Money Changes Everything

Independent journalism can't lean on a few rich donors

In lower Manhattan as I write, thousands of protesters, recently joined by some unions, local New York politicians, and a few celebrities, are thronging Zuccotti Park. While their message is by design not a unified one, and specific demands of the sort one expects at a protest are evidently not forthcoming, there is a loose, common belief that explains why the movement is called “Occupy Wall Street.”

It’s the belief that, increasingly, this country is organized for and around the interests of the very rich; that, on a profound scale, the influence of private money on government affairs is perverting the aims of collective organization through government to build a country and solve its problems.

The Occupy Wall Street movement has been compared to the Tea Party movement that sprang up in the wake of the 2008 presidential election, and which organized a similarly disparate group of interests, including Ron Paul supporters, people with certain theories about tax policy, and people with an overall distaste for what they saw as government by and for the coastal elites.

There are, of course, stark differences between the two. A more discomfiting analogy than the Tea Party to the aims and ideas of the Occupy Wall Street crowd are the aims of a subset of the very people they are protesting: a loose but similarly Washington-averse “protest movement” taking hold among America’s rich. The goals of this group are populist in spirit, but the method they promote is the intervention of a superclass of billionaires in the political process in order to save it from itself. Howard Schultz, founder of Starbucks, is a prominent figure in this movement, which, like the Occupy Wall Street movement, is technically leaderless.

Schultz has pioneered a campaign aimed at getting the biggest individual donors to election campaigns to withhold their money from candidates until a bipartisan deal is reached in Washington that sets the country “on stronger long-term fiscal footing.” Only then, Schultz argues, can Washington be purified of the partisan bickering in which only the vagaries of the political process itself separate left from right, or right from wrong. Similar calls to action have come from influential op-ed columnists and big-money philanthropists.

Where any of these three movements is going is impossible to tell. The billionaire club’s political ambitions are still nascent, as are those of the young Occupy Wall Street protesters. The Tea Party, on the other hand, arguably controls the gop conference in the House of Representatives and is powerful enough to shape the agenda for the Republican Party itself, for now at least.

Still, to consider the future of the country, I believe, requires contemplating these three strands of civil action. They are evidence that this period of time is transforming in a deep way how Americans view the interaction of government and private money.

After all, it seems that government cannot achieve its objectives in any number of areas without cooperation from large corporate interests. How to reform health care without reckoning with the health-insurance industry? How to create energy independence without bargaining with the energy industry? Government negotiates with the auto and banking industries about the shape of their bailouts. To deal with education, it must work with the privately funded reform movement that is pushing charter schools and testing, among other things.

Journalism has always most strongly identified itself as a check on government. Now, though, as the lines between large private fortunes and corporate interests and the government get blurrier, journalists must begin to think of corporate America and of the super-rich as another strand of government, and guard their independence from corporate interests and the rich as carefully as they guard their independence from government.

Yet as the foundations of the business model for traditional journalism shift and change and, in some cases, fall away, what happens to that check and balance? We all know that legacy journalism outlets have been receding. Newspaper print revenue in 2010, for one example, was less than half what it was in 2005. Some newsrooms have been cut by more than half.

So in many cases journalists have turned to foundations and philanthropists, and to well-meaning venture capital, to develop new nonprofit journalism operations. Indeed, some of these outlets have attracted attention and awards. The Texas Tribune and ProPublica, two very different journalism operations, are examples: ProPublica was the first all-digital news operation to be awarded a Pulitzer, and the Texas Tribune is routinely praised for its aggressive reporting and investigation as well as its rigorous monitoring of statehouse data. The Texas Tribune was initially launched with funding from a civic-minded venture capitalist, John Thornton, who put up $1 million and helped raise more. ProPublica has been funded primarily by Herbert and Marion Sandler, the former chief executives of the Golden West Financial Corporation, though it, too, is working to broaden its donor base.

What tends to be forgotten in all the praise for the philanthropic model is that big handouts can come with a price. The reason for the press to be independent of a political agenda is not the danger that a bad political agenda could take over; it’s that agendas in general are toxic to a certain kind of journalism.

I have had a chance to think about this: as a reporter for The New York Blade, a paper about gay political issues and culture, I served the readership by reporting on the finances of such important organizations as Gay Men’s Health Crisis and the Lesbian and Gay Community Services Center. If the paper, instead of being employee-owned, had been financed by do-gooders with deep pockets and a passion for local aids charities and gay political causes, how possible would that have been? Our money would have come from the same sources as many of the places we were reporting on.

Even charities that mean to do good work for journalism in particular must observe a different kind of restraint from straight-up capitalists if they want the journalism they fund to be truly independent: they must decide that even their good works are open to critique and interpretation by the reporters they’re paying. That can be a harder pill to swallow in practice than it is in theory, even for the most enlightened funders.

The danger here is that philanthropy has given the moneyed class the potential to exert a new pull on journalism. And in a world where the lines between private money and government continue to blur, serious journalism must resist that pull and guard its independence—with business prowess, rigorous cost efficiency, and by spreading wide the donor base.

A.J. Liebling’s famous formulation, “freedom of the press is guaranteed only to those who own one,” has a different ring today. An expensive press is no longer necessary; he who owns the publication has the freedom, something more possible than ever as developments in digital publishing and distribution have removed costs traditionally associated with print journalism.

The only thing left to pay for is the journalism itself. Figuring that out, for ourselves, is the only route to independence. And independence is more important than ever.

In Philanthropy In America: A History, due out this month and likely to become a landmark text, Olivier Zunz, an academic at the University of Virginia, argues that American government has long been shadowed by two kinds of private philanthropy. One is mass philanthropic effort (the “Big Wind,” as H. L. Mencken’s American Mercury put it in 1928, when the tax code evolved in such a way as to save the middle class significant tax burdens if they made charitable donations; “Viewers Like You!” is the current parlance). Another is philanthropy from elites (American Mercury’s “Big Money Boys,” now recognizable in end credits listing the likes of the Helena Rubinstein Foundation).

Zunz explains that the very creation of both these classes of philanthropy required significant government interference with the tax code, a process that evolved over decades, and which Zunz profiles with diligence and nuance. In other words, philanthropy’s independence from government interference required government action, to loosen restrictions on the disposal of private money for charitable causes.

What’s more, government has continually sought to create its own firewall between private moneyed interests, philanthropic and otherwise, and the spheres of activity that rightly belonged to the state, lest unelected interests have control of the basic functions of practiced democratic government. From the very earliest changes in the tax code to allow charitable organizations to operate without serious tax burdens, a distinction was made between “education” and “advocacy.” The latter, Zunz writes, was considered a dangerous counterpoint to actual government; the former was a form of free speech. Diligence was required to keep the line from blurring.

Consider the case of Margaret Sanger, the path-breaking advocate of birth-control education, who in 1921 founded what would become Planned Parenthood. In her time, pamphlets on birth control were still subject to Victorian-era anti-obscenity laws. Sanger and her allies fought for the right to distribute them anyway, and won. But a court rejected the argument that the distribution of the pamphlets was a charity that qualified for tax exemption. Zunz writes: “They were unable to change Treasury’s position that the state could not subsidize challenges to existing law, regardless of the flaws of that law.

“No issue,” Zunz writes, “came closer to embodying all the difficulties inherent in attempts to define the proper nature of philanthropic causes and the limits on philanthropic action and its interaction with democratic politics.”

One reason this is relevant here is the importance of the independence of the press from government or private-interest interference.

“There were three estates in Parliament,” Edmund Burke is said to have exclaimed in 1787, “but, in the Reporters’ Gallery yonder there sat a fourth estate more important far than they all.”

Americans know in their bones that the independence of that fourth estate is to be guarded. We’ve seen how work in the public realm that is funded entirely or in part by government subsidy comes under intense scrutiny for perceived bias to the left or right. The culture war of the 1980s that embroiled the National Endowment for the Arts is an example. Or the battles over public broadcasting after the Corporation for Public Broadcasting, created by an act of Congress in the Johnson administration, got into the act. Things only got worse as public broadcasters like PBS and NPR aired reports and documentaries on civil rights, the Vietnam War, and the general cultural revolution taking place in the latter half of the twentieth century.

Then there is the pressure of private money. Zunz provides reminders of the history of philanthropy in advancing particular causes. In 1945, he notes, Pennsylvania oilman J. Howard Pew, who had been looking for a way to counter what he considered philanthropy’s broad, irreligious, and even communist views, threw charitable support behind Guideposts, the magazine of Norman Vincent Peale, pastor of the Fifth Avenue Marble Collegiate Church. “All we need to do is state our case,” Peale told Pew, and “keep driving it home. It will win its own way, I am sure, because it is the truth.” Pew avidly supported McCarthyism, as well as Tennessee Congressman B. Carroll Reece’s 1953 investigations into whether large philanthropic organizations were supporting “efforts to overthrow our government and to undermine our American way of life.”

Philanthropists give money to advance causes. The press is not the same sort of cause as poverty or malnutrition, or education or aid to immigrants. It is, after all, the medium through which information about precisely the issues philanthropy has traditionally addressed is broadcast to the public.

Of course, the press has always had owners—wealthy families or big corporations—that have pushed the journalism in certain directions. Whether news outlets can guarantee their independence any better with a large for-profit corporate owner than with major nonprofit funders remains to be seen. But one recent and controversial report found that nonprofit news organizations already have a mixed record when it comes to being objective and transparent about the sources of their support.

Published in July 2011 by the Pew Project for Excellence in Journalism, the study found:

The 46 national and state-level news sites examined—a group that included seven new commercial sites with similar missions—offered a wide range of styles and approaches, but roughly half, the study found, produced news coverage that was clearly ideological in nature.

In general, the more ideological sites tended to be funded mostly or entirely by one parent organization—though that parent group may have various contributors.

On the other hand, the study found that sites that had a broad base of support—a larger number of smaller funders—were more likely to produce journalism as the traditional nonpartisan mission would have it:

Sites that offered a mixed or balanced political perspective, on the other hand, tended to have multiple funders, more revenue streams, more transparency and more content with a deeper bench of reporters. The six most transparent sites studied, for instance, were among the most balanced in the news they produced.

Or as media critic Jack Shafer put it in a column on Slate in September 2009, “No matter how good the nonprofit operation is, it always ends up sustaining itself with handouts, and handouts come with conditions.”

The bigger the handout, the more onerous the conditions. Laura Frank, director of the nonprofit Rocky Mountain Investigative News Network, last September told the American Journalism Review: “People think, ‘Oh, wow. You don’t have to deal with advertisers,’ but it’s kind of the same thing. Foundations are used to funding something and having control over it. You have to explain to them that there is a firewall: ‘What you’re funding is the act of journalism for the benefit of society.’ ”

There is, of course, a great debate over whether the kind of standardized objective journalism that took hold with the professionalization of the craft in the latter half of the last century still serves the public. A press that advocates positions on issues is not inherently problematic. The question is whether the advocacy is pursued independently of funding interests; that’s the distinction that Frank finds she must constantly strive to make her funders understand.

Advocacy as an editorial priority or point of view is essential to a healthy, diverse press culture. Without it, there’s no Nation, no Weekly Standard, no New Criterion, no Dissent, to name a few outlets with radically different structures but with independent editorial missions.

Advocacy as a funding mechanism is what I find problematic, especially as new big-money power bases emerge for solving the problems that society encounters. Everyone takes for granted the need to be a news organization that is independent of Washington. But how long before it becomes just as important to be independent of, say, tech billionaires out of Cupertino, or Mountain View, or Redmond?

Building a “philanthropy firewall” is just as daunting as any advertising firewall ever was. Yet contemplating a nonprofit model does not necessarily mean hunting great personal or corporate fortunes. Broad appeals to the middle class have long been a part of American philanthropic practice.

But broad appeals need a broad base, and, therefore, scale. Most journalism will not be able to reach that scale quickly, without large private disbursements from a small number of deep pockets. The next NPR or PBS will not just drop out of the sky without some boldface name from the financial pages creating it. That strikes me as perilous.

Building a business, as risky as it sounds, at least builds value that belongs to the organization. It can be difficult, and slow. Today’s apparent success stories are often small regional startups that have generally been patient about scaling up. Such sites may not comfort those who want to see three or four more news organizations with the strength and reach of now-fading quality regional dailies, like The Philadelphia Inquirer, the Los Angeles Times, or the Chicago Tribune. But it’s worth remembering that these papers, in a different era, themselves grew organically over time from local dailies to large operations, according to market conditions.

In other words, I tend to think the tortoise in this race is journalism produced by individuals willing to endure extremely small budgets to build an audience and revenue streams over time, independent of agenda-driven charitable organizations and deep-pocketed vanity publishers. Some well-endowed nonprofits see things differently; there admittedly is a divide among nonprofit journalism organizations about scale.

But the nonprofit journalism outfits that spend big bucks can’t go on forever, can they? I don’t think the large nonprofit journalism entities coming into being these days are the future, and I don’t think that’s a bad thing.

In his conclusion, Zunz elevates the importance not of big donors, but of many small ones. “If there is a lesson from the history I have told,” Zunz concludes, “it is that philanthropy enlarges democracy when it is an activity in which the many participate.”

The same, I think, will be true of the journalism, whether for-profit or nonprofit, that emerges in the next half century. Lean operations of committed journalists, fiercely protective of their independence and eager for commercial success—but flexible in their planning and patient for growth—will create the next generation of quality journalism. You haven’t heard of very many of them yet, but you will. 

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Tom McGeveran is a co-founder and editor of Capital New York, a for-profit news and commentary site that recently raised $1.7 million from private investors. He previously was editor of The New York Observer.