Editor’s note: This piece originally appeared on KnightBlog, the blog of the John S. and James L. Knight Foundation, on June 15, 2016. 
By Jon Sotsky | Director for strategy and assessment, Knight Foundation
When it comes to local journalism, stories describing the challenges the industry faces far outpace ones covering promising developments. This makes recent events in Philadelphia’s news ecosystem all the more intriguing, because while no one seems to have the answer for the best way forward for journalism, we know the status quo is insufficient and unsustainable.
Enter Gerry Lenfest, owner of the Philadelphia Media Network (The Philadelphia Inquirer, Daily NewsPhilly.com), with a new experiment. Lenfest announced in January the creation of a new nonprofit/for-profit hybrid structure called the Institute for Journalism in New Media. The institute intends to sustain and grow journalism in Philadelphia, and elsewhere, by supporting public-interest journalism, digital experimentation and research. Lenfest donated Philadelphia Media Network (PMN) to the institute, which is housed at the Philadelphia Foundation, and seeded it with $20 million with the goal of ultimately raising $100 million to fund its efforts.
At Knight Foundation, we’ve supported experimentation with new approaches for producing and funding local journalism, including efforts in Philadelphia where the Knight brothers once owned The Philadelphia Inquirer. But we know that experiments only matter if you document the hypothesis and monScreen_Shot_2016-06-14_at_8.09.55_PM.png.221x0_q85_cropitor the results. It’s why we’ve chronicled the development of new journalism models in a prior series of reports on nonprofit news organizations, and why this time we hired Tim Griggs, former publisher and COO of The Texas Tribune, to document the developments and emerging lessons in Philly. The resulting report “Could It Be Sunny in Philadelphia?” offers a keen perspective of what’s occurred, what’s next and key considerations going forward.
The new Philadelphia model is not a panacea for the disruption that has media in turmoil. As Griggs quotes news analyst Ken Doctor, “Sprinkling some nonprofit pixie dust won’t save the newspaper industry.” In fact, no single model will likely change the fortunes of local and regional news organizations across the country seeking solutions. But the Philadelphia approach along with other experimental initiatives offer the power to surface lessons and elements for news organizations to harness as they chart new paths for performing and sustaining their work.
With that in mind, here are some of the important insights from the Philadelphia experiment:

  • Stability versus solvency: The arrangement does not alter the fundamental economic challenges Philadelphia Media Network faces with declining advertising revenues and needing strategies for producing, disseminating and monetizing digital content. But it creates stability for an organization that underwent constant changes over the last decade, including six separate owners.  This will allow it to more intentionally focus strategy and the institute, explicitly barred from funding operating losses, will fund PMN’s experimentation with digital approaches. It will be interesting to see if stability and small investments in new capacities can have an outsized affect.
  • Nonprofit ownership models: IRS regulations prevent a for-profit media company from directly converting to nonprofit ownership, so the Philadelphia Media Network structure is more sophisticated. The most notable prior example occurred when Nelson Poynter created an education nonprofit, now the Poynter Institute, and, in his will, gave it controlling ownership of the newspaper company that would eventually become Times Publishing Company. Lenfest’s arrangement could also benefit Philadelphia Foundation, which is excited to play an important role in advancing local journalism and raise its profile. It will be worth exploring the potential for a symbiotic relationship with community foundations in other markets.
  • Journalistic transparency: The institute and Philadelphia Media Network are managed by separate boards with separate missions and marching orders. Lenfest chose the structure to keep business and editorial decisions out of the institute’s hands and firmly under the control of PMN. Nevertheless, the institute and PMN will need to be extremely transparent about their relationship and decisions they make to alleviate concerns about the independence of reporting at the media company, and to show they are adhering to strict federal rules precluding nonprofit engagement with political campaigns and supporting candidates. This will play out at a time when people are increasingly examining the motivations of media funders and how we can best preserve our First Amendment rights as the digital age brings new challenges.
  • An ecosystem mentality: There is still a lot of uncertainty about how the institute will balance supporting projects at Philadelphia Media Network with funding other journalism initiatives in Philadelphia or beyond. Nonetheless, other media organizations in Philadelphia (Billy Penn, WHYYNotebook) are hopeful, but skeptical, that the institute will attract more funding for journalism in the city and provide a platform for greater collaboration across the media ecosystem. Knight’s work supporting ecosystem-based approaches, including efforts led by the Geraldine R. Dodge Foundation in neighboring New Jersey, have highlighted the importance and power of collaboration between news providers.

A wealthy media owner donating the company and a small fortune to endow strong local journalism isn’t exactly a replicable model. But as Griggs writes, “reinvention is a pressing need at most metro newspapers across the country.” Embracing the risk of a new model is certainly worth what it can teach us. Many aspects of this approach, whatever the final outcome, will certainly have broader relevance across the media industry and philanthropy, including how nonprofits and community foundations can advance strong local journalism. We look forward to continuing to share the lessons we learn from the work in Philadelphia—and throughout the sector.
Jon Sotsky is director for strategy and assessment at Knight Foundation and sits on the Board of Directors for Media Impact Funders. Email him at sotsky@knightfoundation.org and follow him on Twitter @jonsotsky.
How is your foundation communicating about pressing issues of our time? Let us know. Email Media Impact Funders’ Communications Director Nina Sachdev Hoffmann at nina@mediafunders.org.