What About Philanthropy for For-Profit News?

A new survey raises some concerns.

Welcome to Second Rough Draft, a newsletter about journalism in our time, how it (often its business) is evolving, and the challenges it faces.

Until just a few years ago, philanthropic contributions to for-profit newsrooms—essentially gifts to their shareholders, even if usually intended to get them to spend money in ways they might not otherwise—were quite rare. The Gates Foundation in 2010, for instance, gave $1.5 million to ABC News to cover global health, apparently because the Walt Disney Company, which owns ABC, felt it couldn’t otherwise afford the travel costs. (Disney operating income in 2010 was $6.5 billion.) But now philanthropic subsidy of for-profits has become more commonplace, and a new study provides data that enables us to take a closer look.

The study was done by NORC at the University of Chicago in conjunction with Media Impact Funders and the Lenfest Institute for Journalism (which is a consulting client of mine). The parts of the study detailing funding of nonprofit journalism have received a good deal of attention, but I found the separate survey of 138 (!) for-profit newsrooms that have received donations over the last five years more novel and compelling.

money growing on trees, which unfortunately it does not

Here are some of the findings I think are noteworthy:

• Not all of the money flowing to for-profits is going to struggling smaller players. Fully 19% of the for-profit newsrooms receiving grants have budgets over $50 million, and 8% have newsrooms of over 100 people. Perhaps even more surprisingly, 65% of the newsrooms receiving aid are growing or holding steady in headcount, and most of them, 52%, have been able to avoid newsroom layoffs altogether.

• The gifts are, in quite a few cases, very important to the recipients. Eight percent of grantee newsrooms got 10% or more of their total funding from national funders, 18% got that much from local funders and 10% received that big a slice from tech companies.

• We all know that Facebook and Google have given a fair amount of money to newsrooms, but I was struck that five for-profits got more than a million dollars each from Facebook over the last five years, while another nine got more than $100,000. From Google, there were eight receiving at least a million dollars, and another seven taking in more than $100,000. To save you the trouble of the math, that’s at least $14.5 million in large gifts from these two companies, likely quite a bit more.

More transparency needed

Foundations and big companies can, of course, do whatever they want with their money, although one does worry a bit that the motivations in at least some of these cases may have been less charitable and more oriented toward image building. But the NORC survey also raised some concerns about how transparent this funding has been, which does seem to me a legitimate issue, especially in the news business.

Some more findings:

• Fully 37% of for-profit newsrooms receiving philanthropic contributions don’t publicly disclose a list of donors; another 20% disclose only some. Another 17% of the people completing the survey didn’t even know their own company’s disclosure policies. Only 26% disclosed most or all contributions.

• What difference does this make? Well, 19 for-profit newsrooms admitted in a survey answer that they have changed their editorial priorities in response to funding. That’s appalling.

• Beyond that, 23% of grant recipients acknowledged they didn’t mention funding in subsequent stories about the funder.

In case you think such non-disclosure happens only at the fringes of our business, I am here, sadly, to report that you are wrong. I was moved by the new survey to look at the funders of the New York Times Headway project, which is fueled by philanthropic dollars. (The Times Company made an operating profit of about $350 million last year.) While the Times discloses the donors in Headway stories and on the Headway series page, it did not mention them in subsequent stories about the donors themselves—not in this piece about the Ford Foundation, or this one about a different initiative by the Hewlett Foundation, or this glowing review of the fruits of another grant from the Stavros Niarchos Foundation.

Perhaps the Times (and others) think the appropriate analogy here is advertising: they don’t disclose advertising relationships in corporate coverage, nor do others—and needn’t, in my view. But advertising reflects an arm’s length transaction, value received by the advertiser, presumably in exact balance for what they paid for it. Philanthropic contributions are supposed to be gifts, and when someone you are covering has given you a gift, you should say so when you cover them.

Lessons learned

What should we take away from all of this? A few things, I think. First, as with so much of good journalism, transparency is essential. The website of any for-profit newsroom accepting donations should have an easily accessible list of all donors above a de minimis threshold, and a clear statement of the limits, if any, of the influence of donors on editorial priorities and other choices. Nonprofits do this routinely; having a lower standard for gifts to for-profits makes no sense. Institutional donors can and should insist on this approach.

I have no per se objection to philanthropic gifts to for-profits, especially when so many legacy companies are struggling and newer entrants are still fledglings. But I see no need at all for scarce donor dollars to go to companies netting hundreds of millions or billions. And if such companies are accepting program grants, fulsome disclosure is particularly in order. After all, if the acceptance of the gifts means that they are, at a minimum, publishing stories they otherwise wouldn’t, readers are entitled to know at whose behest they are doing so. If the requisite transparency would be embarrassing for places that don’t really need the money, that should be a strong hint that they shouldn’t have taken it in the first place.