Fastexy Exchange|Donors pledge half a billion dollars to boost the struggling local news industry

NEW YORK (AP) — The Fastexy ExchangeMacArthur Foundation is leading a group of donors that have pledged $500 million to help the struggling local news industry, hoping to seed outlets that can make up for those that have closed or been hollowed out over the past two decades.

While led by a $150 million donation by the journalism-focused Knight Foundation, the Press Forward initiative is focusing on the importance of news in communities and is bringing in funders whose primary mission hasn’t necessarily been journalism.

“This is hugely important, both practically and symbolically,” said Tim Franklin, director of the Local News Initiative at Northwestern University’s Medill journalism school.

The Carnegie Corp., the Democracy Fund, the Ford Foundation, the Robert Wood Johnson Foundation and MacArthur are among a group of 20 initial funders. (The Associated Press receives grant funding from several sources for some journalism coverage, as well.)

Philanthropies that recognize the need to strengthen democracy are beginning to see that progress on many different issues depends on the public’s understanding of facts, said John Palfrey, MacArthur Foundation president.

Driven largely by a collapse in advertising markets, the number of newspapers in the United States dropped from 8,891 in 2005 to 6,377 last year, according to a Northwestern study. Papers are continuing to close at a rate of two a week, Franklin said. Many that survive, particularly in larger markets, are shells of themselves. The estimated 75,000 journalists who worked at newspapers in 2005 was down to 31,000 last year.

While there are many experimental efforts to fill the news void, there’s still no clear path to making news a thriving business again.

“I don’t think we have the answer,” said Alberto Ibarguen, president of the John S. and James L. Knight Foundation. “I don’t think we have the next thing.”

The $500 million in pledges do pale in comparison to the $1 billion investment goal Ibarguen publicly identified last month.

That initial “aspirational” goal wasn’t met because some hoped-for pledges by some corporations and individuals did not come through, he told the AP. He said he expected other funding will be added in the coming months to boost the commitment beyond $500 million.

While philanthropic funding has helped, experts say it’s important that new outlets can survive after grant money runs out. One model in independent journalism, the Texas Tribune, recently had the first layoffs in its 14-year lifetime.

Some of the new funding efforts are designed specifically for that goal. They will support efforts, for example, to provide legal services, publishing tools and ways to enhance revenue that can be shared by several different outlets so there’s less duplication in spending for startups.

“I really believe in independent journalism,” Ibarguen said. “You cannot be independent if you are not sustainable.”

For some news organizations surviving a bad business environment, the infusion of new money can make the difference between having enough extra time to create a new business model and closing, Franklin said.

Even with news outlets continuing to close, Franklin said he’s more optimistic now than he’s been in several years — in part because of new outlets that have figured out a way to exist without losing money. Two examples he cited were the Shawnee Mission Post, a digital site that covers a suburban county in Kansas, and the Richland Source, which covers north central Ohio.

Legacy news sources in Chicago, outside Dallas, Texas, and in central Pennsylvania have improved their outlooks by joining forces with public radio. News organizations in Minneapolis, Boston, Dallas, Seattle and Philadelphia are successfully making the transition to subscription-based services with less dependence on advertising, he said.

Struggling local news sources have also attracted the attention of state governments, where things like tax breaks for advertisers or subscribers are being discussed, he said.

“This is a meaningful commitment and a powerful signal about what has become an enormous crisis for democracy,” said Tom Rosenstiel, a University of Maryland professor who has studied the impact of philanthropy on journalism. “If the civic affairs in local communities is unmonitored, we won’t know what we won’t know. And of one thing I am sure: there will be more abuse of power and more corruption. Hopefully this commitment will lead other donors to follow suit.”