Foundations and the foundation of a new way of funding journalism

In early January 2016 one of the United States’ oldest newspapers, a once hugely profitable and highly regarded enterprise, was turned into the American equivalent of a charity. The financial situation had got so bad at the Philadelphia Inquirer that its 85-year-old billionaire owner Gerry Lenfest decided its best chance of survival was to transfer his ownership along with that of its sister paper, the Daily News, in to a newly created non-profit organisation.

"Of all the things I’ve done," said Lenfest, "this is the most important because of the journalism."

Ask anybody working in the newspaper industry why the decline in print sales is such a matter of concern and the response across the board will be something to do with the importance of journalism. The huge impact of the decline raises worrying commercial concerns, but even among those responsible for the business side of newspapers there is a strong understanding that the problem has a much wider implication. Without robust financial returns serious journalism is threatened – and in the current media landscape that threat seems very serious indeed.

It is a well-rehearsed argument: journalism is a vital part of any functioning democracy. A country without a strong and free press is a much poorer society. An independent press informs, educates, scrutinises and questions. It provides the facts that help citizens better understand their world and it holds to account those that wield the power.

So if the commercial model is no longer working – or if alternative commercial models have not yet been found, non-profit status perhaps provides a way of saving journalism. The Inquirer’s Lenfest is not the first to think so.

In the US there are more than 150 non-profit journalistic enterprises. A study by the Pew Research Centre in 2013 looked at the rise of this alternative funding model. It found a healthy, optimistic and growing sector. Many of the organisations it reviewed were still small entities employing fewer than five journalists. But the sector was diverse in its interests and spread widely across the US. Another study by the Investigative Reporting Workshop run out of American University found operating budgets in the largest 60 of these organisations amounted to $86m.

Some of the largest have news teams that are starting to equal those of many papers both in scale and numbers. The Center for Investigative Reporting (CIR) in California, for example, has a budget of more than $10m and employs nearly 80 people. On the east coast ProPublica, which was set up in 2007 by Paul Steiger, former managing editor of the Wall Street Journal, operates at a similar scale.

Both ProPublica and CIR pursue investigative reporting. Other non-profits operate in more niche areas such as the well respected Marshall Project, which focuses on injustices, and InsideClimate News that reports on climate change issues. Others such as the Texas Tribune and Voice of San Diego have taken over local patches left by now extinct print products.

The ability to focus purely on journalism – rather than clickbait (the latest obsession in newsrooms desperately chasing allusive digital advertisers) is a huge draw – leading some of the US media’s brightest young and some of the country’s most senior journalists to this new model.

Go into their newsrooms and there is a buzz, an enthusiasm that has long evaporated from many of the traditional print establishments. And this is leading not only to gap plugging, but to fantastic stories and powerful journalism as highly regarded New Yorker writer Nicholas Lemann noted in an article in 2016: "Their work is always good, and sometimes spectacular." ProPublica, it is worth noting, has already received three Pulitzer prizes – the highest honour in American journalism – in its short nine-year existence.

It is the privilege of time, so rarely available in now slimmed-down traditional newsrooms, that the non-profit model has been able to provideRachel Oldroyd, the Bureau of Investigative Journalism

Earlier in 2016 a relatively small Washington-based non-profit announced a global tax story based on the biggest leak of information ever received by the media. More than 100 teams of reporters, mostly working in traditional newsrooms across dozens of countries, were pulled together to work on this leak, known as the Panama Papers. It was to be the biggest global story of the year and it was pulled off by a non-profit – the International Consortium of Investigative Journalists.

The old print publications are benefiting too, with many commercial news organisations now partnering with non-profit media both in the journalism and the story publication. The ICIJ for example partners largely with commercial interests as it seeks out well-placed publishers in each country.

The enthusiasm for this new model is, perhaps most importantly, also there among those able to provide the financial backing. The sector has blossomed because the funds have been readily available, with some of the country’s largest foundations putting up increasing levels of support.

Ford Foundation, the Knight Foundation, the Bill and Melinda Gates Foundation, the Reva and David Logan Foundation all pour millions into journalism each year. And as quickly as the old, traditional print models have tumbled into ever more chaos, the commitments of the funders have risen. The MacArthur Foundation, for example, enhanced its commitment in 2016, providing $25m to 12 journalistic non-profit organisations. The Reva and David Logan Foundation committed funds to help launch Reveal, a new investigative radio strand produced by CIR.

The success of the non-profit model in the US has not gone unnoticed in the wider world. In 2010 in the UK, philanthropists David and Elaine Potter launched the Bureau of Investigative Journalism. Elaine had a good sense of what was being lost as the global financial downturn started to bite. As a former Sunday Times journalist she had been part of the team that investigated thalidomide, a pharmaceutical drug that was discovered to cause defects in unborn babies if taken in pregnancy. David was behind the Psion computer and then mobile phone technology Symbian.

Like many of the US non-profits on which the Bureau was modelled, the remit was to pursue in-depth investigative journalism in the public interest. The desire from the start was ambitious stories that mattered, stories that revealed a hidden and important truth, stories that could have an impact and lead to change.

Large subjects have been tackled. Examples include the waste and corruption inherent within European Structural Funds; the use of drones and targeted killings by the CIA; secret lobbying of the UK government; party political funding; failings in the care system; the lack of provision of affordable homes; the cause and impact of antibiotic resistance; military contracting; and unaccompanied asylum seekers. To properly investigate these topics requires months of work and a team of reporters. It is the privilege of time – so rarely available in now slimmed-down traditional newsrooms – that the non-profit model has been able to provide.

The environment in the UK is very different to that in the US. To get the tax advantages offered by non-profit status in the US an organisation has to become a charity. But while there is no rule against journalism being funded charitably in the UK, it has proved difficult for organisations producing news to fit within the charitable description in the Charities Act 2011, as it does not recognise journalism as a charitable endeavour. The Bureau has applied twice for charitable status and has on both occasions been turned down. It is set up as a company limited by guarantee – and all revenue is ploughed back in to its journalism.

Foundations in the UK have also been slower to recognise the social impact of the disruption to the traditional newspaper model perhaps because UK newspapers initially proved more resilient to falling circulations than their US counterparts. The BBC with its requirement to provide public service broadcasting also meant the democratic deficit resulting from the reduction in print journalists was less marked. In 2015 and 2016, however, market conditions deteriorated fast and virtually every newspaper group cut journalist posts quite dramatically.

Non-profit status does not guarantee success. Organisations have to be run well, they need to develop structures, accounting and fund-raising practicesRachel Oldroyd, the Bureau of Investigative Journalism

Over the past three years the Bureau has expanded both the number of funders and the level of its funding. It now has nine different backers and over the past three years has increased its funding by more than 40 per cent. In 2017 the Bureau will launch a data journalism project for which it has also received substantial funds from Google’s Digital News Initiative, a €150m fund aimed at encouraging innovation among European media companies.

The hurdles in the UK have not stopped other journalistic organisations adopting the model too. Open Democracy, Bellingcat, the Ferret and the Bristol Cable are all producing fantastic journalism through non-profit structures. And in wider Europe a number of journalism teams have set themselves up in similar vein – Correctiv in Germany and the Organized Crime and Corruption Reporting Project in Eastern Europe.

In fact the model is not that new in the UK. Back in 1936 John Scott, the then owner of the Manchester Guardian, came to the same realisation that the Philadelphia Inquirer’s owner Gerry Lenfest did 80 years later.

The Manchester Guardian (now The Guardian) had gained an international reputation under long-serving editor and owner CP Scott. When he retired he passed control to his two sons, John and Ted. The death three years later of CP Scott and Ted within three months of each other brought a very real threat to the paper. Upon John’s passing the Inland Revenue would claim substantial sums in what were then death duties and this threatened the independence of the paper. In order to prevent this, John transferred all his and his family’s interests in the paper to a group of trustees – the Scott Trust, effectively creating a very early non-profit model. The trust, though, is not a charity but a company limited by guarantee (the trustees are the shareholders) whose main aim remains the continuation of The Guardian in perpetuity.

Of course this model has not protected The Guardian from the recent, and most ferocious of financial storms to hit the print industry. The losses on the paper have become so enormous that even the Scott Trust does not have the resources to keep it alive in the long term.

This illustrates an important point. Non-profit status does not guarantee success. Organisations have to be run well, they need to develop structures, accounting and fund-raising practices.

Even in the US where there are many more foundations offering funding to journalism, the pool is still relatively small and, as few of the new non-profit models have well developed publishing platforms, raising funds from the general public is a difficult task for many. These factors make the sector inherently fragile and long-term sustainability far from guaranteed.

Yet despite the issues those running and working in the sector are determined to make it work – and for no other reason than a belief in the importance of journalism.

With the latest crisis to hit the print industry these ambitions among those running non-profit newsrooms are more important than ever. Newspapers had hoped that as their print circulations declined they could pick up readers on their websites and then persuade advertisers to migrate their spending to their growing online presence. The problem is that the digital advertising revenues that were expected to follow the growing online clicks have not materialised at the levels required and are rapidly evaporating. Many newspaper groups are finding themselves now fighting on two fronts – stretching their shrinking resources still further.

Foundation-supported journalism has not and probably will not take the place of traditional media – even if print declines to nothing. It is not a silver bullet, but it is a force for good. And in the storm that is blasting across the traditional media landscape it has to be a welcome part of the mix.

Rachel Oldroyd is managing editor of the Bureau of Investigative Journalism, a UK-based non-profit news organisation.  She joined the Bureau at launch in 2010 as a reporter, becoming its Deputy Editor six months later and its Managing Editor in 2014. She joined the Bureau from the Mail on Sunday where she worked for 13 years first as a reporter and then as a commissioning editor.

This piece is an extract from Last Words? How can journalism survive the decline of print?, to be published by Arima on 23 January at £19.95. Readers of Journalism.co.uk can pre-order at a special discount price of £15 by emailing richard@abramis.co.uk.

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