Shaking the Money Tree: Another News Outlet Turns to Philanthropy

photo:  Osugi/shutterstock

photo:  Osugi/shutterstock

One could argue that the greatest beneficiary of the Trump Effect in the journalism space is the "failing" New York Times. As a recent Forbes piece notes, the Gray Lady is actually doing pretty well. 

In late June, the paper announced $407 million in revenue in the second quarter of 2017, 9 percent higher than in the second quarter of 2016, exceeding Wall Street expectations. In two years, it has doubled its digital subscriber base. And in the previous quarter, it added 93,000 digital-only subscribers, bringing in $83 million in revenue—a 46 percent increase over 2Q 2016.

So what should we make of the news that the Times is launching a philanthropic arm to seek outside support for its journalism? Simple. It's following the money.

Despite its success in ramping up its digital operations, the Times isn't out of the woods just yet. While the company reported revenue of nearly $1.6 billion in 2016—consistent with prior years—"under the surface," according to analyst Om Malik at Gigaom, "the mix of revenue is changing dramatically as revenues from its print advertising business continue to decline." The Times is also up against the formidable duopoly of Google and Facebook in the digital advertising space.

In early summer, the paper announced it would offer buyouts to its employees in an effort to restructure its newsroom. Around the same time, dozens of employees staged a 15-minute protest against layoffs at the paper’s copy desk. 

Add it all up, and the Times, like all journalism outlets, is searching for a sustainable business model built on under-leveraged revenue sources. And if developments over the past six months are any indication, donor dollars are the lowest-hanging fruit. 

The Trump Effect in the journalism space has been well-documented on Inside Philanthropy, with alarmed funders throwing money at a critical bulwark against the administration's overreach. Similarly, donors like Pierre Omidyar and Craig Newmark are funding efforts to address the less savory manifestations of the recent election, like fake news and the proliferation of online hate.

Meanwhile, H.F. Lenfest created a nonprofit journalism institute last year to insulate outlets from the very market factors that keep Times management awake at night. It turns out donors enthusiastically support his vision. In May, the institute announced it received more than $21 million in new donations while Lenfest pledged an additional $40 million

Given the fact that so much cash is sloshing through the journalism space, it's no surprise that the Times ramped up its philanthropy arm after funders approached them—and not the other way around.

In a note to staff, Executive Editor Dean Baquet and Managing Editor Joe Kahn said, "Over the past year, a host of philanthropies and universities have come forward asking to help support our journalism. Invariably, they say we are one of the few institutions with the independence and ambition to take on the largest subjects here and abroad," the letter reads.

Calling the rise of philanthropy-supported journalism "one of the most compelling developments in our business," Baquet and Kahn believe the new department, led by Janet Elder, will "build an operation that will allow the Times to seek philanthropic funding for ambitious journalism."

The formation of the Times philanthropy initiative comes a few weeks after the Guardian announced it, too, was creating a nonprofit journalism arm. The reasoning behind the move sounds familiar.

"Across the past six years, philanthropy has played an increasingly significant role in supporting Guardian journalism," said Rachel White, president of new The Guardian's philanthropic fundraising arm of four has doubled in the past year and the organization is planning to add another full-time fundraiser.

As far as the Times' new initiative is concerned, Elder’s job will be to "figure out what other newsroom activities would benefit from philanthropic support." She will also determine what kind of nonprofit funding would work best for the Times and deal with legal and ethical questions.

Ah yes, "ethical questions."

The Times' arrangement surfaces familiar concerns around editorial independence. As Jim Warren notes in Poynet, "Money talks. ExxonMobil won't want to be ripped in a series on global warming. The family foundation of a rich Apple director probably won't be excited about an investigation into labor practices at its primary Chinese manufacturer."

A recent study from NYU’s Steinhardt School of Culture, Education, and Human Development examining the outcomes of a philanthropy-backed journalism corroborates Warren's theory.

The study found that "project-based funding from foundations may skew media attention toward issues favored by donors. Media organizations dependent on project-based funding risk being captured by foundation agendas and are less able to investigate the issues they deem most important."

Warren also makes an interesting point of differentiation. The Times is a highly scrutinized institution with "admirable family owners, ambitions, and army of great reporters and editors." It has leverage and journalistic capital. It can afford to keep agenda-driven donors at arm's length. Local and regional outlets looking for relatively easy access to revenue, on the other hand, may be more susceptible to donor influence and self-censorship. 

All of which brings me to the $64,000 question: Is this model sustainable for outlets not named the New York Times?

That's a good question. Philanthropic trends come and go, and we've often wondered how long the recent upsurge in funding for nonprofit media would last. While Trump's rise has lately turbocharged this trend, his disappearance from the scene down the line would likely lead to a falloff of funding. Even if such donations do remain strong, the proliferation of new nonprofit media ventures could result in funding being spread ever more thinly. If I were an executive at ProPublica, for example, I probably wouldn't be thrilled at the emergence of two new and well-known competitors for funding in just the past month. 

On the other hand, overall growth of the nonprofit media space could have the effect of further normalizing grantmaking in support of journalism. A larger and more well-established field could attract more funding, lifting all boats. 

Regardless, the ethics issues aren't going away. Alan Mutter, a former newspaper reporter and current industry analyst based in San Francisco, sums up the state of affairs accordingly: "External funding may be a necessary evil in these troubled economic times, but it is a slippery slope for even the most ethical publishers."