BRUSSELS - Could the non-profit model be the saviour the newspaper industry has been looking for?

This question was prompted by a New York Times op-ed on 28 January, which proposed that America's "most valued sources of news" should become non-profit institutions funded by endowments. Animated responses to this article, both positive and negative, have appeared throughout the media since.

From Steve Coll writing for the New Yorker who suggests that the rise of non-profits is verging on an inevitability, to Roy Greenslade in the Evening Standard who believes that the obliged political neutrality will be the stumbling block, to Jack Shafer of Slate who feels there is "something disconcerting about wanting to divorce the newspaper from market pressures." The Editors Weblog spoke to Paul Steiger, Editor-in-Chief and President of ProPublica, one of the largest American non-profit news ventures currently in existence, to find out more about how the non-profit model works for them. As a former managing editor of the Wall Street Journal, Steiger has plenty of experience in the for-profit side of the industry as well.

How ProPublica works - free articles for partner papers

New York-based ProPublica uses its funding to support 28 staff, who produce investigative reporting which is then given, not sold, to news outlets. Editors and reporters decide which stories they want to pursue, and after beginning investigation into the issue, they will offer the story to a relevant publication. If the original choice of partner does not want it, ProPublica will find somebody else. Steiger said that ProPublica articles have appeared in about 20 newspapers, including the New York Times and the Los Angeles Times, "a bunch of websites", as well as television news channels, such as CNN or CNBC. Stories appear on the ProPublica website shortly after publication by the chosen partner: ProPublica promises an appropriate period of exclusivity but Steiger explained that many partners are happy for the story to appear on ProPublica either immediately, or a matter of hours later. The site will always link to the partner that has the story, which is publicity for the partner and means that "people coming to our site will always know what we are up to."

Stories with moral force

The general criteria for stories are those which "shine a spotlight on abuse or power of failure to uphold the public interest," according to Steiger. Reporters have broad beats, such as the effectiveness of government spending, health care, energy and the environment, voting rights or the impact of the legal system on the poor. These are national issues, which sometimes veer into international territory, but can also have a local focus. Steiger described one of the most important projects in the past year: an investigation of the risk to the water supply of deep drilling for national gas, which is undoubtedly a national and even international issue. But because reporters discovered a crucial government decision pending in New York state which would have put legislative and regulatory protocols into place to give the industry carte blanche to drill wherever it chose, ProPublica offered the story to the local Albany Times Union, and hence grabbed the attention of the governor and legislators. Government policy was consequently changed.

"Propublica searches for stories that "shine a spotlight on abuse of power or failure to uphold the public interest"

Embracing multimedia, enhancing impact

ProPublica has embraced online distribution. The newsroom has "a huge online focus," stressed Steiger, "much larger than I expected when I got into this." He explained that the organisation has had "tremendous success" with outfits such as Politico or the Huffington Post, "they have given great distribution to some of our stories." Steiger is also enthusiastic about the multimedia advantages of online reporting: "the awareness of how online graphics and online interactive elements can enhance a story and enhance its impact is penetrating through the entire group," he commented. The older staff from print backgrounds are learning rapidly from the younger reporters with online backgrounds, " because that's where so much of the energy and the growth is."

Money doesn't buy you influence

One of the potential problems with privately funded non-profit news organisations is the risk that those who fund them might try to influence the news that comes out of them. Herb Sandler of the Sandler Foundation, ProPublica's principle founder, is also chairman of the ProPublica board, which leads an outsider to question his influence over the reporting.  Steiger was clear that "he and the board have agreed that they will have no advance knowledge of what we decide to cover. They will see it on the day of publication." Steiger ensures that reporters are shielded from influence from the board: although board members are invited to offer story ideas, Steiger emphasised that "these are to be funnelled only through me or through managing editor Stephen Engelberg so the reporters won't feel pressured by getting a call from a director." The Sandler Foundation has made a multi-year funding commitment. Other funders are the MacArthur Foundation, the Atlantic Philanthropies and Mary Graham's personal foundation.

"The board have agreed that they will have no advance knowledge of what we decide to cover. They will see it on the day of publication."

So, is this a model that could be implemented more widely?

Paul Steiger explained that his day-to-day job at ProPublica was no different because of the non-profit element of the site. So, is this a model that could be implemented more widely? It is clear that the business model that has supported newspapers until now no longer works. Instead of desperately trying to save and adapt the current business model, is it time for a new one altogether? The authors of the New York Times piece, David Swensen and Michael Schmidt, both from the Yale's investment fund, believe that "As long as newspapers remain for-profit enterprises, they will find no refuge from their financial problems... By endowing our most valued sources of news we would free them from the strictures of an obsolete business model and offer them a permanent place in society, like that of America's colleges and universities." A shining example (outside the US) of a paper not pressured by making money for shareholders is the Guardian, which is owned by a trust, and has been subsequently less affected by the recent financial downturn. The paper's website almost always tops the list of British newspapers in terms of reader numbers, and generally boasts more than the New York Times. The privilege to work without extreme financial pressure is something which would undoubtedly benefit the world's newspapers. One crucial point would be to ensure a long term endowment, as having to frantically search for funding every year would apply the same pressures as for a for profit.

An obvious issue to address is the cost: huge endowments would be needed to fund a large national newspaper. ProPublica has annual operating costs of around $10 million, which supports a staff of only 28. To support a newspaper such as the New York Times, you would need a $5 billion endowment, according to Swenson and Schmidt, or $2 billion for the Washington Post, according to Coll. Steiger's response was "how many people are there who have $5 billion to step up and set up an endowment, even for a wonderful property like the New York Times?"

"How many people are there who have $5 billion to step up and set up an endowment, even for a wonderful property like the New York Times?"

And he has a point. For a start, there is the question of what news is worthy to fund. Investigative reporting such as ProPublica's is one thing: asking people to fund journalism in the public interest seems a reasonable request.  Finding people to fund an entire newspaper - including sections such as entertainment, sport and crosswords  - seems harder. Steiger does, however, see some future for non-profit newsgathering. "I do think that it's possible that non-profit operations can play an expanded role and can fill in some of the gaps. But can the concept turn around a fundamental destruction of the basic business model of metro newspapers? No it can't." This is true: non-profit journalism is a way to prop-up existing structures, but will only make newspapers dependent on outsiders rather than encourage them to develop new ways to survive on their own. It does seem that many of the arguments for endowments are to ensure that newspapers not only survive, but survive just as they are now. Maybe this is the wrong way, maybe in fact they need to change.

Maybe newspapers need to change more fundamentally?

Jack Shafer makes the valid point that the capitalist system is what allowed the great newspapers to achieve success in the first place. "The Times, the Post, and the Wall Street Journal earned their reputations by competing in the marketplace, not by stroking philanthropic billionaires or foundations," he argues. Their dynamism and adaptability allowed them to gain their dominant positions in the market; to remove the financial impetus for such growth could have a detrimental effect on their innovation and efficacy in news distribution. It would also, crucially, change the way that they measure their success: an increased focus on story impact could be a positive outcome but this is not relevant for many types of news.

Newspapers need to change and develop, as they have over many years, in terms of what they cover, how they cover it, and how they reach their audience. The Internet has truly revolutionised the way people follow the news, and endowments should not be a means to stifle necessary change that should follow. Other strategies must also be investigated, such as an industry-wide decision to implement payment for online news. But for now, if newspapers are to function effectively, whether in print or online, as a crucial part of a democratic state, they need to find a way in which they can maintain sufficient staff and resources. Maybe a partially-funded model is the solution, at least in the short term: whereby the arguably more democratically valuable reporting is supported and protected by an endowment, leaving the papers to find a way to make up the rest of the revenue needed for other reporting and further costs. And hopefully out of these endeavours a new more durable business model could emerge. At least for the immediate future, there is an organisation like ProPublica to provide vital proactive investigative journalism to the American public.

By Emma Heald, thanks for allowing Journalismfund.eu to republish, this article was published on www.editorsweblog.org

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