A Nonprofit Panacea For Newspapers?

Correction Feb. 9, 2009

We said, "[Former 'Washington Post' correspondent Peter] Osnos points to NPR’s growth based on revenue from foundations, contributions from listeners, and corporate underwriting or ads." In fact, listeners do not contribute directly to NPR but to their local stations, which in turn pay fees to NPR for its programming.

This story is the second in a two-part series about the future of newspapers. The first story imagined a city without its daily newspaper.

As the business model for newspapers cracks apart, there are those who are lamenting and those who are inventing. Some journalists now say the industry should forget about making a profit altogether and find new ways to support the news.

Paul Steiger was a captain of the financial press as the managing editor of The Wall Street Journal. But capitalism wasn't working all that well for a lot of American newspapers — even before the economy collapsed.

"My role was not to generate the advertising revenue or to figure out how much to charge for the paper, or any of that stuff," Steiger says, "But you certainly had to think about that, particularly in the last five years, as the walls ... kept squeezing in tighter and tighter."

Steiger is now editor-in-chief of ProPublica. The year-old investigative reporting outfit runs on a not-for-profit basis, and he says that changes everything:

"I don't even have to think about revenue, I don't have to think about circulation. I don't have to think about advertising."

A wealthy couple, Herb and Marion Sandler, asked Steiger how to help save journalism. His answer became ProPublica.

"What we want to do is shine a light on abuses of power and failure to uphold the public interest — and make that light hot enough and persistent enough so that positive steps are taken by the public to change them," Steiger says.

With $10 million a year, primarily from the Sandlers, Steiger and his colleagues created a newsroom with more than two dozen journalists, including Pulitzer Prize winners from the Los Angeles Times and a foreign correspondent from The Washington Post.

Their stories are appearing in news outlets big and small — on CBS's 60 Minutes and New York's primary public radio station, WNYC.

ProPublica charges nothing for its stories, demanding only full credit and the promise that its pieces will run in their entirety. It does some stories on its own and collaborates with reporters elsewhere on others. ProPublica's reports have appeared on the front pages and Web sites of The New York Times and the L.A. Times, smaller papers from Albany to San Diego, and Politico.com. ProPublica is also collaborating with NPR on a project.

The executive producer of 60 Minutes, Jeff Fager, says ProPublica is filling a real need.

"There's a crisis in this country involving investigative reporting, and everybody's aware of it," Fager says. When strapped news organizations make cuts, they look to what's most costly, he says. "And that's what happens when you're investigating — doing real investigative reporting. It's expensive."

While 60 Minutes might not need the help, other news organizations sure do. Journalists have urged philanthropists in Los Angeles, Boston and Baltimore to take over struggling local dailies. The former managing editor of The Washington Post just called for a Bill Gates or a Warren Buffett to endow the Post's operations with a single check.

Wealthy patrons can present their own complications for newsrooms. The Sandlers, ProPublica's financial angels, have drawn some fire for their former bank's lending practices. Editors there say they have been promised — and so far received — no interference with their journalism.

Even so, book publisher Peter Osnos says this model can't be widely mimicked.

"The problem with nonprofits is that very often it is equated with charity — that somebody's going to come along and hand you a check, and everyone will live happily ever after. Well, that's not truly a good not-for-profit model," he says.

Osnos, the founder of PublicAffairs Books as well as a former NPR commentator and Washington Post foreign correspondent, says people should look instead at the public radio model: nonprofit, publicly supported and a hit with listeners.

He points to NPR's growth in recent decades based on revenue from foundations, contributions from listeners, and corporate underwriting — or ads.

"It pays the way," Osnos says. "It doesn't pay the way lavishly, but it doesn't need to."

Several news sites with modest staffs and a sharp local focus do follow that very model: the New Haven Independent, the Voice of San Diego and a Twin Cities site called the MinnPost.

But that's not bulletproof, either. NPR and some local member stations have announced layoffs. And getting seed money from private foundations can be tough. Former Boston Globe foreign correspondent Charlie Sennott just launched a new outfit called GlobalPost to replace disappearing foreign coverage from big regional papers. Sennott ultimately sought money from investors rather than foundations because he found that asking for grants required too much hand-holding.

"Call me impatient and even call me crass, but I wasn't willing to wait around for that to happen," Sennott says. "These things are collapsing now."

Sennott's large network of reporters are given slender monthly stipends — though they also receive a small ownership stake in his for-profit company. It's his new model for news.

Even Steiger of ProPublica says the not-for-profit model probably isn't the cure for what ails the news business. But he says it might just be a much bigger part of what's next.

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