Bay Area to Get Nonprofit News Organization

The description offered by the New York Times' Richard Pérez-Peña sounds a bit like the setup for a sitcom or a reality series: "A wealthy investor, a university journalism school, and a public radio station have joined forces to create a nonprofit local-news website for the San Francisco area…" Call it Survivor: The Fourth Estate.

With $5 million dollars in seed money from F. Warren Hellman, co-founder of the private equity firm Hellman & Friedman, LLC, the news organization, currently known simply as the Bay Area News Project, would bring together students from U.C. Berkeley's Graduate School of Journalism and reporters from KQED-FM. Pérez-Peña writes, "The founders said it was too early to talk specifically about which areas the new site would cover, but they all said they wanted to focus on areas where the established media had pulled back, like investigative work, arts coverage, and community-level reporting," which is good since the San Francisco Chronicle, as many have noted, has been struggling for quite some time.

According to the Project's FAQ, "The Bay Area is one of the most intellectually curious, engaged, and community-minded regions in the nation. We believe the community has a voracious appetite for high-quality news and information. We also believe that ambitious, penetrating, dynamic coverage of news is critical to a functioning democracy."

KQED's radio program Forum featured a discussion of the Project hosted by Dave Iverson today at 9 a.m. PST. (As if to illustrate one of the challenges of the nonprofit model, before the NPR news break that led into the show there was a KQED pledge-drive spot.)

"This is a very noble project," Neil Henry, dean of U.C. Berkeley's Graduate School of Journalism told Iverson. "And one that offers a bright light considering the darkness we've been in for years."

Carl Hall, a Chronicle reporter-turned-Newspaper Guild union rep added, "The traditional big city newspaper newsroom has got to change. What we're talking about here is creating some pressure for quality and giving shape to the new newsroom."

The Bay Area News Project is just the latest attempt at creating nonprofit news organizations. Two years ago former Wall Street Journal managing editor Paul Steiger and former New York Times investigative editor Stephen Engelberg started ProPublica with funding from the Sandler Foundation. Last month ProPublica and the New York Times Magazine teamed up to create an epic cover story about Hurricane Katrina written by Sheri Fink.

In an New York Times op-ed from early in 2009, David Swensen and Michael Schmidt, chief investment officer and financial analyst at Yale, respectively, explained the thinking behind such endeavors: "As long as newspapers remain for-profit enterprises, they will find no refuge from their financial problems. By endowing our most valued sources of news we would free them from the strictures of an obsolete business model and offer them a permanent place in society, like that of America’s colleges and universities. Endowments would transform newspapers into unshakable fixtures of American life, with greater stability and enhanced independence that would allow them to serve the public good more effectively."

The New Yorker's Steven Coll blogged at the time that, "The typical spend rate for endowed nonprofits is in the five-percent range. If the Washington Post had a two billion dollar endowment, it would be able to fund a very healthy newsroom. And this is before revenue from continuing operations—advertising, circulation, etc.—which could surely cover at least the cost of distribution and overhead, particularly if the form of delivery is increasingly digital."

Then again, not everyone is so sure nonprofit it the way to go. Four years ago, several reporters started the Chi-Town Daily News with underwriting from the John S. and James L. Knight Foundation as well as grants and individual donations. Three weeks ago, the Huffington Post pointed out that Chi-Town would be abandoning the nonprofit model.

In a statement, editor Geoff Dougherty said, "The Daily News needs $1 million to $2 million per year to do a great job of covering a city as sprawling and complex as Chicago. And despite hundreds of phone calls and letters to foundations, corporations, and individual donors over the past four years, we've never come close to that. So, after much soul-searching, we've decided to turn our efforts toward a business model that will support the kind of vibrant public affairs coverage that Chicago deserves."

Dougherty concluded, "Ultimately, we believe we will be able to fulfill the same mission we set out to accomplish with the Daily News, though with a new name, a new company, and a different business structure."