Crowdfunding Journalism By The 1 %

By Kevin Davis.

This article appeared originally on NetNewsCheck, February 4, 2016 6:35 AM EST

KLJD Consulting’s Kevin Davis writes that news organizations that turn to philanthropic avenues to fund their journalism are going to have a tough time walking the tightrope between editorial independence and covering the topics that the big donors will want them to cover. But, he writes, if those outlets were able to avoid such pressures by not taking big donations we probably wouldn’t be having this conversation.

Ecosystems of Philanthropy, via Salzberg Global Seminar, 03/12/14

Image courtesy of the Salzberg Global Seminar, March 12th, 2014 made available via a Creative Commons license. https://flic.kr/p/kXEgMB

If there is one thing that I know gets people in journalism circles posting and tweeting, it is a large metro newspaper (in this case the Philadelphia Inquirer, The Daily News, plus the stand-alone websitePhilly.com) being sold. So when media empire-builder turned philanthropist H. F. Lenfest last month donated the assets of his Philadelphia Media Network, plus $20 million cash to the Philadelphia Foundation and the new nonprofit Institute for Journalism in New Media, heads were turned.

As Philly.com reported, “The structure opens philanthropic avenues to fund the company’s journalism.  Foundations, corporations, and other benefactors can give money to the institute to be used for specific reporting efforts and journalism projects and undertakings.” Think of this as journalism crowdfunding for the rich and powerful.

Newspapers that go this route are going to have a tough time walking the tightrope between editorial independence and covering the topics that the big donors will want them to cover. Many national foundations, but clearly not all, understand the need for total editorial independence. Yet even foundations that have publicly said as much are also quite happy to fund projects in particular topics or areas of focus.

Beyond the small number of national foundations that support the practice of journalism (the Knight Foundation being the predominant), there are an even greater number of foundations that overtly look to leverage journalism to achieve their vision of social change.

Community foundations in particular have an especially tricky time when it comes to funding journalism. Their goal is to attract funds primarily from wealthy individuals and families who are interested in putting money towards social good, but not in running their own foundations.

The vast majority of funding controlled by community foundations is tied up in donor-advised funds that stipulate where and how the money is to be spent. Just this past month, Reed Hastings and Sheryl Sandberg each put $100 million and $31 million respectfully into the Silicon Valley Community Foundation. Presumably, the Philadelphia Foundation will continue to court funding, not only for the new Journalism Institute, but for other initiatives as well.

Therein lies perhaps the biggest challenge for this community foundation model for funding journalism: It is very difficult for an organization programmed to say yes to a benefactor to be able to promote editorial independence – including saying no to that same benefactor when he or she wants their money to go towards funding a particular story or in support of a particular position.

Lenfest and the new high-powered, but strikingly non-representative advisory board of the institute are going to have a hard time maintaining editorial independence while asking “foundations, corporations and other benefactors” to give money and let it be used for, as Philly.com put it “specific reporting efforts and journalism projects and undertakings.”

This isn’t the first time a community foundation has been involved in funding, overseeing or running a news organization, although nothing has been of this scale. From 2008-13, the Knight Foundation began its long-running Community Challenge to “help community and place-based foundations play leading roles in meeting their community’s information needs.”

In addition to some very good guidance and materials on the topic, Knight got the support of 80 additional foundations, which together invested in more than 100 projects around the country. Four of them were deemed successful enough that, in their words, Knight “doubled down” by giving them more money.

In response to yet more downsizing at the state’s largest newspaper, the Community Foundation of New Jersey made a small loan to a team of journalists in 2009 to start NJ Spotlight, an online investigative news service focused on state policy issues. Today, NJ Spotlight has diversified its revenue streams and continues to make a difference seven years later.

Not only were the number of successful community foundation-based news projects small, but also there were some notable failures that may shed some light on the tricky nature of the Philadelphia Foundation gift.

Specifically I’m referring to the very public implosion of Mission & State in Santa Barbara, which was a project of the Santa Barbara Foundation. After letting go of the news organization’s highly competent editor, the community foundation took control of the news organization away from its founding advisory board and unilaterally gave management of the nonprofit to a local for-profit. After the local news community protested, the community foundation folded the project, and gave back $300,000 of the original budget thereby not only denying the Santa Barbara community of independent investigative journalism, but also taking funds away from other community projects that may have had more success.

The reasons behind the decision were manifold, and as with all things there was culpability in many places. However, what cannot be disputed that in the face of difficult questions about independent journalism, the community foundation preferred to return funds and shut the project down, then commit to fixing it.

Lenfest’s gift of $20 million in cash in addition to the assets was, by his own statements, designed to be seed money with the hope that with this gift and the gifts of others, the news organizations can maintain a tradition of fiercely independent public service journalism.

That is not to say that I am personally opposed to this structure. I am not at all. I believe in public service journalism that is paid for and by the public. The key questions going forward in Philadelphia are to what extent the Philadelphia Foundation and the newly formed Institute can attract further investment, and what type of influence will the money expect to have over the types and subjects of the content produced?

Right now it’s too early to tell which way the wind is blowing. But until such time as more people understand what’s at stake and how news works, I suspect that simply aren’t enough Gerry Lenfest’s around to stave off the continuing turmoil in this once lucrative but always essential industry.

In short, the Philly papers are going to have a tough time walking the tightrope between editorial independence and covering the topics that the big donors will want them to cover. The only way to truly inoculate your organization from these pressures is to not take big philanthropic donations, and to be fully funded by the advertisers and the people. But if newspapers could still do that, we probably wouldn’t be having this conversation.

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