By NYU Staff

Shrinking newsrooms are giving away to focused nonprofit groups headed by former journalists backed by donors overwhelmed by the civic crisis. Investors hitherto uninvolved in the media have come to realize that the paucity of information is a serious problem. Some of them feel compelled since the public is not informed. Serious money is flowing into nonprofit journalism.

“More funding is because of new funders. That, to me, is a giant big headline. This is the only good news about

Money doesn't grow on trees...

the bad news in journalism,” says Charles Lewis, a veteran investigative journalist who founded the Center for Public Integrity in 1989.

People who didn’t care about journalism are moving to fund journalism. Some of the new entrants to the game include Warren Hellman, San Francisco based billionaire who announced a $5 million contribution to the Bay Area News Project. Another new nonprofit, the Texas Tribune, headed by former Texas Monthly editor/publisher Evan Smith, recently announced $750,000 in grant funding from the Knight Foundation and the Houston Endowment.

According to the first comprehensive report that tracked donor backed funding for nonprofit journalism, nearly $128 million flowed in as grants to 115 news initiatives in the country since 2005.

The report ‘New Media Makers: A Toolkit for Innovators in Community Media and Grant Making’, was published in June by J-Lab – Institute for Interactive Journalism anchored by journalist Jan Schaffer. As many as 180 community family and other foundations have supported these projects in 17 states, some of them receiving multiyear funding. The J-Lab database shows that $56 million has gone to support three investigative journalism projects.

“There is a vast landscape of funding sources, larger than anyone realizes,” Lewis, who is now professor and the founding executive editor of the new Investigative Reporting Workshop at the American University School of Communication, in Washington. Historically, there has been a permanent layer of nonprofit work that is funded by philanthropists, individuals and large foundations – at various levels for 30 years in the USA.

The new investors have two challenges. A handful of funders are faced with a new landscape of proliferating non-profits. The challenge for funders is to find out which horses to bet on, according to Lewis. The size and programs of these groups are changing: funders who are keen about investigative reporting and others who are primarily interested in funding state based groups.

Do the donors anticipate that their investment could blossom into something that will have business potential? Lewis does not think so. The same cloud of economic uncertainty that hangs over commercial journalism, threatens some of the new groups. It is hard to believe that non-profit journalism will make money in ways that the for-profit sector has not. “No one has demonstrated that in a compelling way,” he says.

There is a hope that this new money will help create ways of doing journalism that are more sustainable than for-profit journalism? Are they investing in a type of journalism that could prove more sustainable, or at least is different, than traditional models?

Robert Rosenthal, an award-winning journalist with four decades of experience, knows the challenges in raising money only too well. Rosenthal is executive director of the Center for Investigative Reporting (CIR), the country’s premier non-profit journalism initiative established in 1977. Rosenthal worked more than two decades at the Philadelphia Inquirer and became the executive editor at the newspaper. He then moved to San Francisco Chronicle in 2002. It was difficult for him to work in an environment that suppressed and stifled innovation, he recalls. In 2008, he quit commercial journalism and joined CIR. “I had never raised money but it was challenging. In January 2008, I took up the assignment in what turned out to be the worst time to raise money.” But CIR went on to raise $3.7 million last year.

What is the future for nonprofits? Content aggregation will become passe, sooner than later content creators will be priced higher than content aggregators. That’s a big assertion – can you support that? Based on what?  Deep investigation that no one else will be doing will be in demand. “Content will be valuable, expensive, unique. Non-profits will evolve as brands, with credible sources of information,” Rosenthal says.

But critics worry about the color of money in journalism. What are the implications of donor funded news for consumers? John Mecklin, the editor-in-chief of magazine Miller-McCune, says that the pressures exerted by advertising in a commercial news outfit are thousands of times greater than what a donor can. Mecklin has worked with two different forms of ownerships in both for profit and non-profit entities. “Concerns have been expressed, but I have never seen or heard of an attempt to influence editorial from a donor. It is made clear right from the beginning that they cannot have a say in the editorial,” he says. Miller-McCune harnesses current academic research with reporting to address pressing social concerns.

The main problem is the sole dependence on donor funding, it will be a continuing challenge for new nonprofits, although Pro Publica may be an exception, he says. A nonprofit is better off diversifying resources across subscriptions, advertising and donor funds.

One of the dreams of the investigative news network is to someday have a revenue sharing model where the content is generating revenue that can be shared with the group – large and small, Lewis hopes.