CHARLESTON, SC — Have you heard about the latest innovative funding model that will save journalism? Allow a group that wants more coverage of the fruits of its labor to pay for you to provide it.

That’s essentially how the News & Record, a paper in Greensboro, NC, and the third-largest daily in the Tar Heel State, is handling an arts group’s wishes to see more arts coverage in the local newspaper.

As N&R editor and publisher Jeff Gauger explained to readers, a nonprofit umbrella organization called ArtsGreensboro, which advocates for the arts and provides grants and other support to arts groups, will underwrite 70 stories—a mix of reviews, profiles, and news articles—about the local arts scene over the course of a year. A News & Record column by ArtsGreensboro CEO Thomas Philion is explicit about the point of the program: the group is putting up the money because news coverage does more than ads to “create interest,” “encourage us to attend certain events,” “drive ticket sales,” and support efforts “to raise awareness about the value and impact of the arts.” At the same time, the contract between the group and the paper stipulates that the News & Record “shall have complete independence and discretion” in the coverage. ArtsGreensboro will pay the paper $15,000, Gauger told me.

To which I say: Don’t sell yourself so cheap!

Obviously, newspapers around the country are in need of money and have had to cut back on coverage. This isn’t the first creative funding arrangement anyone’s come up with—it’s similar in some ways to other deals in public, nonprofit, and even commercial media. Still, it goes further than most.

And even in today’s climate, $15,000 for a daily in a city of 275,000 people isn’t that much money. It’s a figure the paper could probably generate by selling a few more display ads. And even if the paper can’t actually sell those ads, it’s not transformative money, and not the sort of funding that could save a publication from an existential crisis (not that the Warren Buffett-owned News & Record seems to be facing one). It’s a meaningful but relatively modest sum that will allow the paper to provide coverage that it hadn’t made a priority at a time of cutbacks and constriction.

Which might not be something worth risking your credibility on by venturing into ethically murky and unfamiliar funding models.

Back in March, I looked at another funding model that sounded some ethical alarms: support from City Hall for local papers. In one case, a Wisconsin suburb brought a community paper back to life with a direct public subsidy. The move was controversial and led to plenty of debate about journalism ethics, as it should. And the local town council is more likely to require journalistic scrutiny than an arts group.

But in that case, I think there’s a better argument that the subsidy was meaningful enough to warrant the credibility risk. If all goes well, City Hall will have saved that newspaper. (And in that case, after a year the paper will have to stand on its own as a commercial entity, without the public subsidy.)

A $15,000 check for a paper that’s not in distress to hire some freelancers to do a little more arts coverage, though? I’m not necessarily sold on the risk-reward ratio.

To be clear, my point isn’t that the News & Record should have held out for more money. Rather, the thinking is two-fold: First, as I’ll explore below, the details of the Greensboro deal really are more problematic than many of the situations to which it’s being compared, because there’s so little space between the source of funds and the subject of coverage.

Second, even in less problematic arrangements, nonprofit, foundation, and public funding for news coverage does come with its own set of ethical and editorial issues that must be navigated—issues that newspapers haven’t traditionally had to worry about, even if those lines have started to blur in recent years. Those issues can be addressed, just like commercial news outlets can develop ways to cover advertisers. But they do have to be thoughtfully addressed. In the context of an overhaul of a business model—a newspaper’s conversion to nonprofit status, or some sort of long-term hybrid model—it might be worth taking that on. But for ad hoc, supplemental coverage? It might be better to stick to the devil you know.

More than just the arts?

Locally, the arrangement in Greensboro has already drawn criticism—from competitors like Triad City Beat, an 19-week-old alt-weekly, and the N&R’s own former editor John Robinson, who now teaches journalism and runs a media blog. Both critiques raised the question of whether the deal is pay-to-play journalism. City Beat quoted from the Society of Professional Journalists’ code of ethics—“Distinguish news from advertising and shun hybrids that blur the lines between the two”—while Robinson quoted The Elements of Journalism—“Its practitioners must maintain an independence from those they cover.”

When I spoke to Gauger, he told me that he, too, was skeptical when arts group CEO Philion first broached the subject. ArtsGreensboro receives public funds from the state, and the editor didn’t want any of that to touch his paper. He also didn’t want to divert money that might otherwise go to support artists or performers. So to pay for the coverage, ArtsGreensboro is raising money into a separate, dedicated account from its private donors, whose names will be published sometime this year.

Part of the reason Gauger agreed is the subject matter. “Arts isn’t ideological, and doesn’t involve public policy in the same way that government and politics does,” he said. “People who run these arts organizations, or perform in them, are not holding a public trust in the same way that elected officials and bureaucrats are.” (This may be mostly true of local artists—though there’s probably “ideology” involved in at least some of their work—and funds from the program won’t be used to cover ArtsGreensboro itself. But it’s worth noting that ArtsGreensboro is a substantial institution and a hub in a local industry; the organization has a $1.8 million annual budget and puts economic development at the core of its arts advocacy.)

Still, the editor does see opportunities for a similar approach in other areas. A question about whether the paper would accept money from a political party drew a quick “hell no,” but the underwriter model could apply to “coverage of, say, science or technology, the environment, education,” Gauger said. He floated the idea of a yearlong look at technology in the classroom, or a sustained investigation into whether teacher tenure increases the quality of classroom instruction. (This is the subject of a heated political debate in North Carolina.) As for what kind of organization he would be comfortable funding such a project, Gauger said it might be a foundation with education as its core mission, or perhaps a corporation without a clear conflict of interest—not a teachers’ union or other ideological group.

Which is to say that this sort of deal might ultimately end up amounting to more than $15,000, if still not truly major money. So it’s worth tackling in a little more detail the argument that this is nothing new—and why that might not be the best line of defense.

Out of the box, under the umbrella

The News & Record deal has been compared to several other types of arrangements. Gauger’s column likened it to public radio underwriting. “It’s not that out of the box—at least that’s how I viewed it,” he told me. Beth Grace, director of the North Carolina Press Association, who also says she’s not sure why there’s been so much angst about the Greensboro deal, compared it to a separate partnership in which Duke Energy underwrote a weekly page on science and technology for the state’s two big McClatchy papers. (That arrangement, in turn, has also been compared to public radio.)

There’s another parallel worth mentioning—that of nonprofit media, including places like CJR. For example, this article is part of a project, supported by a foundation, which covers state and local news nationwide. In addition to the goings-on in both for-profit and nonprofit newsrooms, the CJR project covers new business models in media, so both fellow grantees and the decisions of current or prospective funders are within its scope of coverage.

Your mileage may vary, but it’s worth noting that all of these types of arrangements have come in for criticism. NPR’s ombudsman has tackled reader complaints about coverage of sponsors. A CJR writer didn’t worry about the Duke Energy deal in 2010, but Paul Raeburn at the Knight Science Journalism Tracker sure did. And here’s Jack Shafer for Slate, and—writing in CJR—Jamie Kalven on the inherent risks of the nonprofit model.

It’s also worth noting that tensions in the News & Record/ArtsGreensboro case may be sharper than in these other cases. At the McClatchy-owned News & Observer in Raleigh, Duke Energy isn’t involved with the science pages anymore, but another corporate sponsor, Blue Cross Blue Shield of North Carolina, now underwrites a section called “Shop Talk” about small businesses, editor John Drescher* told me. In that case, Blue Cross is getting some brand association, and getting its ads in front of readers who are more likely to be in charge of purchasing insurance. It’s not quite a traditional advertising buy, but it looks closer to that than what’s happening in Greensboro does. (For what it’s worth, the N&O has produced hard-hitting reports on Blue Cross Blue Shield, said Drescher, and the company has complained, “but they never put it in the context of Shop Talk.”) Commercial underwriters for public radio are more or less buying ads, too. Being dependent on a major advertiser is problematic, but at least it’s a problem newspapers are used to dealing with.

When foundations or other nonprofit groups give money to support media coverage, the situation is a little different—like ArtsGreensboro, they’re supporting coverage they care about, not trying to build a brand or sell a product, which is what makes some critics suspicious. But in general, these funders are only occasionally or indirectly supporting coverage about themselves, their own initiatives, and their networks. And the more distance there is between the source of funds and the subject of coverage, the easier it is to navigate issues and address concerns about conflicts of interest, disclosures, editorial emphasis, etc. The biggest problem in Greensboro is the lack of distance—the relationship is almost as tight as it can be.

If the News & Record’s judgment is questionable here, the broader point is that being in the nonprofit funding world means facing these judgment calls all the time. Obviously, CJR believes journalism that’s supported this way can be done honorably, but for-profit newsrooms that are tempted to explore other funding models should have their eyes open to what the challenges of those models are.

Even more broadly, when considering a change to a funding model that raises new questions for your organization, it makes sense to weigh the risk against what might be gained. Advertising’s not what it used to be, and everybody’s looking for new sources of revenue. Some news organizations will make deals that they wouldn’t have made in the past, with a decent justification for doing so. But as long as you’re in a position to choose, you might not hurry to stand under someone else’s umbrella.

* Correction: This story originally misstated John Drescher’s first name. CJR regrets the error.

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Corey Hutchins is CJR's Rocky Mountain correspondent based in Colorado. A former alt-weekly reporter in the Palmetto State, he was twice named journalist of the year in the weekly division by the SC Press Association. Hutchins worked on the State Integrity Investigation at the Center for Public Integrity and he has contributed to Slate, The Nation, The Texas Observer, and others. Follow him on Twitter @coreyhutchins or email him at coreyhutchins@gmail.com.