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API continues conversations on the ethics of nonprofit funding in news

Research from API shows that the ethics of taking grants from foundations and gifts from donors to produce news are not fully charted and not without controversy.

Nonprofit funding of news also appears likely to grow, including in new ways. Just this month, Philadelphia’s Institute for Journalism in New Media, which will own the for-profit Philadelphia Inquirer, Philadelphia Daily News and Philly.com, named its first director.

On Oct. 6 at Columbia University, API will be hosting a discussion between nonprofit news outlets and funders to identify core guiding principles that any funder or nonprofit media organization should keep in mind. We will start by drafting some of these principles and then widening the circle by sharing them with others for reaction. The event is funded by The Craig Newmark Philanthropic Fund. The original research was funded by The John S. and James L. Knight Foundation and The Bill & Melinda Gates Foundation.

As we head into next week’s event, here’s some of what we’ve already heard as challenges nonprofit news organizations and funders struggle with.

Does funding both for-profit and nonprofit journalism come with inherent ethical issues and what are they?

“I would assert that almost none of the journalism that we in this room admire most has ever been truly commercially viable,” Nicholas Lemann said at an event API hosted in April about the ethics of nonprofit news. “Most of it has lived inside larger systems that supported it. … Butler Library is not commercially viable either, but it’s an essential part of Columbia University, and it gets cross-subsidized by other things.” Lemann says it’s becoming increasingly apparent that some forms of journalism may be less commercially viable than others and may need their own sources of funding — possibly in the form of foundation support.

While receiving funding from foundations comes with ethical challenges, Lemann also said other forms of funding, including advertising, come with their own challenges. “I don’t think there’s any source of funding for journalism that is automatically pure or automatically corrupt,” Lemann said. “It’s all about how you build the relationship.”

How transparent should nonprofit news organizations be about their funding?

Journalists are the “original people who live in glass houses and throw stones,” Lemann said, making the issue of transparency of funding a “particularly sensitive issue.” Journalists also typically aren’t as used to being on the receiving end of scrutiny, Lemann says.

But increasing transparency also comes with substantial logistical challenges for organizations. “If you take a five person journalism organizations and tell them that they have to disclose every $5 contribution by name, rank, and serial number, you’re going to be imposing on that organization a very considerable administrative burden under which some of the smaller ones are going to crack,” ProPublica’s Dick Tofel said.

How specific should media grants be about what gets funded?

A key theme of our discussion this spring at Columbia was the benefits of general operating grants versus grants for specific projects. Tofel says ProPublica doesn’t accept funding for specific stories, which he says is “a very important line to draw.” But not all funders give general operating grants, which Bill Buzenberg says meant in his time at NPR, they would talk to funders who were interested in general project areas and disclose that they were funders on specific projects.

Kathy Im says the MacArthur Foundation is moving toward giving out more unrestricted general operating grants. That’s because “the accumulation, as an organization receiving many of those strategic restricted grants without enough support for operating, leaves that organization in a situation where, [the grantee says] ‘Well, we don’t have enough money to recruit the most talented people or retain the most talented people, because we don’t have flexible funds.’ … You have this situation where organizations are telling us that they don’t have enough flexibility to make good decisions.”

The Rockefeller Brothers Fund’s Keesha Gaskins also emphasized that project-based funding should include overhead, and it’s possible to do it ethically with the right guidelines. “We would never ask for a specific story to be written, nor would we fund anyone who came to us saying, ‘we’ll write the story you want,’” Gaskins said.

How should success be measured?

For for-profit and nonprofit news organizations alike, measuring success remains a challenge. “It’s incumbent on us to have some measurement of our success,” Tofel argues, “to understand what we’re trying to achieve well enough to be able to say, look, we know what we’re trying to achieve, and we’re also prepared to fail our own test. It’s not a meaningful test if all the children are well above average.”

As a funder, Im says it’s often easier to measure impact if you’re “narrow and strategic” about what you fund; for general operating supporters, Im says it’s harder to know what the indicators of impact are.

What practices can aid transparency and ensure ethical behavior?

Several people have made suggestions about what a gathering like next week’s should address. One is the group should stick to general principles that organizations of different size and focus could agree on. Explore the complexities of donor advised funds is another. In a discussion about the research findings at a Media Impact Funders meeting in June, Eric Newton, formerly of the Knight Foundation and now Innovation Chief, Professor of Practice at the Arizona State University Walter Cronkite School of Journalism and Mass Communication, has wondered about two ideas to improve the health of ethics policies in funding arrangements.

1) Can foundations all post their rules about giving to media organizations online?

and

2) Can foundations ask grantees to post their rules about accepting money online?

If both sides required policies to be posted online in order to complete funding arrangements, it would give an impetus to develop and refine organizational policies, suggested Newton. The practice would also add transparency to the process, a benefit for nonprofit news audiences and potentially other grantmakers.

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