Then, in a follow-up email to me, Jay made a great suggestion: Try looking for steps that nonprofits can take if they want to be legitimate news providers (emphasis, Jay’s). That inspired me to look at nonprofits and journalism from a different perspective than I originally had planned.

This almost certainly was not Jay's intention, but the first thing I did was ditch the idea of trying to evaluate journalism or practices within the editorial process. For example, one newsroom’s advisory board may have teeth, while another's might not. There’s no way to tell from the outside what impact, if any, that kind of structure or any other have on the final product. Plus, most criticism of nonprofit journalism goes to the question of funding – not reporting, writing and editing. (You can read Jack Shafer’s September 2009 Slate piece here; it concludes that nonprofit journalism is compromised because it relies on “handouts” as its primary revenue source. And here is my rebuttal.) So I focused on the relationships between publishing entity and newsroom, and between publishing entity and readers.

That leap freed me to think about legitimacy in broader terms. I began looking beyond organizations that defined themselves as producers of journalism. All sorts of nonprofits are in the business of publishing as part of a mission to educate the public, and they also seek legitimacy as contributors to the broader news ecosystem. What might we learn from them?

I began my search for best practices by talking with some of the best minds in the business. Among those I consulted were Len Downie, Chuck Lewis, John Yemma of the Christian Science Monitor and Ron Schiller of NPR.

Then, armed with their wisdom, I looked closely at a dozen nonprofits that operate inside the news ecosystem – how they’re funded, what they disclose – and I kept coming back to two core questions: Does the nonprofit align its case for philanthropy with a journalistic mission, if not journalism itself? And does it make its funding and operations transparent to its stakeholders, including readers?

For each question, I found three common, easy-to-identify practices among nonprofits that aspired to be legitimate sources of news and information. I put them in the form of a checklist similar to the new IRS Form 990, which requires nonprofits to disclose whether they have certain governance practices in place.

Here are the best practices I found:

• Resource/mission alignment
o The case for philanthropy is linked to editorial independence and objectivity.
o The organization solicits small donations and/or other forms of grassroots support.
o The organization’s board of directors operates on a volunteer basis.

• Transparency of mission and operations
o The organization’s financial statements are posted online.
o The organization’s major donors are named online.
o The organization has clear accountability measures for its publications.

Which nonprofits incorporate all six practices? Just a few. ProPublica was one. No surprise there; the organization was built to operate under a microscope. Given its high profile, ambition and achievement, it should set the pace.

But some of the other nonprofits that went six-for-six might not be the first you’d guess.

Another that employed all six practices was Human Rights Watch. It doesn’t try to do journalism, but its advocacy depends on producing work of the same – or, arguably, higher – journalistic quality. I recently found this comment from HRW associate director Carroll Bogert that explains how journalism fits the group’s mission and its case for philanthropy:

We’re hiring award-winning journalists and winning webbys for repackaging the material that our researchers collect all over the world. And we have more than 70 researchers — more than the NYTimes and the WashPost have foreign correspondents, put together. You can call it journalism, or you can call it something else, but we’re helping to keep the American public informed. And we ain’t making a profit.

The third six-for-six nonprofit was the Council on Foreign Relations, publisher of Foreign Affairs magazine. The organization is supported by 4,300 members from across the ideological spectrum, Chuck Hagel to Angelina Jolie. The group and its publications are more oriented toward opinion and analysis, but the debate is based on facts that a highly educated and diverse membership can agree on. As NBC news anchor Brian Williams says on a promotional video: “It’s a reference shelf of everything going on in the world.”

And here was another surprise: The American Red Cross, which often provides some of the first video and on-the-ground reporting from scenes of humanitarian crises such as the January earthquake in Haiti. The group rated five of six, but it came very close to meeting all six criteria. The one piece missing: It does not link its case for philanthropy to objective journalism. In its mission statement, however, the Red Cross commits itself to neutrality and impartiality – two primary tenets of journalism – in all its dealings with the public.

I spoke with media relations director Jonathan Aiken, who said that the Red Cross makes no attempt to present its work as journalism. But it uses the tools of journalism to provide information as a public service – its video feeds are regularly featured by major TV networks around the world – and as a means of making itself accountable to donors.

“If I’m a donor, I want to know that the $25 I sent is going to the people I saw on TV,” he said. “Your transparency becomes a real issue, and your handcuffs get tighter as to what you can do with your money.”

The Red Cross has made a deliberate move toward greater organizational transparency following accusations of mismanagement in response to Hurricane Katrina in 2005, Aiken said. He believes that transparency can be a better indicator of legitimacy than advisory boards and mission statements of nonprofits that were organized specifically to produce journalism. “If I’m looking at an organization that is using journalistic tools, what I want to know, what is your point of view? What colors what I read or see or hear?” said Aiken, formerly of CNN.

Despite such examples, some leaders within the nonprofit sector of journalism rejected the idea that news organizations can be judged by any standards other than those of journalism.

Perhaps the most emphatic of those was Dick Tofel, general manager of ProPublica.

In an interview, Tofel said he believes it is very difficult for an advocacy organization to maintain a truly independent newsroom because of the conflicts that inevitably would emerge. “Eventually it would publish something that would say that the people who are pursuing the organizational mission are wrong,” he said.

He added:

The hard question is, can advocacy organizations do news? I think the answer is that it’s highly problematic because if you’re an advocacy organization, you have answered the question that news poses. ... An advocacy organization should be advocating. Where do we get the idea that Human Rights Watch should have to undertake some sort of objective concept of journalism? They shouldn’t. If they are misrepresenting themselves as completely objective, then I think it’s troubling.”

As part of my review, I also talked with Yemma, editor of the century-old Christian Science Monitor, which is wholly owned by the Church of Christ Scientist. Based on his experience operating under church ownership, Yemma comes to a different conclusion. He thinks that indeed it is possible for an advocacy organization to achieve legitimacy as a provider of news, but that the news enterprise eventually must pay its own freight.

The church’s founder, Mary Baker Eddy, saw the journalistic mission as central to the work of the church, Yemma said. Eddy had been burned badly by the yellow journalism of her day, and she wanted to position the Monitor as an alternative with greater legitimacy. Over the decades, the Monitor has been free to report on the operations of the church, Yemma said, and its legitimacy as a news source has been confirmed by its seven Pultizer Prizes But he conceded that Tofel’s concern might apply to other advocacy organizations.

“There are ways a newspaper could run at cross purposes to the interests of its sponsoring organization,” Yemma said. “For nonprofits now getting into the business, it may be that you need a very clear articulation of that role within the overall organization. If you’re a foundation and you decide that not enough information is being provided about the area you care about, then it might make sense. But you’ve got to think fairly deeply about why it’s important that you do this and what the purpose is. You’re not just keeping journalists employed or keep something going. It has to be part of your mission.”

Yemma also sees financial independence as crucial ingredient to legitimacy. Throughout its existence, the Monitor has operated with a sizable subsidy from the church. The Monitor is taking aggressive steps to bring its revenues in line with its costs – including moving its daily print publication online – and plans to trim the annual subsidy to $3.8 million from its current $10.7 million over the next three fiscal years.

“For journalistic operations within a nonprofit, the first order of business has to be to move toward sustainability,” Yemma said. “Whatever you do, you have to figure a way to justify your journalistic mission because someday there’s going to be somebody on the board who’s going to say, why do we have this? It’s clear then that your news operation is in jeopardy.”

So what's the takeaway from this exercise? Does this mean that the Red Cross does a better job of covering news than self-proclaimed news sites because it employs these six practices? No. But nonprofits all types are filling the void being left by traditional media – particularly in un-sexy places such as city halls and state capitals, and costly, far-flung places such as Baghdad and Port-au-Prince. Even if a nonprofit doesn't bring you the news directly from these places, chances are greater than ever that a nonprofit provided value as an expert source or first responder. Given traditional media’s dwindling capacity to vet its sources, nonprofits can provide leadership by taking on that role and providing an example to emulate.

For nonprofits seeking legitimacy, actions do matter as much as words. ProPublica, Human Rights Watch and the Council on Foreign Relations all stake their reputations – and their revenue sources – on providing accurate news and information. When they do so in a highly transparent way, they make the news ecosystem a safer place for readers.

Here are the 12 nonprofit publishers I studied, in no particular order. My goal in studying them was to recognize best practices, not to criticize anybody for falling short on some test they didn’t know was being administered.

ProPublica
National Rifle Association
National Geographic Society
NAACP
Kaiser Family Foundation
Human Rights Watch
Council on Foreign Relations
Clean Skies Foundation
Church of Christ, Scientist
American Red Cross
American Civil Liberties Union
AARP

CPI's New Business Model

People who read Howard Kurtz's Media Notes column this morning may have missed it, but Kurtz documented a seminal moment in the evolution of the nonprofit model in journalism.

The column focuses on the Center for Public Integrity, founded 20 years ago by Chuck Lewis as an answer to what he saw as the heavy, if often indirect, influence of advertisers on news judgment. Lewis' solution: Get funding from foundations that could appreciate the social value of the center's investigative work.

Lewis deserves an enormous amount of credit for pioneering this model. But as Kurtz's column implies, the foundation-only model no longer is sufficient. The column documents the center's post-Lewis financial difficulties (he now runs a reporting workshop at American University) and the steps that new leadership is taking to develop new revenues sources such as selling e-books.

Deep, deep into the column, Kurtz articulates the big question facing the nonprofits that do journalism: Can they be self-sustaining when the foundation money runs out? He writes:

The larger issue is whether such not-for-profit outfits can become self-sustaining, or will forever be dependent on foundations and wealthy donors. If those checks stop coming, these operations could be crippled.

News From INN

The Investigative News Network, the nonprofit support group formed last year at the Rockefeller Foundation's Pocantico conference center in New York, has been busy in recent weeks adding members, and it announced yesterday that it has hired its first CEO.

The group, which now counts 32 members, announced in April that it had added four new members: The Austin Bulldog, The San Francisco Public Press, FairWarning and Maine Center for Public Interest Reporting.

And it announced earlier this week that it had added eight more: the Common Language Project, The Lens, The Iowa Center for Public Affairs Journalism, The Philadelphia Public School Notebook, Spot.Us, Youth Today, The New Haven Independent, and the Florida Center for Investigative Reporting.

INN's new CEO is Kevin Davis. Here's a link to the release from INN.

Bay Citizen-NYT Partnership

The New York Times issued a press release today saying that, as expected, it will launch its partnership with the nonprofit Bay Citizen to begin providing content for the Times' new Bay Area section.

Okay, So Google Isn't Evil

I just spent 20 minutes reading James Fallows' lengthy piece on Google's efforts to save the news business, and I can buy his argument that Google isn't evil, it's just misunderstood.

But after all those words, I still don't see a lot new coming out of Eric Schmidt & Co. Here's the closest to a solution that Schmidt offers to Fallows:

"In the future model, you’ll have subscriptions to information sources that will have advertisements embedded in them, like a newspaper. You’ll just leave out the print part. I am quite sure that this will happen."

Is this not the same argument that we've been hearing for nearly a decade?

I've concluded that Google's argument boils down to three elements:

* Online ads are getting better, more targeted and more readable
* News sites can do a better job of selling their space (using Google technology, natch)
* Trust us

The one encouraging thing that I gleaned from Fallows' piece is that Google indeed does recognize that its search engine is only as good as the content it delivers. And it's fair to say that the burden of saving the news business shouldn't fall to Google alone. But if Google really wants to help, it needs to think about some business models besides its own.

Which brings me back to the point of this post: When it comes to filling the void of public-service journalism, the nonprofit model offers solutions that would pair neatly with Google's.

A Lesson for Advocacy Nonprofits

When the nonprofit Christian Science Monitor announced in October 2008 that it would convert its daily printed report to a weekly edition and move its breaking news online, some people wondered whether the venerable newspaper would survive.

A year after the conversion was completed, it turns out that the new model is working pretty well, according to John Yemma, the Monitor’s editor.

The Monitor has succeeded in moving 93 percent of its daily subscribers to weekly, and its new web-and-print format is attracting new subscribers, Yemma told me in a telephone conversation Friday.

More importantly, the Monitor is on a path to financial sustainability, he said. The paper retains the full support of its publisher, the Church of Christ Scientist in Boston. But it is working to wean itself from church subsidies over five years -- a time frame that would be unacceptably long in the for-profit sector. And although it is owned by a church, it retains its stature as a respected, mainstream news organization.

While the Monitor has a unique history that would be difficult, if not impossible, for new nonprofit news organizations to emulate, Yemma said he thinks the Monitor’s positive experience can speak to the role that nonprofits can play in the rapidly evolving news ecosystem – particularly nonprofits that were founded to pursue missions other than objective journalism.

Below is a summary Q-and-A of my conversation with Yemma, paraphrased and edited to provide clarity and to compensate for my poor typing skills.

Q: How does an advocacy organization – in this case, a church – create and preserve a newsroom that has true editorial independence?

A: The church’s founder, Mary Baker Eddy, saw the journalistic mission as central to the work of the church. It was it was seen as a direct thing that should be done. It wasn’t just, ‘let’s support journalism.’ She wanted clear, non-sensational journalism to counter the yellow journalism of the day. That might not be as clear to other nonprofits. There are ways a newspaper could run at cross purposes to the interests of its sponsoring organization. You have to negotiate that relationship.

Q: Over the years, the Monitor has won seven Pulitzer Prizes. But do you ever get questions about whether the paper adheres to the principles of editorial independence and objectivity?

A: We’ve been in the mainstream of journalism for so long, our practices align with those of almost every other journalistic organization of repute. We’ve reported on difficult issues that the Church of Christ Scientist has gone through, including lawsuits in different eras. It’s no different than what a newspaper such as the Boston Globe would do if it was named in a lawsuit.

Q: How does the Monitor do with issues of transparency? Do you disclose your finances?

A: We make public all of the finances of the church. When it comes to the Monitor, it’s always been made public because the church would like to spend less on the paper. Each May, the church publishes a full report. It’s not online only because the church in some cases is a little slow about adopting technology. But they’re certainly transparent about what the finances are.

Q: Do the directors and trustees of the church and the Monitor still see journalism as critical to the mission of the church?

A: Yes, because it was founded by Mary Baker Eddy. She wrote the deed of trust that created the church’s publishing society, which puts out the Monitor. Today, the questions are about what form its content should take. There are legitimate questions as to whether a daily, print newspaper sent by mail made any sense. When we made the jump to the web, we expected that there might be some concerns on the part of the members.

Q: What about the members? How do they view the change?

A: The church members I think have always supported the idea of the Monitor and understood the centrality to the mission of the church. Even if they had questions about the direction, they understood that we had to make a move in some direction. The current way was untenable. I don’t think anybody asked whether the mission should go on.

Q: Do you think that to succeed as a news provider, an advocacy has to link its case for philanthropy to objective reporting, no matter where it takes you?

A: I think you have to. For nonprofits now getting into the business, it may be that you need a very clear articulation of that role within the overall organization. If you’re a foundation and you decide that not enough information is being provided about the area you care about, then it might make sense. But you’ve got to think fairly deeply about why it’s important that you do this and what the purpose is. You’re not just keeping journalists employed or keep something going. It has to be part of your mission.

Q: In terms of editorial independence within an advocacy organization, what does the Monitor’s experience show?

A: There are two paths. You can build it in constitutionally, as the church did, and it becomes enshrined. Or you have to have a sustainable business model so that you’re not a long term burden to the organization.

Q: Do you think it’s okay for independent newsrooms to rely on subsidies from advocacy organizations?

A: As a journalist, it’s not good to have to go to with the begging bowl to your parent organization all the time. It’s a bad dynamic. For journalistic operations within nonprofit, the first order of business has to be to move toward sustainability. Whatever you do, you have to figure a way to justify your journalistic mission because someday there’s going to be somebody on the board who’s going to say, why do we have this? It’s clear then that your news operation is in jeopardy.

Q: What is the Monitor's current subsidy?

A: The subsidy was $12.6 million in the fiscal year we are now completing (FY10, which ends April 30, 2010). We project a subsidy of $10.7 million in the upcoming fiscal year (FY11, beginning May 1, 2010). ... Besides the subsidy, our revenue comes from subscriptions to the weekly and the e-mail-delivered Daily News Briefing, advertising in the weekly and on CSMonitor.com, syndicated sales, and an endowment that provides an annual $6.8 million.

Q: What is the plan for the Monitor to reduce its subsidy from the church?

A: Each year we are planning to reduce the direct subsidy from the church so that by the end of FY13 (April 30, 2013) it should stand at around $3.8 million. Beyond that, we intend further reductions, but those out years are notoriously hard to predict with any accuracy. We’ll undoubtedly be re-forecasting along the way (perhaps as soon as this summer) to reflect the real world we are in.

Seeking Sustainability

Some of leading new nonprofit news organizations and their sponsors are meeting today at UT-Austin to swap ideas on how to move from the start-up phase to sustainability.

The Seeking Sustainability conference has a great home page here with tons of links and resources, and there's a mile-long Twitter feed at #nonprofitj. And here's a link to the Romenesko column with a list of participants.

Christian Science Monitor Thrives Online

When the nonprofit Christian Science Monitor announced in October 2008 that it would convert its daily paper to a weekly and move the rest of its reporting online, a lot of people assumed the venerable newspaper was on its deathbed or awfully close to it.

Turns out, the model is working pretty well, according to a report in Media Daily News. According to the report, print subscriptions have increased, and the online site attracted 5 million unique visitors in March. It says:

From a total paid circulation of 40,000 when the weekly debuted on April 12, 2009, the subscription base has grown to 77,000 today.

The report doesn't get into revenue numbers, but I think this is a god example of how the nonprofit sector can be an excellent laboratory for new models in this topsy-turvy age.

The paper traditionally has received a subsidy from its owner, the Church of Christ Scientist, based in Boston. And because the church publishes the paper as part of its mission rather than a need to turn a profit, it can take risks that other media outlets cannot. Here's one that appears to be paying off. Now let's see if others try to copy it.

Steiger Sticks Up For Nonprofit Model

After taking home a shared Pulitzer Prize for investigative reporting today, ProPublica editor-in-chief Paul Steiger told Joe Strupp that the award indicates that the nonprofit model works and has a future.

Here's what he told Joe:

To have a reporter get an award in investigative and another a finalist in Public Service, those are at the top of the list of categories for the kind of work we do. It suggests that our non-partisan, non-profit model can serve a role in this time of expanding change in the media.

I've criticized Steiger in the past for not talking about the merits of the nonprofit model, so I'm glad to see that this is part of his honoree stump speech.

John Thornton, Myth-Buster

Those of us who work in the nonprofit sector in journalism have gotten used to what Texas Tribune founder John Thornton calls the "familiar refrains" of those who moan and groan about how the nonprofit model simply won't work because there's not enough foundation money, how nonprofits could never replace legacy media, blah, blah, blah, yada, yada, yada.

The latest installment comes from Alan Mutter. Why today? I'm not sure. But it's worth reading his post and then John's response. Unlike Alan, John has lived and breathed the nonprofit model, and their experiences (or lack thereof) are revealed clearly in what they write. Alan builds the nonprofit model into an easily felled straw man. But John sees it for what it is -- one way (of many) to fill the growing void of socially responsible journalism.

Len Downie's Nonprofit Network

By any measure, former Washington Post executive editor Len Downie epitomized success in the traditional, subscription-and-advertising model of newspaper journalism: With a staff that once topped 900 and an annual budget of $100 million, his newsroom hauled in 25 Pulitzer Prizes over 17 years and wielded influence from Capitol Hill to the darkest recesses of the nation's capital.

Since stepping down from the Post's top newsroom job at age 66, Downie has taken on a professorship at Arizona State University. But behind the scenes, he also is lending his experience to help shape the practices and prospects for the burgeoning nonprofit sector in journalism.

Why? Simple, Downie says. The for-profit model alone no longer can support the kinds of investigative, explanatory and accountability journalism that society needs. As the for-profit sector shrinks, journalists and interested readers must explore new ways to underwrite their work.

"There are going to have to be many different kinds of economic models,” Downie said in an interview Wednesday afternoon at the Post's offices. "The future is a much more diverse ecosystem."

Downie has made himself an expert on the nonprofit model, and wrote about its possibiliies in his recent report, "The Reconstruction of American Journalism," with Michael Schudson.

Less known, perhaps, is that Downie casts a wide net as within the nonprofit sector of journalism. He's on the board of Investigative Reporters and Editors, which has incorporated panels on the nonprofit model in its conferences. He's also a board member at the Center for Investigative Reporting, which recently launched California Watch to cover money and politics at the state level. And he chairs the journalism advisory committee at Kaiser Health News, which has provided niche explanatory reporting to leading newspapers, including the Post.

Looking across the sector, Downie sees great potential -- and some big, unanswered questions.

On the upside, nonprofits are helping journalism move toward a more collaborative model, Downie said. In the old days, newspapers resisted ideas and assistance from outside. But in the new news ecosystem, collaboration is a way of life. “All of our ideas have been changed about that," he said.

Also a plus: Big foundations and the public at large are warming to the idea that news organizations are deserving of their support, just like the symphony or any other nonprofit that contributes to society's cultural assets. “There’s a question of whether there’s enough public realization," Downie said. "I think we’re heading to that direction. Awareness is growing steadily.”

But a lot of questions still must be sorted out, Downie said.

High on the list, he said, is the most basic of all: Where will the money come from? Like other nonprofits, nonprofit news organizations will have to find the right mix of foundation money, grassroots support, advertising, and perhaps additional government support, he said.

That leads to the other big question of sustainability: It's not clear that all the nonprofits that have launched in recent years will survive. “How many will succeed and for how long?” Downie wondered. A related question: How will the collaborative model will settle out, and where nonprofits will find productive niches?

Downie said he also has been watching nonprofits wrestle with the issue of credibility -- how to achieve it and how to keep it.

The answer begins with editorial independence and transparency about financial supporters, Downie said. But when it comes to painting a bright line between journalism and ideology, advocacy or spin, there are no magic formulas to assure readers -- just the experience of trial and error.

“It’s one of these things that’s proven by its exceptions," Downie said. "When there’s an exception, it’s a scandal.”

AOL's Foray Into Nonprofit Journalism

Big, pathbreaking news from AOL. The company announced this afternoon that its Patch Media subsidiary is launching a nonprofit subsidiary, Patch.org, to provide hyperlocal coverage to underserved communities.

According to the announcement: "Patch.org will partner with community foundations and other organizations to launch Patch sites and bring objective local news and information to communities and neighborhoods around the world that lack adequate news media and online local information resources."

This is a significant development because by creating a nonprofit hyperlocal operation to match its for-profit cousin, AOL gives us proof of concept that nonprofits can complement for-profit media by delivering value that for-profits cannot. We've seen the dynamic at work in other cases -- but usually when a nonprofit hands over a story to an independent, for-profit partner that no longer can afford to do all the enterprise journalism that it would like.

AOL gets it. And that's refreshing.

Fair Warning: Here Comes FairWarning

A couple of former Los Angeles Times staffers next week plan to launch a new, nonprofit news service called FairWarning that will focus on "safety and health issues facing consumers and workers, and related topics of government and corporate accountability," according to a statement released Thursday. The site will go live March 24.

The new organization will be led by Myron Levin with help from Joanna Lin and three graduate journalism students from UC-Berkeley and the University of Southern California. The organization also has an all-star board of directors, including:

* Margaret Engel, director of the Alicia Patterson Foundation and a former editor and reporter for The Washington Post
*Chuck Lewis, founder of the Center for Public Integrity and the Investigative Reporting Workshop at the American University School of Communication
*Vernon Loeb, deputy managing editor for news and multimedia at The Philadelphia Inquirer
*Bill Marimow, editor of The Philadelphia Inquirer and two-time Pulitzer Prize winner
*Henry Weinstein, a law professor at UC Irvine, former Los Angeles Times reporter and a founder of the Center for Investigative Reporting.

I asked Lewis what he found compelling about Levin's vision for FairWarning. Here's what he told me in an email:

Over the years, I had known and had great respect for Myron Levin's important work investigating the tobacco companies and other health and safety subjects. The idea that someone that talented suddenly had nowhere to do that kind of in-depth work was outrageous and unacceptable. Myron asked if I (as the first incubated "new models" project of the Investigative Reporting Workshop's iLab) would help him form a 501c3 nonprofit and I helped him get a small grant from the Public Welfare Foundation to get moving, and I am honored now to serve on his Board.

In the Great Recession, Myron has gone out and singlehandedly landed two other much larger grants, and important stories are springing forth. He's off to the races. This is an increasingly familiar story today -- veteran investigative reporter also becomes editor and publisher, as a necessary act of entrepreneurialism, all for the public good. It is thrilling and inspiring to behold.

In the statement, Levin said he founded FairWarning "as a new model for presenting essential news and information that is underreported or absent from traditional media."

“Even before news budgets went into free fall, few news organizations gave adequate attention to safety and health investigations, despite the potential to save readers from injury or death,” Levin said. “In today’s hollowed-out newsrooms, even fewer reporters can tackle these complex and time-intensive stories. We want to help fill the gap.”

What I Meant To Say ...

We had a great panel Wednesday at the We Media conference on the rise of nonprofits as contributors to the news ecosystem. My fellow panelists for the session were Ellen Miller of the Sunlight Foundation, Andrew Sherry of the Center for American Progress, and Jonathan Aiken of the Red Cross.

We had lots of great questions and a rousing discussion. But that meant I didn't get to use my prepared remarks. So for those who might be interested, here they are:

Four years ago, I was a Washington correspondent for a major metro daily, working in the national bureau of a medium-sized newspaper chain. Today, my former bureau and my former job are gone.

I’ve been lucky. Now I work as a strategic analyst for AARP, arguably the nation’s biggest nonprofit news publisher. A big part of my job is to find new ways we can leverage the nonprofit model in journalism to create value for our members – and for society as a whole.

I got interested in the nonprofit model for journalism in 2004, when I read an essay by my graduate advisor at Chapel Hill, Phil Meyer, entitled “Saving Journalism.”
My first thought after reading Phil’s piece was, hey, great, somebody might actually want to give me money to do the kind of reporting I want to do.

So I decided to start my own nonprofit newsroom, and I set about contacting journalists and foundations who I thought might help me.

I got nowhere fast.

But in my failure, I learned a lot. For one thing, I realized that 99 percent of journalists had no idea how nonprofits worked.

Over the years, I have come to another important realization: Journalists who view the nonprofit model as I did then – as a way to solve their immediate problems – shortchange its possibilities.

While the nonprofit model has gained some cachet recently, nonprofit journalism is as old as the Associated Press, which began in 1846 as a cooperative of New York newspapers interested in defraying the cost of covering the Mexican-American War.

That history is important because it also speaks to future possibilities. Then as now, the nonprofit model supports creativity through partnerships and collaboration rather than competition and “not invented here” mentalities.

This aspect of the nonprofit model, I think, makes it particularly well suited to the online world and a news ecosystem where consumers expect information to be free of charge.

I’ve also come to the conclusion that journalism is the easy part.

The nonprofit model requires vigorous strategic planning and no small measure of entrepreneurial spirit – just like any business. And to succeed, nonprofits must show how their journalism can connect friends, neighborhoods, communities and, ultimately, a society.

That’s what the really good ones are doing. And if a nonprofit can reach that level, a member’s donation takes on a whole new meaning. It becomes an affirmation of values.

Until recently, nonprofits were anomalies in a largely for-profit ecosystem, despite some well-regarded successes – Mother Jones magazine, the Christian Science Monitor and Center for Public Integrity, to name a few.

But today, the nonprofit model is becoming just that – a model with basic structures that can be replicated and perfected in any variety of circumstances and communities. And the model is evolving rapidly as startup nonprofits experiment and create new revenue sources through events, thought-leadership conferences, corporate sponsorships, and, of course, advertising. Some are functioning as membership organizations, much like AARP.

There are signs that the sector’s creativity is paying off.

When we talked about a “virtuous cycle” in the old days, it was the notion that great journalism boosted circulation. That helped boost ad rates, which in turn made it possible for newspapers to hire more great journalists.

While that cycle now has turned into a death spiral of staff cuts and declining circulation, the nonprofit model offers us a new kind of virtuous cycle – one in which diversity of revenues appears to correlate with growing news budgets.
Are there flaws in the nonprofit model? Absolutely.

Perhaps the most frequent argument I hear is that nonprofit journalism somehow lacks credibility because it hasn’t withstood the discipline of the market.

To this criticism, I say that philanthropy indeed is a means to legitimacy - if it's done properly. Nonprofits measure success not by the revenues and profits they generate, but by yardsticks such as how many people read their work, educational value, and the impact it has on decision-makers. If they create social value, they will reap the financial rewards. If not, they’ll wither.

This is the lesson I’ve gleaned from my travels: Great journalism isn’t enough. What really counts are the relationships that the nonprofit develops with its readers. Journalism is only part of the nonprofit’s value proposition, and at the end of the day, it might not be the most important part.

What Makes It Legit?

With many new news organizations launching as nonprofits and many nonprofits moving into the news business, one has to wonder: Exactly where does journalism end and something else -- call it spin, opinion or advocacy -- begin? Or to phrase the question as Chuck Lewis recently did for me, if a nonprofit says it's doing journalism, what makes it legit?

The line -- if you believe there ever was one -- is becoming increasingly blurred. As the traditional advertising-and-subscription model of newspapers continues to erode, other institutions -- including advocacy, membership and charitable nonprofits -- are leaping to fill the void. But it's not clear that some new entrants are playing by the rules of journalism and nonprofit accountability. Or more accurately, it's not clear that they want to.

In this uncertain environment, the question of legitimacy looms large, particularly for nonprofits. As beneficiaries of taxpayer support, nonprofits have a special duty to be absolutely transparent. If they want to call their work journalism, the material they publish must be good enough meet any test of professional standards that might reasonably be applied, from both the realms of journalism and of nonprofit management.

Trouble is, no widely accepted set of best practices or due diligence exists for journalism nonprofits. To separate journalism from what Dan Gillmor has dubbed "almost journalism," many in the business have borrowed from Justice Potter Stewart's standard: "I know it when I see it." Or at least they think they do.

This standard has worked most of the time. But it failed notoriously in December, when the Washington Post published a story by The Fiscal Times, a new, online news organization owned by The Fiscal Times Media Group LLC and backed by investment banker and former Commerce secretary Pete Peterson. Peterson is a long-time deficit hawk, and has helped fund the Concord Coalition, a nonprofit that is "dedicated to educating the public about the causes and consequences of federal budget deficitseradicating the federal deficit."

As recounted by Post ombudsman Andy Alexander, the article drew criticism from progressive critics of Peterson because it quoted the president of the Concord Coalition, but failed to mention that the group receives funding from Peterson's foundation. The article -- reporting that momentum was building for a plan to name a special bipartisan commission to address the nation's debt -- also fell short of the Post's standards because it cited data from a study supported by the foundation but again failed to note the foundation's backing, according to Alexander.

Compounding transparency issues, The Fiscal Times gives mixed signals about its corporate status.

In fact, The Fiscal Times is not a nonprofit. It has a ".org" landing page and invites readers to create a "Member ID." It also says on its about us page that it "is part of a new era of independently supported non-partisan journalism." But it is incorporated in Delaware as a limited liability company, or LLC, a for-profit structure most often used by sole proprietorships, partnerships or small businesses.

Jackie Leo, editor in chief of The Fiscal Times, told me in an email that the organization changed strategies shortly after launching. "When we started this project, we thought we would model it after ProPublica or some of the other non-profit news sites," she wrote. "But our lawyers pointed out that if we post opinion pieces (from our bloggers and columnists) about candidates running for office or bills pending in Congress, and if that opinion can be deemed as influencing the outcome of a vote, the IRS would consider it 'lobbying' and we would lose our 501c3 status. With that in mind, we decided to create the LLC."

Did the Post know all this before it agreed to publish The Fiscal Times' work? Judging from Alexander's column, the Post had no formal means of screening its reporting partners. Rather, it appears to have relied almost exclusively on institutional familiarity with the Fiscal Times' staff, which includes former Post reporter and editor Eric Pianin.

The controversy has subsided. But it has left a lasting impression in journalism circles, particularly in Washington, and nobody wants to repeat the Post's mistake. As Vivian Schiller, CEO of National Public Radio, told me in an interview, "my alarm bells go off" when she looks at the Fiscal Times' corporate structure, financial backing and reporting focus.

At NPR, Schiller added, editors employ a set of criteria to evaluate potential partners. Among them: nonprofit status, a well-regarded board of directors and top-notch journalists. But the process remains an informal one.

So what to do?

As I've talked over this problem with Lewis, Schiller, David Westphal and others who think about it a lot, I keep coming back to the idea that some standards are in order -- a Good Housekeeping seal of approval, if you will, for nonprofit journalism.

This task may be easier said than done.

To begin, there are some deceivingly simple threshold questions. For one, should the nonprofit sector take it upon itself to set standards for its journalism and business practices? If yes, then who should be on the drafting committee?

If not, then are journalism nonprofits willing to live with the current mishmash of definitions of journalism put forth by entities as diverse as the Senate Press Gallery, the Pulitzer Committee, and perhaps the IRS? And how about other stakeholders such as the Post, NPR and others that have come to rely on investigative and explanatory reporting from nonprofits? Following The Fiscal Times episode, will they overreact and overlook work by ambitious, high-quality news organizations?

It seems to me that the answers should come from the nonprofit sector of journalism, if for no other reason, than to minimize damage potential damage from bad actors that might yet emerge from within its ranks.

No list of criteria or standards can guarantee quality or take the place of professional responsibilty. But it is a place to start -- much like the new IRS Form 990, which was re-designed based on input from the nonprofit sector. So here are some suggested criteria that might help.

Nonprofit Governance:
* 501(c)3 or 501(c)4 status
* All-volunteer publisher board
* 990s clearly posted online
* Major donors named
* Case for philanthropy linked to editorial indpendence
* Clear accountability measures
* Clean accounting opinion

Journalistic Professionalism:
* Functionally independent newsroom
* Journalism advisory board or ombudsman
* Adherence to SPJ Code of Ethics
* Supportive institutional culture
* Submitted entry for professional prize (SPJ, IRE, etc.)
* Holder of federal or state press credential

Comments? I plan to spend the next few months researching this question in greater depth, and I welcome thoughtful input.

Also, for those planning to attend the We Media conference next month in Miami, this is one of the issues we plan to address during our panel on nonprofits in journalism, so please come ready to discuss.