Now here’s part one of what Leonard Downie Jr. and Michael Schudson got wrong in “The Reconstruction of American Journalism,” their report on the status and future of journalism.

• Government and philanthropic funding can help support independent news reporting.

In their recommendations for the future of the industry, the report’s authors write:

The Internal Revenue Service or Congress should clearly and explicitly
authorize any independent news organization substantially devoted to
reporting on public affairs to be created as or converted into a
nonprofit entity or a Low-profit Limited Liability Corporation serving
the public interest… page 77

Philanthropists, foundations, and community foundations should
substantially increase their support for news organizations that have
demonstrated a substantial commitment to public affairs and
accountability reporting. page 81

These recommendations have rightfully caused some observers to express concern about how they could impact impartial coverage of issues. A reporter might be pressured not to write critically or negatively about the government body or organization that provides the funding for his or her salary.

However, while that possibility is important to consider, it’s not the reason why government funding or non-profit status can’t play a big role in supporting independent reporting.

The real problem is that there’s not enough nonprofit funding available.

A New York Times Op-Ed contributor estimated that a $5 billion endowment could finance a $200 million newsroom for the Times, which would not account for any other costs, including printing or delivering newspapers. page 20

Of course, the Times is one of the country’s largest newspapers. But it can still cost tens of millions of dollars to operate even a small- to mid-size news organization that produces a print edition. The business expenses for a small online operation can be $1 million or more.

There are few philanthropies or government agencies that offer that sort of cash to nonprofits today. Many grants given to nonprofits are for less than $10,000, and several agencies often vie for that money. (Bloggers note: For full disclosure, I feel it’s important to note here that my fiance is a development director for a nonprofit that provides services to victims of sexual assault and domestic violence.)

It’s a vastly different economic situation than that of the newspaper industry, in which executives have become comfortable making millions from double-digit profit margins. In comparison, consider that when California Gov. Arnold Schwarzenegger vetoed a single state domestic violence program this year, at least six shelters closed and dozens cut back on services.

The amount of funding that was lost through the governor’s veto?

$20.4 million. That’s only about half of what it can cost to run a single small- to mid-size newspaper, but it was funding that many California nonprofits needed to say viable.

For newspapers, the numbers just don’t add up.

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