Watching the government, with a government loan

December 3, 2020

In the canon of modern American journalism, thou shalt not take money from the government. Journalists can’t hold government accountable if they’re on the government dime, the reasoning goes, and they won’t have credibility with the public.

That applies to our editorial content. When it comes to the business of journalism, however, the rules are different. Postal rates subsidize newspapers and magazines. And nonprofit newsrooms like the Center for Public Integrity, which I lead, benefit from a government-designated tax status.

This week, new data was released detailing the millions of small businesses, including news organizations, that received more than $700 billion in loans under the Paycheck Protection Program and the Economic Injury Disaster Program to help them weather the coronavirus pandemic. Our organization is among twelve news organizations that successfully fought in court for the release of the most complete accounting of the loans to date, including the names of all the loan recipients and other missing pieces of a program plagued by errors, omissions, and problems. In this case, government money didn’t stop journalists from being formidable government watchdogs.

Public Integrity sits in the unusual position of both receiving a loan and suing to get information about other recipients. In April, we received a $658,000 PPP loan; for a little perspective, the Seattle Times received nearly $10 million, and Seven Days, a free weekly in Vermont, received nearly $450,000. Nearly 2,800 newspaper companies received PPP loans. While that’s a significant number of journalistic organizations, they represent only a sliver of the 5.2 million businesses that received loans. With the exception of some large regional dailies, most news outfits received less than $150,000. 

Though some in our business dubbed the coronavirus pandemic an extinction-level event for journalism that called for any means of rescue possible, Public Integrity’s path to taking the loan was mined with staff questions about ethics. In April, when I announced that I had applied for the loan, I was reminded that our donation policy was clear: “We don’t take money from governments.” It’s a badge of honor we share with every newsroom where I’ve worked. 

Before our application was approved, Axios returned a $4.8 million loan, saying the loan program had become divisive. Loose guidelines and loopholes by the Small Business Administration, which runs the loan program, abetted the rush to the government buffet. Later, some of the first companies to receive loans were among the first to return the money—from Auto Nation, the country’s largest auto dealership chain, which returned a $77 million loan, to restaurant chain Ruth’s Chris Steakhouse, which returned a $20 million loan. 

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The questions from my colleagues piled up. Our identity has been cultivated over more than thirty years and is expressed in a powerful word in our name: integrity. How will taking the loan affect our credibility? What guarantees did we have that the government wouldn’t suspend the loan if we reported something officials didn’t like? 

As a news organization with access to both capital and credit, we’re privileged, and we’ve tried to use that privilege to provide a megaphone for those who aren’t.

The choice wasn’t between taking the loan or opting out. We needed the financial support. Rather, the choice was how to maintain a strong commitment to our values as a news organization. Not everyone agreed with the decision to take the loan. Nevertheless, we moved forward with two commitments: transparency with our readers, and accountability to ourselves. 

Then we put it in writing. We told our readers why we were taking a government loan in exception to our long-standing policy. We included a disclaimer in our coverage of federal stimulus aid. And we posted the following statement on our website:

“The PPP loan does not compromise our mission or limit our journalism. To the contrary, by allowing us to maintain staff it helps us continue our essential work of holding the government and other powerful institutions accountable.”

The court fight for the loan data is the fruit of our commitment to ourselves and our readers. The information reveals a loan program resting on pillars of power and privilege. The Washington Post, also part of the Freedom of Information lawsuit, wrote that more than half of the money went to 5 percent of the loan recipients. A government oversight expert told the Post the loan “benefited the well-lawyered and well-banked at the expense of the small businesses it was supposed to benefit.”

Women- and minority-owned businesses, which historically have had less access to capital and credit, were less likely to receive support. In truth, as a news organization with access to both capital and credit, we’re privileged, and we’ve tried to use that privilege to provide a megaphone for those who aren’t. 

In our podcast The Heist, we reported about Ana and Luis Rivera, small-business owners in Southern California whom the PPP loan was supposed to help. The couple had launched their heating and air-conditioning business with their federal income tax refund. When business dried up because of the pandemic, they applied for a bank loan. And then they waited and waited some more. They finally received a $7,000 PPP loan through a community development financial institution, an alternative to banks. Ironically, we may have never told their story without the government loan that has sustained us yet eluded small-business owners like the Riveras for so long.

NEW AT CJR: What has journalism learned from the pandemic?

Susan Smith Richardson is the CEO of the Center for Public Integrity.