A national Fund for Local News should be created with money the Federal Communications Commission now collects from or could impose on telecom users, television and radio broadcast licensees, or Internet service providers and which would be administered in open competition through state Local News Fund Councils.

The federal government already provides assistance to the arts, humanities, and sciences through independent agencies that include the National Endowment for the Arts, the National Endowment for the Humanities, the National Science Foundation, and the National Institutes of Health. The arts and humanities endowments each have budgets under $200 million. The National Science Foundation, with a budget of $6 billion, gives out about 10,000 grants a year. The National Institutes of Health has a budget of $28 billion and gives 50,000 grants. In these and other ways, the federal government gives significant support to individuals and organizations whose work creates new knowledge that contributes to the public good.

The Federal Communications Commission uses money from a surcharge on telephone bills—currently more than $7 billion a year—to underwrite telecom service for rural areas and the multimedia wiring of schools and libraries, among other things. In this way, the FCC supports the public circulation of information in places the market has failed to serve. Local news reporting, whose market model has faltered, is in need of similar support.

The FCC should direct some of the money from the telephone bill surcharge—or from fees paid by radio and television licensees, or proceeds from auctions of telecommunications spectrum, or new fees imposed on Internet service providers—to finance a Fund for Local News that would make grants for advances in local news reporting and innovative ways to support it. Commercial broadcasters who no longer cover local news or do not otherwise satisfy unenforced public-service requirements could also pay into such a fund instead.

In the stimulus bill passed in early 2009, Congress required the FCC to produce by February 17, 2010, a strategic plan for universal broadband access that specifies its national purposes. One of those purposes should be the gathering and dissemination of local news in every community, and the plan should include roles for the FCC and the federal government in achieving it.

We have seen into a future of more diverse news organizations and more diverse support for their reporting.

The Fund for Local News would make grants through state Local News Fund Councils to news organizations—nonprofit and commercial, new media and old—that propose worthy initiatives in local news reporting. They would fund categories and methods of reporting and ways to support them, rather than individual stories or reporting projects, for durations of several years or more, with periodic progress reviews.

Local News Fund Councils would operate in ways similar to the way state Humanities Councils have since the 1970s, when they emerged as affiliates of the National Endowment for the Humanities. Organized as 501(c)(3) nonprofits, they have volunteer boards of academics, other figures in the humanities, and, in some places, gubernatorial appointees, all serving limited terms. Local News Fund Council boards should be comprised of journalists, educators, and community leaders representing a wide range of viewpoints and backgrounds.

Grants should be awarded in a transparent, public competition. The criteria for grants should be journalistic quality, local relevance, innovation in news reporting, and the capacity of the news organization, small or large, to carry out the reporting. A Fund for Local News national board of review should monitor the state councils and the quality of news their grants produced, all of which should be available on a public Fund for Local News Web site.

We understand the complexity of establishing a workable grant selection system and the need for strict safeguards to shield news organizations from pressure or coercion from state councils or anyone in government. As stated earlier, we recognize that political pressure has played a role at times in the history of the arts and humanities endowments and in public broadcasting. But these organizations have weathered those storms, and funding for the sciences and social sciences has generally been free of political pressure. With appropriate safeguards, a Fund for Local News would play a significant role in the reconstruction of American journalism.

More should be done—by journalists, nonprofit organizations and governments—to increase the accessibility and usefulness of public information collected by federal, state, and local governments, to facilitate the gathering and dissemination of public information by citizens, and to expand public recognition of the many sources of relevant reporting.

Leonard Downie Jr. and Michael Schudson are the authors of "The Reconstruction of American Journalism." Leonard Downie Jr. is vice president at large and former executive editor of The Washington Post and Weil Family Professor of Journalism at Arizona State University's Walter Cronkite School of Journalism and Mass Communication. Michael Schudson is a professor of communication at Columbia University's Graduate School of Journalism.