Some philanthropists question how funding for-profit news organizations can work


Matt DeRienzo

DeRienzo

By Matt DeRienzoLMA consultant

The Knight Media Forum conference in Miami Feb. 24-26 was, in part, a celebration of unprecedented investment in nonprofit journalism, including the emergence of the American Journalism Project, which announced an investment of $8.5 million in 11 news organizations in December.

But the conversation frequently returned to the big picture, in which something like 90 percent of local journalism in the U.S. happens in for-profit, legacy newsrooms. Some funders expressed a strong desire to help for-profit news organizations who are struggling or making the transition from advertising to a more consumer revenue-based business model. But they have questions about how philanthropic funding of journalism at a for-profit would work. Will resources be cut elsewhere, and grant money just move to someone’s bottom line? They’re also struggling with how to distinguish between local newspapers owned by hedge funds and big corporate chains that aren’t reinvesting in their products or communities, and those with independent and/or more responsible ownership.

Lauren Gustus, whose footprint as a regional editor for McClatchy includes the Fresno Bee, said that significant newsroom resources there are now funded by philanthropy. Once they understand the economics of the news business, she said, local foundations realize that there are issues and segments of news coverage that aren’t easily monetizable, but are vital to a community where 3 out of 5 people live in poverty.

Readers, too, want a way to support local journalism beyond buying a subscription. She cited the work that a sister McClatchy paper, the Miami Herald, did in exposing the crimes of child molester Jeffrey Epstein and his connections to powerful men. People from around the world were grateful for that coverage, but had little use for a Miami Herald subscription. Newsrooms should consider offering readers who appreciate that kind of work the chance to donate to a special investigative reporting fund.

McClatchy is a gray area when it comes to concerns about funding for-profits. It’s been a pioneer among legacy news organizations in developing philanthropic funding, but also recently filed for bankruptcy and could end up in the hands of some of the hedge funds that have been stripping other local newspapers of resources.

That didn’t stop the Esserman family from donating $2.5 million to support investigative reporting at the Miami Herald, which was announced on the opening night of the conference.

Sharon Chan, who helped build a philanthropy-supported journalism program at the Seattle Times before being tapped by the New York Times to oversee similar efforts, said that a key to success was having engaged local ownership with deep ties and commitment to the community the newspaper covers. Frank Blethen, in Seattle’s case, opened doors with funders and expressed his full commitment to the kind of investigative and accountability journalism that grant funding and donations were supporting, she said.

As LMA CEO Nancy Lane notes in her blog following the event, reluctance to philanthropically fund for-profit media is unjustified considering the vast number of newspaper and media owners who are are innovating, offering real civic value, and building local trust, such as Rust Communications, Houston Defender and The Post and Courier.