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    Non-Profit News Becomes the Flavor of the Month

    by Chris O'Brien
    October 9, 2009

    Something that’s been lurking just below the surface of the San Francisco Bay Area news scene for several months finally bubbled up to the top last month. Financier Warren Hellman announced the creation of a new, non-profit news organization. This news organization will partner with KQED, the the Graduate School of Journalism at the University of California at Berkeley, and most likely the New York Times.

    The Bay Area News Project has a web site and a Twitter feed. The San Francisco Chronicle had a story. And so did the New York Times.

    There are few details available about the project, in part because they haven’t really been worked out. But the news is emblematic of something much larger going on across the country. As various people try to figure out the future of news, the non-profit model has gained substantial momentum.

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    This struck me last week while I was attending the two-day UC Berkeley Media Technology Summit at Google.

    Presenters from the non-profit journalism world gave some interesting insight into how the model works and, in some cases, doesn’t. It left me with a sense of the challenges the Hellman project faces to get off the ground and have an impact. The odds are against most start-ups. And that’s no different for non-profit news organizations.

    A ‘kvetch-free’ journalism conference

    The Berkeley-Google conference was devoted to exploring the intersection between technology, news, and business models. It was organized by Alan Mutter, who blogs at Reflections Of A Newsosaur. You can find Alan’s opening thoughts here, and his takeaways on having what he called a “kvetch-free journalism conference” here.

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    Besides being hosted by Google, it was presented by the Graduate School of Journalism at Berkeley and the Haas School of Business at Berkeley. Sponsors included The Koret Foundation, Google, and the McCormick Foundation.

    There were lots of interesting tidbits about various technology trends. For notes on the conference, you can search Twitter for #mts to see all the tweets (and there were a surprising number of tweeters there). The tweets were also being captured by live bloggers on day one and day two. There were a lot of interesting thoughts on things news organizations could be doing more efficiently or effectively to increase traffic, engagement, and advertising revenue. But, frankly, there wasn’t much that sounded revolutionary or that would move the needle.

    It was the discussion about non-profit models that I found most intriguing. Not because I necessarily believe that’s where the future lies, but because at this moment so many others clearly do. There are enough emerging or current non-profit experiments that over the next couple of years we should have a pretty good sense of whether or not this model is relevant and sustainable.

    The NPR Model

    One of the speakers at Google was Ellen Weiss, the senior vice president for news at National Public Radio. Weiss, who has been at NPR for almost two decades, summed it up nicely when she said that the non-profit model seemed a bit like the “flavor of the month.”

    For better or for worse, non-profit news organizations represent a big departure in terms of business models from the for-profit mainstream model. In a way, it seems like some of this push is driven by a sense of resignation that a new model can’t be found to reinvent for-profit news. I don’t buy that. But, clearly, others do.

    The highest profile non-profit effort to date is ProPublica, the investigative journalism organization. There’s also Investigate West, Voice of San Diego, and Minnpost.com. Already in San Francisco, there’s The Public Press and California Watch. There are many, many others out there.

    In an era of financial challenges, the so-called NPR model seems appealing to many newsrooms. But Weiss delivered a little reality check. Of NPR’s $166 million budget, 40 percent of that comes from member stations and 30 percent comes from corporate sponsorship. NPR gets no money directly from the federal government, Weiss said.

    She noted that folks from a traditional media background don’t always understand how hard it was to build that model. In NPR’s case, they’ve had 35 years. Of ProPublica, she pointed out that the organization was started with a large personal donation, a “lightning strike,” as she called it. But they haven’t proved they have a sustainable model.

    The problem is that if the non-profit model catches on too much, then what little money that exists to support these organizations will be stretched too thin. “One girl selling girl scout cookies is cute,” Weiss said. “Two are okay. Three or more is just annoying.”

    Her bottom line: “Will non-profits save us all? They’re an essential ingredient. But I doubt it.”

    Texas Tribune

    Another fascinating non-profit presentation came from John Thornton, a partner in Austin Ventures and chairman of the Texas Tribune. Thornton is hoping to launch the Tribune next year, and has raised $3.5 million of the $4.5 million targeted. Just last week, Thornton announced he’d bagged another $750,000.

    But that money really is just a start. Thornton provided a lot of useful data and shared his spreadsheets with the conference. According to his calculations, the organization needs to raise $1.3 million in donations every year to support a newsroom of 10 full-time journalists.

    Thornton said people donate $20 million each year to dance non-profits in Texas. From that perspective, he said getting $1.3 million each year doesn’t seem like big hill to climb.

    We’ll see.

    Perhaps the most cautionary tale came from Geoff Dougherty, a fellow blogger here at Idea Lab and founder and CEO of the Chi-Town Daily News. Dougherty’s grant was to “recruit and train a network of 75 citizen journalists — one in each Chicago neighborhood.” But despite his efforts, Dougherty said at Google that the support from the local philanthropic community didn’t materialize to sustain it.

    Last month, Dougherty announced Chi-Town was going to re-launch using a for-profit model.

    Bay Area News Project

    All this brings us back to Hellman and the Bay Area News Project. UC Berkeley Dean Neil Henry gave a short presentation at Google, but he didn’t reveal much more than had already been announced. Here’s what we do know.

    The goal is create a news organization that employs full-time journalists, perhaps anywhere from 10 to 15 to start. They hope to leverage KQED’s fundraising experience. And they’re exploring a partnership with the New York Times to provide content for that paper’s new Bay Area edition.

    Beyond that, there are lots of blanks to be filled in. The first step is to hire a CEO and/or executive editor to actually map out what this organization can and should be, what it will do, and how it will operate. This is a tall order. And an expensive one. I had been telling folks that to find someone with the right set of skills and experience, they’d have to be paid well over six figures in salary.

    Then I saw Mutter’s post that included information about the top salaries paid to ProPublica editors. Editor Paul E. Steiger got a whopping salary of $570,000 while the number two editor pulled in $296,370. Whoa. That will eat up Hellman’s money right quick.

    This leads to my own reality check: $5 million sounds like a lot. But it’s not. Not when you’re talking about starting an actual news organization with paid reporters. The same day the project was announced, I happened to be visiting a start-up in San Mateo called Caring.com, which produces content related to elder care. The CEO said he needed to raise “a little money” to get through the next year, about “$5 million or $6 million dollars.” That would sustain an online-only content start-up with a staff of 14 that already has a growing revenue stream.

    All of this is to say that $5 million is purely seed money. KQED and the other parties are going to need to put serious fundraising muscle behind this. They still need to hire a CEO, executive editor, and staff. It’s going to be some time before it’s having any impact on the ground.

    The reaction to Hellman’s project has ranged widely, and I must say I’m quite surprised. On the positive side, David Cohn weighed in with advice for Hellman, including to hire folks who think “web first.”

    But not everyone was giddy. Popular local blogger Greg Dewar, who writes the N-Judah Chronicles on the Njudah blog, tweeted: “this Hellman/KQED/UCB J School thing sounds like a disaster in the making, at least for us who don’t have wealthy financiers…”

    And Suzanne Yada tweeted: “@mediatwit I am only officially speaking for myself re: Public-Press. But yes, I feel like Hellman ganked our model & left us to dry TBH.” The Public Press, for which Yada does some work, had been operating through bootstrapping and small grants.

    The East Bay Express worried that this project “threatens traditional news media in the Bay Area, because it will rely on 120 journalism students at Cal who will work for free.”

    I think the fears of the other local and hyper-local news start-ups are valid. Hopefully, the organization will take a collaborative approach that builds the news ecosystem.

    Finally, if you want to hear from some of the folks involved in Hellman’s project, check out this interview from KQED’s Forum:

    Tagged: berkeley chi-town daily news kqed non-profit texas tribune warren hellman
    • Though I’d much rather work with than against the BANP, I’ve set aside those sour grapes because competition is a good thing in the news world. Bring it on!

    • I thought all news organizations were now “non-profit,” in the sense that none are any longer making a profit :-)

      All kidding aside. Great look at what the future of news might hold, I agree this model might give birth to a few more NPRs, but there is still only so much $$ to go round regardless of your biz model.

      This statement strikes me the most:

      “I had been telling folks that to find someone with the right set of skills and experience, they’d have to be paid well over six figures in salary.”

      I’m not exactly sure I agree with this. I don’t think you need to pay someone half a million or even a quarter of a million a year to make it work, I’m guessing you could get someone who could make it happen for much. much less.

      In the end, there’s no real trick or black magic to making news valuable, it’s about providing readers with what they want to read as opposed to what publishers think they should be reading.

    • JHMcFadden

      I’ll reiterate the comment that I put on Newsosaur’s post this week r.e. non-profit models. See below.

      Great post. As someone who has moved from fundraising at an Ivy League university to working in the newspaper industry, I’m always shocked at how quickly people in the industry turn to a non-profit model as a panacea because of the perceived ease of getting a non-profit venture up and running. What is often ignored is that even the most efficient, scalable, and well-known non-profit organizations sometimes have a difficult time raising funds–particularly in cyclical downturns like we are experiencing now.

      Fundraising for a non-profit with a multi-million annual budget requires major infrastructure and an experienced staff. There are researchers, development officers, and communications staff who are responsible for responding to RFPs and supplying reports to donors once grants have been funded. It is, by no means, a small undertaking. Additionally, it is not an immediate process. It can take months, and sometimes years, for a foundation and its board to decide to support an organization–particularly if you are looking in the $1M+ range. These grants rarely go to operating funds–which means that the newspaper is beholden to its donors when making resource allocation decisions. Membership programs only add on another layer of complexity.

      Joel Klein and his wife have done an amazing job of raising funds for their publication. However, I would urge people to look at this as an anomaly and not the norm. There is a reason why MinnPost is constantly innovating to find new sources of revenues–relying on one source of funds, whether it is advertising or donations, in the current environment is risky. The fickleness of grantmaking organizations, who sometimes tend to focus on the issue of the day when making funding decisions, only adds to this risk.

      There will likely be a role for non-profit news organizations in the new ecosystem for news. I would just urge journalists who are contemplating starting a venture on their own to make sure that they are teaming up with a board who has serious fundraising experience or, better yet, find a partner who has actually run a non-profit organization. Things are never as easy as they originally appear.

    • Re: NPR’s model. NPR may not get funding directly from the Corporation of Public Broadcasting, but it’s member stations do, allowing them to stay afloat and continue serving local communities, raising local dollars and sent them to NPR in exchange to NPR’s programs.

      Following suit, Hellman speculates that support from “local and national government sources” could be part of the model in this Forbes piece (http://bit.ly/1uS7G).

      We’ll see how it plays out… I think you’re right to be skeptical, though.

    • You rely too much entirely on the mindset of “RUSH LIMBA#@.” These people you are getting this harsh critisism from are people that the majority of are trying to keep commercial edited news with that ranky stanky adds everywhere that even television and major networks have sold out too. Are you talking about the corprate America that has sold out to having 2 hour infomercials about crap evry night to keep their show on the air. You have supply and demand out their… plenty of company’s with supply that get write offs for donating their business tools as a way of marketing for adds in which no money is transmitted but can be written off at end of year… Yeah a 35 year old non profit company does not get monry from the gov. nor do I believe they should. If you are in any major business for 35 years and can not get 1.5 million for the entire year is doing a bad job at whatever they do. They do help get you started with and only with a very good business plan that shows that you will be able to make money and provide a yearly annalysis to the point and knowledge of what you were trying to achieve. You have contests that company’s get to write off the prizes for you get the community involved like how “MYSPACE,” “LimeWire,” and such other numerous share ware open source company’s that share their trade secrets with a trust fund of interopermobilty with… It is called non~profit because it is not to accumalate profit for individuals but for a group with a purpose… like straying away from our blinded idiocracy of believing reliable republican commercialized corporate america that will always say as long as you are trying to work without us… you will fail. So include them, I have nothing against the republicans as I was raised a republican. I am not a die hard democrat either… I want a 3rd option and so does America. We are so sick of this hypocritical mindscrew of it either being nlack or white and maybe gray… I may be a fruit loop sometimes but I would rather be like You Can SAM or 2 can however you want to euliterate that and write it up like a pro’. I want the “maxim magazine” vs. “Marvel” vs. “MySpace” vs “ArtBistro” Vs. “Facebook” Vs. “IMVU” Vs. “WordPress” Vs. “Disney” Vs. “PBS” Vs. “YouTube” Vs. “MAD T.V.” Vs. “Waynes World,” network for the people by the people with or without the help of any of those company’s. (Perferably with) Bill Gate’s has non profit company’s too. It does not mean you are just a charity case that does not pay it’s employer’s… jaust means you are motivated by educating the country and sharing the wealth and having a much more open sorce budget that shows everyone who is donating and where the money is going… It was horrible lack of checks and balances that bankrupted America to have to depend on other country’s to save us… But when their freedom from terrorists is in Jeopardy… who do they call? U.S. of course and that is how things continue to go full circle. It is all about presentation and letting kids have alot of control of feedback and letting them get off their chests a lil’ news satire as long as it is publicly appropriate.

      JD Wilcox
      signing off
      [email protected]
      facebook.com/jdwilcox

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