Can Philanthropy Save These Big City Newspapers?

In a recent post titled "Can Philanthropy Save the New Republic?," we articulated a hypothetical scenario whereby the century-old magazine could transform into a nonprofit kept afloat with philanthropic dollars.

As it turns out, it looks like we'll have some real-time results to draw from about 139 miles north of TNR's Washington, D.C. headquarters in Philadelphia, where, according to the New York Times, H.F. Lenfest, the owner of the Philadelphia Inquirer, the Philadelphia Daily News and Philly.com, donated the publications to a newly formed nonprofit journalism institute.

The plight of Lenfest's two print publications will likely sound familiar to someone like Chris Hughes. The Inquirer and Daily News continue to grapple with plummeting circulation and shrinking ad dollars. Readers continue their exodus to free online outlets. And the industry-saving business models, the kind envisioned by Hughes and his Silicon Valley-bred colleagues at the TNR, have yet to materialize.

Lenfest saw the writing on the wall and concluded that the best way to ensure his publications' long-term survival was to fold them into a nonprofit structure. "My goal is to ensure that the journalism traditionally provided by the printed newspapers is given a new life and prolonged, while new media formats for its distribution are being developed," Lenfest said.

And so Lenfest ceded ownership of the Philadelphia Media Network, which controls the three news outlets, to the Institute for Journalism in New Media. The institute, which was created at Lenfest’s behest, will operate under the Philadelphia Foundation. The nitty-gritty of the ownership structure is as follows:

Philadelphia Media Network will remain a for-profit business, with its own independent board and management, and will operate as a taxable subsidiary of the institute. Individuals, corporations and foundations can donate to the institute and will be able to specify that the tax-deductible contributions be used to support journalism projects at the three publications. The institute will be run by a board of managers.

That ownership structure isn't entirely unusual. As the Times piece notes, the Poynter Institute owns the Tampa Bay Times. National dailies like the Washington Post and the Los Angeles Times get cash from foundations like Ford, while other organizations like ProPublica and the Marshall Project operate as nonprofits.

It's also worth mentioning that Lenfest donated $20 million to the institute’s endowment. As we've noted elsewhere, the idea of a nonprofit journalism organization beholden to a disproportionately generous funder can raise serious conflict-of-interest issues. Then again, the endowment comes at a time in which Lenfest's foundation is planning for its final years of operation. At the ripe age of 85, we don't anticipate Lenfest to turn into some micromanaging mega-donor with an agenda. Rather, the more pressing question is if the institute can create a diversified funding model built on donors, advertisers and subscribers.

Can philanthropy save the New Republic? Maybe. But until then, let's see if it can save the Philadelphia Inquirer and the Philadelphia Daily News.