Donor-driven Journalism

Naomi Schaefer Riley & James Piereson

Current Issue

The headline of a recent New York Post editorial — "Associated Press Turns Prostitute" — decried the AP's admission that it had taken more than $8 million from organizations to publish articles about climate change. The donations allowed the AP to employ more than two dozen journalists around the world to cover climate issues.

The AP is not alone: Many large media institutions take money directly from foundations to fund particular areas of coverage. Others publish works from organizations like ProPublica, which are entirely funded by philanthropic dollars. As the news business has hemorrhaged subscribers and advertisers in recent years, many newspapers, magazines, and websites have looked to such organizations for financial support. Some of that support is helping struggling publications survive in areas where there might otherwise be a "news desert." But much of it is linked to a particular set of ideological goals.

While not necessarily demanding slanted news coverage, these donors are asking for more coverage of certain areas of interest. And though such influence may sound harmless, story selection is one of the major ways news organizations can exhibit bias.

Other donors rely on the unspoken expectations that are inevitably attached to large donations. When the Ford Foundation makes large grants to the New York Times to fund a disability-journalism fellowship, for example, the message may not be explicit, but it is nevertheless clear: The paper is expected to make the case that government should provide more accommodations to people with disabilities. And in fact, the reporter funded by that grant published articles describing the efforts of disability advocates to keep Covid-19 restrictions in place to protect vulnerable populations.

To be sure, such articles would not be published if the editors of the paper disagreed with their overall thrust. But foundation grants do incentivize editors to prioritize these stories above others — which undermines their institutions' claims of independence.

The entry of charitable foundations into the world of journalism should call to mind the influence these organizations have wielded over our institutions of government, culture, and especially higher education in recent decades. Back in the 1960s, foundations began funding racial, sexual, and ethnic identity-based groups in order to influence politicians and policymaking. They soon discovered that by strategically allocating funds to the academy, they could influence faculty appointments, courses offered to students, and the subjects of doctoral dissertations, conferences, and seminars. These foundations enjoyed enormous success, but it came at the price of exacerbating the polarization of Congress, the political parties, higher education, and our society at large.

The national news media — from the New York Times and the Washington Post to CNN and other major news networks — are already ideologically lopsided, in part because they recruit journalists from politicized colleges and universities to cover the politically polarized environment in Washington. Nevertheless, foundations' increased funding of journalism is likely to make matters worse.

IN SEARCH OF A BUSINESS MODEL

A report from Harvard's Shorenstein Center shows how the financial model for the news business has shifted dramatically since the beginning of the digital era. In 2000, advertising revenue for commercial newspapers topped $67 billion; by 2014, advertising revenue for print and digital newspapers had fallen to less than $20 billion. In inflation-adjusted dollars, newspapers in 2014 brought in less money than they did in 1950. While papers and magazines experimented with giving away some of their content for free, erecting firewalls to make people pay by the month or by the article, or trying to cut deals with social-media companies that would subsidize the news content those sites seemingly provide free of charge, none of it has ended with a clear model that would allow newspapers to earn a profit.

Meanwhile, investment firms and partnerships have increasingly moved in to purchase news organizations as a means of propping up their faltering business models — and to make money for their investors. The pace of such acquisitions has picked up since the financial crash of 2008. Saving Community Journalism reports that by 2014, six of the 10 largest newspaper companies — including New Media/Gatehouse (which owns 379 papers), Digital First Media (208 papers), and Civitas Media (98 papers) — were owned by investment firms. That trend has continued unabated in the near decade since then.

But this new model is not working in all situations, largely because investors have different attachments to newspapers than the media barons of old. In a recent article in The Atlantic, McKay Coppins describes how buyouts by investors, which once looked promising as a way to save some faltering publications, are creating even more problems for news businesses:

What threatens local newspapers now is not just digital disruption or abstract market forces. They're being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. The model is simple: Gut the staff, sell the real estate, jack up subscription prices, and wring as much cash as possible out of the enterprise until eventually enough readers cancel their subscriptions that the paper folds, or is reduced to a desiccated husk of its former self.

This has not happened in all cases of investor buyouts, of course. But it has occurred often enough to make newspaper owners wary of this path to solvency.

All of this makes it easy to understand the appeal of philanthropy as a means of saving American journalism. The evolution of charitable giving in the United States makes that appeal even more obvious. In 1917, lawmakers inserted a charitable exemption into the federal income-tax code, allowing wealthy individuals to reduce their tax burdens by donating to schools, colleges, churches, and hospitals. Today, the exemption also covers advocacy groups, public-interest law firms, research centers, think tanks, book publishers, and other kinds of operations not contemplated by the original statute.

Charitable giving is now a major enterprise in the United States, exploding over the past several decades from around $50 billion per year in 1980 to nearly $500 billion in 2021. At the same time, the impressive growth of the stock market has created dozens of new billionaires and enriched the endowments of major foundations. In 2021, charitable foundations donated around $91 billion; large foundations like Gates, Ford, Hewlett, and a handful of others were responsible for the bulk of these contributions.

The funds and opportunities for foundations to expand into journalism are clearly there. And expand they have: According to Media Impact Funders — an organization that monitors foundation support for journalism — grants to the news industry nearly quadrupled between 2009 and 2017. Of the roughly $2 billion given during that period, about 70% of the funds went to support general news and information, while another 20% went to investigative and advocacy journalism. Meanwhile, the Institute for Non-Profit News's NewsMatch program — which provides a vehicle for individual donors around the country to make donations to support news organizations on a tax-deductible basis — has raised an additional $200 million to fund local newsrooms.

These numbers give us some insight into what amounts have been donated and by whom, but they tell us little about the nature of the donations. Why did foundations and individual donors make these gifts? What were they hoping to accomplish?

The American Press Institute (API) sought answers to these questions in a survey conducted in 2015. The institute found that 52% of funders were trying to influence public policy with their donations to journalism, while 54% hoped to strengthen a free press. A full 44% of respondents admitted that their media-funding decisions served "to advance other larger strategic goals."

The subject matter these donors wanted journalists to cover is also of interest. According to the Harvard report, the largest percentage was allocated to the role of money in politics; other significant categories included jobs/poverty/financial reform, the military/national security, and the environment/energy. Given the large influx of donations related to racial issues in the past few years, the social-justice category has likely grown significantly. Just last year, Mackenzie Scott's foundation gave $2.5 million to Oakland-based YR Media — a group that partners with public radio to cover "important issues including voter suppression, #BlackLivesMatter, LGBTQ+-focused legislation and the recent wave of anti-AAPI sentiment and violence." As part of its efforts to "create a more inclusive and sustainable media industry," the Ford Foundation has helped found projects such as the Racial Equity in Journalism Fund at Borealis Philanthropy to award millions in grants to news organizations covering diverse communities. One commenter on the foundation's media initiative expressed hope that it could help "redraw and expand the unbalanced and very white-biased frame that has been the context of American journalism."

It's clear that major foundations are trying to transform journalism in much the same way they reshaped higher education. The question is whether they will succeed.

THE NEWS IS DIFFERENT

The data we do have paint a troubling picture: Among non-profit media organizations, only 20% say they would not accept grants tied to specific content; the vast majority said they would have no problem accepting such gifts.

Of course, for publications with philosophical leanings, donation restrictions pose few problems. Their goals are already aligned with those of their donors — and openly so.

Conservative journalism, for instance, has thrived for decades under a system where philanthropy is a primary source of support. Quoting William F. Buckley, Jr., Rich Lowry of National Review says the outlet "exists to make a point, not a profit" — a theme that's true of most publications of this kind, including those on the left.

During Buckley's tenure as editor and publisher of National Review, the magazine was set up on a for-profit basis that allowed it to endorse candidates for public office. Even so, the magazine usually lost money — so much so that Buckley had to send out end-of-year appeals for funds to balance his budget. Large numbers of readers responded to these appeals with donations, even though their contributions were not tax deductible. More recently, the magazine has expanded its non-profit arm — the National Review Institute — to receive donations on a tax-exempt basis.

Today, the vast majority of opinion magazines (including National Affairs) are organized as public charities and funded as non-profits, enabling foundations, corporations, and individuals to donate to them on a tax-deductible basis. In exchange for favorable tax status, these publications cannot endorse candidates for office or organize lobbying campaigns for legislation. They can, however, publish articles about campaigns and legislation without limits. Mother Jones may take clear political positions on a whole host of issues, but it cannot violate its 501(c)(3) status by backing a politician running for office. Still, its political commitments are not hidden from view — and its donors are well aware of the kind of publication they are supporting.

There are some opinion journals that follow the old-time "for profit" model. The Nation, a progressive magazine, still operates on a for-profit basis, as does The New Republic, though both receive non-deductible donations to cover publication costs. The Atlantic is mostly supported by Emerson Collective — a limited liability corporation owned by Laurene Powell Jobs. As Gordon Crovitz, former publisher of the Wall Street Journal and co-founder of journalism credibility and transparency tool NewsGuard, observes, "I think for many years opinion magazines have had a mixed model where they really did depend on charitable donations as well as market revenue. I think that's fine. It's disclosed. It's more than disclosed."1

But news outlets are a different story. In the United States, newspapers have always operated as for-profit businesses. As Batya Ungar-Sargon documents in her book Bad News, many newspapers in the United States, including most local papers, were started by grassroots, working-class individuals trying to "make a buck" — or, rather, a penny, which is how much Benjamin Day charged for the first issue of the New York City-based Sun when he launched it in the 1830s.

At the time, Day was struggling to maintain the print shop and support his growing family. As he did so, he was "assaulted...with the sights and smells of the life that awaited him a few blocks south and a few rungs down the economic ladder if he failed, a reminder of which every strong wind must have brought to his doorstep."

It wasn't long before the newspaper business came to be dominated by owners who were far wealthier and more powerful than Day. Joseph Pulitzer was perhaps the most obvious transition figure in this regard. Pulitzer started out as a Jewish immigrant who resorted to sleeping on park benches before finding a job as a reporter in St. Louis. Eventually he made enough money to buy his own newspaper and went on to greater wealth and success in New York when he purchased the New York World.

Pulitzer may have managed to muscle his way into the elite, but in Ungar-Sargon's words, "he knew that only a newspaper could marry these two parts of himself to each other: the desire to be powerful and the desire to never forget what it was like to be powerless."

Eventually, individuals of a more select pedigree took over. Today, the owners of big-name media companies are mostly families like the Sulzbergers — who have been owners for multiple generations — or individuals like Jeff Bezos, who never had to sleep on park benches.

Those who work their way up in the media business today also tend to start out as educated, upper-middle class young people whose families can afford to subsidize their internships and apartments in expensive cities. Reporters at major outlets now include graduates of Ivy League colleges or other elite institutions — places where young journalists absorb the left-leaning ideas that they insert, consciously or unconsciously, into their articles and newscasts. Not so long ago, reporters at local and metropolitan newspapers were not college graduates, but bright and ambitious working people trying to get ahead.

In the 1830s, Day chose "shines for all" as the Sun's motto because the paper focused on local news — particularly subjects like crime that affected the daily lives of the paper's working-stiff readers. Today's papers, by contrast, are geared toward individuals at the other end of the income spectrum. The shift was in part a conscious one: When Adolph Ochs bought the New York Times in 1896 for $75,000, it became clear to him that selling newspapers was not the only way to make money; he also began to sell advertising. To do so, he had to ensure that wealthy sets of eyes were viewing those ads each day. Ochs's descendants have continued the tradition: Today, the Times's Sunday Styles section features an array of luxury brands. The rest of the paper, too, is written primarily for the wealthy and the educated.

Of course, in today's world of affordable luxury goods, the tastes of the elite have shifted from the material to what Rob Henderson calls "luxury beliefs." So in addition to hawking the latest in conspicuous consumption, the papers of today sell summer classes to high-school students, exotic travel itineraries to adults, and curricula — like the 1619 Project — to schools. Such programs are carefully crafted to sound non-partisan — they're aimed at "uplifting young and old" or making people "more aware" of climate change, racism, and the like. But the ideological component is hard to miss for anyone who bothers to look for it.

THE FUTURE OF JOURNALISTIC INDEPENDENCE

College and university administrators don't like to talk about crude matters like revenue and business models; they prefer instead to discuss how they are enlightening students, serving the cause of justice, and bringing opportunity to the underprivileged. Newspaper managers and executives are now beginning to speak the same language. While scouring the landscape for donations or new ways to make money, they cultivate an image of civic-mindedness and community spirit — almost as if money is a secondary concern. In this way, newspapers have transformed themselves into institutions much like our contemporary universities — even though many continue to operate as for-profit businesses.

For Crovitz, the test of whether there is a problem with a particular entity supporting some kind of journalistic enterprise is whether "readers understand who is financing and supporting the operation." He cites the recent instance of Courier Newsroom, which was founded in 2019 to "restor[e] trust in media by building local reporting infrastructure in states across the U.S." It turned out to be a "clandestine political operation," in the words of Washington-based reporter Gabby Deutch. Paid for with an initial investment of $25 million, a group called Acronym managed to fund what appears to be a local news website but in fact offers information to promote Democratic candidates for office.

Crovitz found the effort "shocking and terrible" for two reasons: First, it "aggressively mislead[s] readers into the nature of the operation," and second, it helps "to undermine the trustworthiness of local news sites."

When it comes to sites that purport to be news outlets, Crovitz says he "would prefer if local news publications could find a market solution." "There is a freedom that comes with having many subscribers and advertisers support a publication that you don't get with benevolent donors," he observes. Many donors, he continues, "have their own missions" that are not entirely consistent with the independence that journalists should have. If newspapers cannot raise sufficient funds from subscribers and advertisers and are forced to rely on charitable donations to survive, Crovitz says he favors "aggressive disclosure" as a way to let readers know what is underlying some kinds of reporting or even the choice to cover a particular topic.

It is this latter form of influence that worries Howard Husock, a fellow at the American Enterprise Institute who served on the board of the Corporation for Public Broadcasting. Husock began his career in the 1970s as a local news reporter. Today, he laments that there is not much philanthropic support for "routinized news gathering."

Husock recalls his first assignment as a news reporter decades ago: calling the state police four times a day. Through these calls, he discovered "all sorts of crazy things that no one expected." Indeed, an enterprising reporter might find that a police investigation into one problem leads in many new directions that are of interest to readers. Attending a routine city-council meeting might lead to information that a developer is manipulating zoning rules. "News is novelty," says Husock. "You never know what you'll find. If it's predictable then it's like Pravda."

But the focus on news might not be exciting enough for today's foundation executives — which makes it harder for news outlets who wish to maintain newsgathering independence to attract donors. "The psychology of foundations," Husock notes, "is that they all have their own enthusiasms." Once foundations allocate funds for particular subjects, they have already succeeded in tilting the news in a particular direction.

This is true for public radio, which regularly takes donations from foundations looking to cover particular areas of interest. Husock points out that this has occurred at a time when many local public-broadcasting stations have lost their local focus. While a significant portion of their budgets are funneled back to Washington to pay for national programming, they are missing big stories at the local level. He remains shocked that public radio was surprised by the opioid epidemic. "They should have been the first to tell everyone," Husock observes. But they were looking elsewhere.

Just as foundations don't want to be responsible for the day-to-day operations of a university, so too do they want to avoid boring news gathering. There are a few donors who want their money to support general education requirements or a core curriculum; there are many more who want to support research on racial equity, social justice, and income inequality.

The university's role has continued to expand through philanthropic donations at the expense of its original mission. Public radio, too, seems to have an ever-expanding mission, also due in large part to interventions by philanthropies. In the wake of the 2020 protests, increasing numbers of stories are about race and gender issues; far fewer cover general-interest news stories.

Nevertheless, public radio seems to have found a more viable financial model than have local newspapers. Today, many of these stations are considering mergers with newspapers. In January, for instance, Chicago Public Media announced that it was buying the Chicago Sun-Times. Though the paper and the radio station will occupy separate newsrooms, they will share content across their platforms.

The station raised over $60 million for the deal, mostly from foundations. And yet more than half of its annual support comes from individual contributions. "People are willing to support news they value and trust," said Matt Moog, the head of Chicago Public Media. "We hope to grow our community of members and donors who will invest in journalism from both WBEZ and the Chicago Sun-Times so we can expand our service and deepen our impact for the public good in Chicago."

Chicago Public Media is not alone: In 2019, stations in Philadelphia and Denver bought local online news sites owned by Spirited Media. And in 2018, WNYC acquired the news site Gothamist.

Oddly enough, people seem to be willing to pledge small donations to support local radio — but newspapers haven't been able to capitalize on a similar arrangement. That may be changing, however. The American Journalism Project (AJP), which was founded in 2019 by John Thornton and Elizabeth Green, is trying to harness the power of large foundations while also enabling news organizations to earn more support from local individuals.

The organization is investing in non-profit news organizations that are interested in expanding. They're also providing seed money for new media projects. Sarabeth Berman, who runs the AJP, says that she expects the news organizations she works with to "set their own editorial agenda and then be entrepreneurial about funding it."

The Berkshire Eagle, for instance, received a grant from Report for America (RFA) — a program that sends young journalists into local newspapers — to support the addition of a full-time state House reporter to its staff, which is something the paper hasn't been able to afford for years.2 "What happens in Boston impacts us," says Fredric Rutberg, the paper's president and publisher, but "it's out of sight, out of mind" for a lot of people. Recently, the paper added a second staffer from RFA.

This kind of local-level journalism — sending people to the state legislature or to cover city council or school-board meetings — can have a strong effect on democracy, says Berman. She notes that when such outlets disappear, people are more likely to vote along party lines on local issues. "They are letting the national agenda drive the local agenda," she observes.

There are more concrete effects as well. Local reporters are most likely to uncover government corruption. When local papers disappear, taxes and public salaries rise. Fewer people run for office and vote. In other words, there are good reasons for people across the political spectrum to rely on local news media to cover, well, the news.

The AJP has recently partnered with Houston Endowment, a community foundation, to launch a new local media organization in 2023. Unlike philanthropies that give money across the country or even the world, community foundations have the interest and support of local residents. But the Houston effort is also being supported by the Knight Foundation and Arnold Ventures — two large organizations with national programs.

Rutberg acknowledges that "there is a risk in indulging philanthropy," which is "letting the tail wag the dog." Newspapers could end up covering topics that "are of marginal interest to readers" but of great interest to foundation executives. "That's not something that will make a long-term impact or make us stronger. You divert attention and resources to chase a grant."

SETTING ELITE PRIORITIES

In a sense, this is precisely what happened at universities. Initially, they expanded in new directions — often into obscure fields of interest to some faculty. Then they began expanding into areas that generate grants and donations, but they did so at the expense of the university's original mission. Higher-education institutions care less today than in the past about basic education for undergraduates, just as newspapers today have less interest in reporting basic news to their readers. Large foundations like Ford and MacArthur have been able to steer American higher education by putting money into new academic centers and curricula, conferences, awards, and publications.

The university of today bears but a faint resemblance to the institutions of a generation or two ago. A parallel process is well underway in the news business, transforming newspapers into vehicles for promoting causes of interest to large foundations but not to ordinary readers. In the process, the news business, like higher education, is turning itself into another source of ideological conflict in American life — as if that's what the country really needs today.

1 Updated to reflect Mr. Crovitz's current title.

2 The text originally indicated that the grant was from the American Journalism Project. We apologize for the error. 

NAOMI SCHAEFER RILEY is a senior fellow at the American Enterprise Institute and a senior fellow at the Independent Women’s Forum.

JAMES PIERESON is a senior fellow at the Manhattan Institute and president and trustee of the William E. Simon Foundation.


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