BOB GARFIELD:  On July 30^th, the Washington Post announced a half-million-dollar grant from the Ford Foundation to expand coverage that would be used for, quote, “special projects related to politics, money, and government” This is the second Ford Foundation grant awarded to a newspaper this year, with a half million bucks going to the L.A. Times in May. Nonprofit giving to the ailing for-profit newspaper industry seems like it might just be - a present and future business model for monetizing the newspaper industry.      

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But when a nonprofit starts subsidizing the operations of a for-profit newspaper, some questions come up. Jonathan Barzilay of the Ford Foundation joins us now to address them. Jonathan, welcome to On the Media.

JONATHAN BARZILAY:  Thanks Bob, great to be here.

BOB GARFIELD:  When a newspaper accepts outside funding, let’s say, not from an advertiser or a subscriber is there a surrender of editorial independence?

JONATHAN BARZILAY:  The newspapers have complete editorial independence over what they cover, and you raise the correct precedent, I think, which is that for over a hundred years American newsrooms have been supported by advertisers, and the leadership of those newsrooms have managed to balance independent editorial newsgathering against the commercial support that they get from advertisers. We have confidence that the leadership of the L.A. Times and the Washington Post can manage any balancing that’s required here.

BOB GARFIELD: Isn’t the earmark itself, almost by definition, a kind of dictation of coverage?

JONATHAN BARZILAY:  Our interest is in supporting principled journalistic coverage of complex social issues. How that is done is entirely up to the newsrooms. It’s true that if a newsroom had come to us and said, we’d like support for a reporter to cover interplanetary exploration, that’s not something we would entertain because it’s not an area in which our foundation works.

But the areas in which we are supporting coverage here were determined by the newspapers themselves. They came to us and said, this is what we’d like to do, we do not have the resources to cover these areas, and we were receptive to that.

BOB GARFIELD:  The Washington Post and the L.A. Times both are in financial extremis, and had been for years and, as a consequence, have been cutting and slashing away.

Now, the Post, the newspaper is a subsidiary of the Washington Post Company which has other interests. And when they cut from the newspaper, it gets moved to the bigger corporation. So if they cut a half a million dollars out of their budget in 2013, have you not just written a [LAUGHS] 500-thousand-dollar check to the Washington Post Company?

JONATHAN BARZILAY:  We certainly can’t draw a line and say that we could only consider supporting a standalone company. Many journalistic enterprises are part of larger corporations. The fact is those newsrooms also remain under tremendous pressure. Our grants, they’re specifically designated for hiring certain reporters to cover certain beats. The beats are determined by the newspaper and the coverage is determined by the newspaper. But it’s not the case that this is the same money that gets moved around.

BOB GARFIELD:  The Ford Foundation is a tax-exempt organization, which means that one step removed, there’s a Federal subsidy to the Washington Post that is part and parcel of this 500,000-dollar grant. Are you concerned at all, or should I be concerned, that this is an indirect taxpayer support for a for-profit enterprise?

JONATHAN BARZILAY:  We’re not the first foundation to make a grant to a for-profit newsgathering operation. So there’s precedent for it and, indeed, the IRS rules contemplate grants to for-profit enterprises. And I’d like to point out the lion’s share of the money that we grant in this area continues to go to public media. We support New York Public Radio, Southern California Public Radio, WGBH, WNET - NPR.

And we look at these two grants to the L.A. Times and the Washington Post, as experimental grants as part of a balanced portfolio that is interested in sustaining the vital role of serious journalism in our democracy.

BOB GARFIELD:  Does this mean that public radio is suddenly in competition, not only with other public media but with the entire for-profit [LAUGHS] journalism world for the funding from foundations like yours?

JONATHAN BARZILAY:  I think it’s fair to say that the future is a model of hybrids, right? ProPublica, which is a not-for-profit newsroom, staffed largely by people who previously worked at big city dailies and investigative newsrooms across the country, has been awarded two Pulitzer Prizes and numerous other accolades and its journalism is having an impact all over the country.

And it may be the case that in the future public media will feel a little different than it does today, and private media will feel a little different than it does today.

Our interest at the Ford Foundation is in the broader issue. If we don’t support this, will this coverage vanish? It has vanished in certain cities, it has vanished in certain markets, and we think it’s vital to continue investing in the production of serious newsgathering. To wake up ten years hence without serious newsgathering in this country would be an immeasurable loss.

BOB GARFIELD:  Jonathan, thank you very much.

JONATHAN BARZILAY:  Thanks, Bob.

BOB GARFIELD:  Jonathan Barzilay is director of the Freedom of Expression Unit at the Ford Foundation.

Public radio has been accepting nonprofit grants for decades, and NPR’s Senior Vice President for News Margaret Low Smith says that there should be no worries about any editorial impropriety resulting from those grants because it’s not the foundations coming to public radio with an editorial agenda, it’s the other way around.

MARGARET LOW SMITH:  So, for example, if you have a foundation interested in investigations or science coverage, we will go to them for certain kinds of grants, in general. It’s not like a funder comes to us and says, hey, we want you to do X, Y and Z, and we say yes. That simply can’t happen. It has to be the reverse order.

BOB GARFIELD:  So the Gates Foundation might underwrite coverage for global health issues or education, and the Robert Wood Johnson Foundation, a longtime underwriter, subsidizes coverage on health care and so forth.

MARGARET LOW SMITH:  Exactly.

BOB GARFIELD:  Now, the obvious risk would be for some funder to say, look here, I don’t like your coverage of this, that or the other thing. This needs to addressed:  Fix it, do this, do that.

MARGARET LOW SMITH:  God forbid there were to happen, it wouldn’t be possible for them to be an NPR underwriter. There’s sort of a, in effect, an explicit agreement, which is that we go to underwriters with areas of coverage that we define as vitally important for us to report on. They may or may not – be interested but if they say they’re interested, they’re supporting our editorial agenda.

BOB GARFIELD:  Your editorial calendar and your resources are determined in part by what pots of money you have available to you. Is there not some surrender of editorial independence because of the, the budget situation?

MARGARET LOW SMITH:  I think you’re making the assumption that we cover what people are willing to pay for, rather than we say, here’s what we want to cover, this is a priority, whether we get funding or not; if you can pay for it, it will make it possible. I am not even sure I cede the notion or the - or the idea that it’s earmarked and, therefore, allows us to do more of one thing and less of another.

BOB GARFIELD:  Is there anything about the connection between foundations and for-profit papers that, that raises a red flag for you?

MARGARET LOW SMITH:  What strikes me almost immediately, Bob, is that people are in some ways emulating what public media has done for a long time. You know, obviously, I think there are questions to be answered in terms of how it’s gonna work and whether it will be successful.

BOB GARFIELD:  There, there was a time when NPR was sort of the heroic alternative to the dominant for-profit media out there that were just money engines. Did you ever imagine that you’d be having this conversation?

MARGARET LOW SMITH:  No, and it’s actually – I think it’s painful for all of us to watch the bottom fall out of a really important industry. And I don’t think I saw it coming and, quite honestly, I don’t think my journalist counterparts at newspapers saw it coming either.

BOB GARFIELD:  Margaret, one last question:  Now, not just editorially but financially, you are in competition [LAUGHS] with the L.A. Times and the Washington Post, and perhaps others, looking for foundation funding. Are you gonna target these news organizations and destroy them?

MARGARET LOW SMITH:  [LAUGHS] At news organizations, you know, you’re always in a kind of competition to be the very best, to have the most compelling and important coverage. That being said, I think to sort of see it as something that’s gonna eat our lunch is not the right way to look at it. I think it’s a real statement about the importance of the business that we’re in, and that if the commercial market isn’t gonna support journalism, that people are gonna have to seek other ways to make sure that this work continues to get done.

BOB GARFIELD:  Margaret, thank you very much.

MARGARET LOW SMITH:  You’re welcome, Bob. It was a pleasure talking to you.

BOB GARFIELD:  Margaret Low Smith is senior vice president for news at NPR.