Non-Profit Journalism in Canada

The Promises and Pitfalls of a Non-Profit Journalism Model in Canada

The future of news media, especially for local outlets, is in dire straits as large enterprises buy out community newspapers. Challenges for newspapers are mounting, and we all wonder who will pay for news and information in the future? Many institutions and philanthropic groups have concluded that journalism should be non-profit.

The storytellers in any society hold tremendous power. To call this a disruptive time for news organizations would be burying the lead in understatement. As newsrooms continue to deal with the digital-age fallout, it is crucial that new ways are found to fund journalistic endeavours, says Kelly Toughill, director of the University of King's College School of Journalism in Halifax. "I think it's the central dominant issue of our age," says Prof. Toughill, who teaches a course on emerging business models in journalism. "It's not just about finding new sources of funding; it's about finding new business models that translate into long term sustainability."

In the U.S., there has been a decades-long tradition of philanthropic giving to media ventures. Public interest journalism shows like Public Television’s Frontline often close with the names of major donors such as the John D. and Catherine T. MacArthur Foundation, the Ford Foundation, the Open Eye Institute, and the Pew Charitable Trust. These are the same organizations that sustain most of the non-profit news groups in the U.S. Pierre Omidyar, the founder of eBay Inc., is pouring multimillions into his independent not-for-profit startup, First Look Media. The sole shareholder of the media group that owns The Guardian is a trust – set up to ensure editorial independence "in perpetuity." Mother Jones is a non-profit funded by a foundation. In Canada, The Walrus is published by a charitable foundation. The traditional source of revenue for any major media organization is ad revenue, and in Canada, some government subsidies through programs like the Canada Magazine Fund and the Canada Television Fund.

The Real News Network, which is headquartered both in Washington, D.C. and Toronto, has the ambitious goal of setting up an alternative digital television news network. RNN received significant initial start-up funding from individuals, foundations, and other organizations. According to the current RNN business plan, the organization “does not accept advertising, government, or corporate funding . . . and will be sustainable on a long-term basis by viewer donations and earned revenue.” It remains to be seen if the RNN can be sustainable.

There are other independent media in Canada who are trying to problem-solve their way to sustainability. Both This Magazine and B.C.-based The Tyee have set up investigative funds in recent years. This is an interesting development and one that should be followed closely by media watchers. Like The Walrus, This has a foundation that oversees the work of the magazine, while The Tyee seeks “investors, advertisers, and funders for our long list of investigative projects just waiting for resources.” Both magazines accept advertising and both raise funds through subscriptions, events, and capital campaigns. Whether funds such as these can yield anything more than modest returns for investigative projects will likely require an ongoing dialogue on what we all value as a society.

The question of editorial independence looms large in discussions about philanthropically funding media. "I personally have real concerns about philanthropy as a long-term source of sustainable journalism," Prof. Toughill says. "I think there are some dangers in philanthropy around conflict of interest the way there are with any funding sources. But they're perhaps more acute if you put all of your trust in one or two donors."

Those who do this kind of journalism, or want to, will ask: What's the difference between mainstream media accepting advertising dollars from corporations and alternative media outlets accepting sponsorship cash from foundations or others?

Prof. Toughill points to a fundamental disconnect in the model. "Charitable organizations are set up to achieve very specific aims, whether the aims are to alleviate child poverty or to improve the quality of the air, or to improve the environment," she says. "And that's sort of fundamentally at odds with traditional journalism, which deliberately avoids trying to further specific aims. So, we have some interesting creative tension here. I think there's lots of promise. But I wouldn't bet the future of the information needs of my society on a philanthropic model."

You have to trust that good journalists will not allow the opinions of their funders (philanthropic or not) to bleed into their stories, but if dollars are tied to areas of coverage (environmental, health), will certain subjects receive more coverage than topics that are perhaps perceived as less sexy?

“The hedge funds or new investors come in to harvest, in business terms, a distressed industry. You'll see them sell the real estate; they'll lay off staff,” said University of Illinois Professor and Global Investigative Journalism Network co-founder Brant Houston. “A major paper gets thinner and thinner, and then it gets delivered on every other day or once or twice a week. The business plan is for this to disappear after what last profits can be reaped from it or taken.” However, “journalism is not in decline,” Houston adds. He sees hope in the non-profit newsroom model. There was a 17% growth in the number of new non-profit newsrooms in 2022.

In Canada, as in many countries, the government helps in a variety of ways, the most obvious being the CBC, funded by taxpayers. Some say government should do more for newspapers. Mr. Peter Klein, the Emmy-winning, long-time 60 Minutes producer who is now director of the school of journalism at the University of British Columbia, has an ambitious plan: To establish at UBC the Global Reporting Centre (GRC) which would produce in-depth journalism on complex international issues using a different kind of funding model – philanthropy. "I really feel if you take the profit motive out of global journalism you could have an exceptional global journalism," says Mr. Klein.

Mr. Klein says he is absolutely aware of the concerns of bias. "Which is why I think it's important for any non-profit journalism organization to have really diverse funding. What do we always say in journalism? Follow the money. That also applies to us," he says. "I think it's critical to have a really diverse kind of funding so you can walk away if you have to. And that's another reason we were trying to endow this. Once it's endowed, it's arm's length. You can't pull the money if you don't like the stories we do."

Other potential pitfalls include a tendency toward pack philanthropy, where funders lavish funds upon a few select news organizations while neglecting others; a preference for grants that fund reporting but do not support the day-to-day operations of news outlets; and the provision of one-off grants that do little to support the long-term viability of newsrooms. Additionally, some Canadian funders will be cautious about wading into journalism as a cause. There is some nervousness about getting involved in this field, not just in Canada but in all sorts of jurisdictions because funders are making a donation to an organization whose job it is to make people uncomfortable and challenge institutions. By comparison, funding a food bank or a new wing of a hospital is less fraught.

The Current State of Journalism in Canada Raises Concerns

Trust in Canadian media has reached a new low. A recent study from the Reuters Institute found just 42 per cent of Canadians surveyed said they trust “most news, most of the time.” It’s the latest in a long decline in confidence, which is even lower with people under the age of 35 — among whom less than a third said they trust the media. Canada still remains among the countries with relatively higher trust levels, but this position is not as reassuring as in previous years.

The crisis in Canadian media isn’t just a crisis of confidence. It’s intimately tied to decades of consolidation and the concentration of power. If there’s any one factor that has led to the decline in trust in media institutions, it’s the profit-making nature of the enterprise — from devastating disruptions and cuts caused by market shifts, to skewing effects of advertiser-dependent business models, to disproportionate editorial influence by the ultra-wealthy.

Many advocates are calling for the development of a common long-term vision of a vibrant, diverse, publicly funded, and dominantly non-profit media ecosystem. Media in Canada has undergone several waves of mergers and acquisitions, each creating the possibility of further concentrations of control. The biggest consolidation happened around 2000, with mergers worth more than $80 billion. Homegrown media titans of the late 90s — Canwest Global’s Asper family and Hollinger’s Conrad Black — eventually ran into financial trouble. Both empires were considered heavily centralizing forces at the time, and eventually became part of Postmedia, which was founded in 2010 and is owned by New Jersey hedge fund Chatham Capital.

Conrad Black started the National Post as a right wing competitor to the Liberal-leaning Globe and Mail, investing millions and sustaining annual deficits as part of a political vision of “uniting the right.” Unable to continue investing, Black sold to Winnipeg-based media mogul Israel Asper, whose CanWest Global was ballooning with acquisitions. Asper later ran into similar business issues and sold to Chatham.

Unlike his flamboyant right wing predecessors, Chatham CEO Anthony Melchiorre keeps a low profile — there are no photos of him on the Internet, and he doesn’t give interviews. Postmedia, which now owns over 130 news outlets in Canada, has executives who support the Republican Party in the U.S. (Melchiorre contributed to fellow private equity CEO Mitt Romney’s campaign, and another board member has ties to Trump). The owners’ politics have tilted the vast conglomerate’s journalism even further to the right, but their main interest is in extracting maximum cash from each of their outlets.

In a bizarre deal with TorStar in 2017, Postmedia swapped dozens of local papers with the Toronto conglomerate, almost all of which were immediately shut down. When the dust settled, Postmedia had cut 244 jobs and closed 24 newspapers. In 2020, they closed an additional 15 papers, cutting another 80 jobs. Postmedia’s cuts were a major part of the more than 250 local media outlets in Canada that have closed since 2008. Chatham has been diligent about creating “efficiencies” and sucking cash out of Postmedia.

In 2020, the New York Times reported that the Postmedia conglomerate reported losses of $40 million for two consecutive years and had spent nearly $127 million on debt payments. “During that time,” the Times reported, “it invested relatively little, about $5.4 million, to try to improve the business.” (Figures in USD).

None of the above has stopped Postmedia from scooping up millions in federal subsidies ostensibly aimed at preserving journalism. At the same time that its columnists were bemoaning the giveaways of the CERB, the company received $35 million in relief funds. Short of funding any journalism, much of those funds went directly onto a balance sheet in the nondescript offices of a hedge fund in New Jersey.

Private cable and telecom companies have also reached extreme levels of consolidation — a drastic change compared to the 1970s when there were dozens of regional cable companies. By 2013, four companies controlled nearly two-thirds of Canada’s television market: Rogers, Shaw, Bell, and Quebecor. While cable viewership is on the decline, telecommunications profits are as high as ever.

The slow-motion merger between Rogers and Shaw means power in both media and telecommunications will be even more concentrated. “Efficiencies,” otherwise known as job cuts, are bound to follow.

Cable companies are actually mandated by Canada’s Broadcasting Act to fund community production, including journalism. But the big four have found ways to pocket almost all of that money, with scarcely a word of protest from regulators. Of course, Canada still has the CBC — an arms-length public broadcaster with a mandate, at least on paper, to represent Canadian society and the political, economic, and cultural lives that constitute it. But that mandate is a threat to corporate interests and has been largely neutralized over time.

The CBC has long faced Conservative threats to defund the institution, and Liberals have taken little action to reverse the right wing tilt of the Harper years. During his time as prime minister, Stephen Harper cut the CBC’s budget continuously and stacked its board with Conservative loyalists. That’s the threat implicit in endless Conservative attacks that claim the public broadcaster is too left-wing.

Optimistic assessments note that the number of journalists has remained steady despite deep cuts to newsrooms. However, accounting for population growth tells a story of precipitous decline: while there were 415 journalists for every million Canadian residents in 2001, by 2016 there were only 334.

In 2022, journalism jobs are less stable, less unionized, and less civically oriented. In recent decades, the proportion of freelancers has more than tripled, while journalist unions have reported drastic drops in their membership. Unifor Local 2000, representing newspaper workers in B.C., saw its membership drop by more than 60 percent since 2010. Newsrooms that cover public interest beats like city hall or even provincial assemblies have also experienced deep cuts.

Less stable and increasingly precarious journalists are employed by powerful corporate structures that have never been more concentrated, and never been more ruthlessly devoted to extracting value from their employees. As a result, journalists are required to produce more with less, and have less freedom to follow their own instincts when it comes to fulfilling the public interest part of their role.

Owners and bosses aren’t the only ones getting more powerful. While journalist positions decline, the public relations industry has seen massive growth. Since the 1980s, the number of workers in public relations and marketing in Canada has tripled. For every journalist in Canada, there are more than 10 people working to influence public perception.

Public Interest Journalism is Cheap, but its Absence is Expensive

Solving the problem of too few journalists is cheap by government budget standards. For example, adding 10,000 working journalists with a public service mandate (to the current 13,000, many of whom have no such mandate) would cost about $700 million annually (assuming an average salary of $70,000). That’s about $17 per Canadian each year. Paid out proportional to income, that comes to pocket change for the majority, and the cost of a few meals out per year for the wealthy.

An influx of public interest journalists working in towns and cities across Canada would mean a seismic shift in the scrutiny faced by government officials, business owners, and other centers of power. It would also open countless opportunities for informed local civic engagement and debate.

There are a variety of ideas about how such a hypothetical sum would be allocated. One proposal would see every taxpayer receive a voucher to allocate to the non-profit media of their choice. Others would allocate resources based on objective criteria, or through federations of non-profit news outlets, or directly to journalists who meet standards evaluated by their peers. Or a more transparent version of the already-existing Qualified Journalism Organization program, which has requirements for non-profit status and democratic governance.

Status Quo Solutions

Justin Trudeau’s Liberals have undertaken a variety of measures aimed at curbing some of the most extreme civic degradation — and backstop existing media conglomerates and their shareholders. The Local Journalism Initiative (LJI), for example, provides money to outlets to create positions that perform civic journalism in underserved communities. While recipients include many non-profit and small community outlets, Postmedia has also benefited. In 2020, for example, the media giant announced it was hiring for 12 new positions through LJI funding.

Other measures from the federal government include a tax credit of $14,000 for news organizations for every journalist position. In 2020, Postmedia reported that it was receiving $8-10 million annually in journalism tax credits.

Ottawa has also incentivized subscribers to qualifying news outlets by providing a tax credit for the cost of subscriptions. About 91 outlets currently enjoy this status and 33 of them are owned by Postmedia. Far from focusing on assisting local and community media, over 80 per cent of qualifying news organizations were part of a parent company that owns two or more publications.

The Case of The Narwal

While the non-profit news sector has flourished south of the border, there are few examples of thriving non-profit news outlets in Canada — in part due to differences in charitable law. In the U.S., funding journalism has long been viewed as a charitable activity, which has enabled large-scale philanthropic support for non-profit news.

Created by Carol Linnitt and Emma Gilchrist in 2018, The Narwhal is a leader in non-profit journalism in Canada and is supported by more than 5,500 members – individuals and foundations that care about independent journalism, democracy, science, and the environment. In March 2021, The Narwhal became Canada’s first English-language registered journalism organization, which means all of its members and donors receive donation tax receipts. The Narwhal is also a member of the Institute for Nonprofit News, recognizing its adherence to strict standards of editorial independence and financial transparency. The Narwhal is a founding member of Press Forward, Canada’s association for independent media, and a partner organization of Covering Climate Now, a global journalism project to bring more coverage to climate issues.

The Narwhal’s reporting is frequently cited in The Globe and Mail, Toronto Star, CBC, and others. It has collaborated with the Toronto Star, VICE World News, Chatelaine, The Weather Network, and The Globe and Mail, while its Manitoba reporter is producing stories as part of an innovative partnership with the Winnipeg Free Press.

Today, the Narwhal has grown to 23 staff, has bureaus across the country, has won dozens of national journalism awards, and is taking a stand for press freedom in the courts.

The Role of Social Media

Meta and Google’s recent moves to block news in Canada has undermined non-profit news outlets – and democracy. Narwhal’s journalism never would have been possible without the audiences it reached via social media platforms. In 2019, Facebook drove 54 per cent of the Narwhal’s total traffic. By 2021, that number had been cut in half. And so far in 2023, Facebook has accounted for just six per cent of readers to its site.

Traffic from Facebook has shrunk ever smaller as the platform has changed its algorithm time and time again to serve users less news. And now, Meta has completely blocked news on Facebook and Instagram in Canada due to the standoff between tech platforms and the federal government over the Online News Act — which compels tech companies to negotiate financial compensation with news organizations for news shared on their platforms. And Google vows it’ll be the next to block news.

These moves by big tech companies to block news on their platforms undermine democracy and represent an existential threat to online news outlets that have relied on word of mouth via social media to discover their work. It also undermines the possibility for new, innovative online news outlets to find audiences.

A New Journalism Landscape in Canada 

In its 2019 budget, Canada’s federal government announced a plan to allow eligible news organizations to earn qualified donee status, which enables them to issue tax receipts and receive gifts from Canadian registered charities. In 2022, Canadian Heritage announced the rollout of additional support to strengthen local and diverse journalism. The Local Journalism Initiative (LJI) supports the creation of original civic journalism that covers the diverse needs of underserved communities across Canada. Funding is available to eligible Canadian media organizations to hire journalists or pay freelance journalists to produce civic journalism for underserved communities. The content produced is made available to media organizations through a Creative Commons license so that Canadians can be better informed. To protect the independence of the press, seven not-for-profit organizations representing different segments of the news industry administer the Initiative. Private non-community broadcasters and the CBC/Radio-Canada are not eligible.

Media and journalism charities across Canada are now supporting and advancing journalism and the media landscape in local communities, nationally, and around the world. These Canadian charities are funding investigative journalism, promoting media literacy, publishing journals, newspapers, and print magazines that cover a specific or a wide range of issues. Some charities are supporting local radio, helping documentarians tell important stories and uncover critical issues, advance and promote filmmaking among youth and adults, and support cultural media programs. Other charities are working to defend, protect, and advance the rights of journalists in Canada and around the world.

Conclusion 

No one in a news startup feels like they’re repeating history — indeed, that’s usually the opposite of their goal. But by adopting a for-profit, investor-driven model, the newest generation of media outlets in Canada run the risk of repeating the same history that led to Postmedia. As the founders of Canada’s new media retire or move on to other projects, their ventures are often either shuttered or sold.

When that happens, audiences, reputations, and relationships risk becoming assets to be monetized. Thousands of hours of work done by well-meaning (and often underpaid) journalists and editors will, at that point, be bent toward other ends. While democratic ownership by readers or community members doesn’t guarantee longevity or integrity, it does anchor media institutions with their audience, while creating a pathway for revitalization when leadership hiccups occur.

In democratic, non-profit outlets, the community of readers and viewers, together with reporters and editors, at least have an opportunity to veto big changes in ownership, and more ability to gather community support, build on the efforts of the past, and correct injustices.

In the current media ecosystem, non-profit media — and demands to expand it — is on the margins. There has been some initial success amending Bill C-11, the Online Streaming Act, but the path to meaningful results requires reclaiming the corporate-captured Canadian Radio-Television Commission, restoring a public interest tilt to the CBC, and fighting out lobbying battles with cable companies. While in some ways far-reaching, current government reforms fall well short of transformative, and remain compatible with corporate domination of the news.

A transformative shift in how our society thinks about and funds journalism is a necessary step in building a more just future. This transformation requires action from a broad base of media activists and journalists, support from multiple unions and civil society organizations, non-profits, and the involvement of political parties at multiple levels of government. The ideological underpinnings of such a coalition scarcely exist. There are still major questions that remain to be answered:

• How much funding do we need for truly public interest journalism, and who should pay?

• What is the best role for the CBC, and what is our strategy for getting there?

• How can we ensure a media ecosystem is publicly funded but meaningfully independent of government, corporate, or wealthy donor influence?

Even if we had common answers to those questions, mobilizing sufficient support could take years, or decades.

However, a starter kit version of that same coalition — hundreds of supporters, a few MPs, a few dozen media organizations, a few key labour movement allies, and a campaigning organization — may be in view.

In a volatile and dangerous moment for the media in Canada, relatively small efforts to build alliances around a common vision of journalism in the public interest could have outsized positive results. Seizing the opportunities before us wouldn’t just benefit journalists and media outlets, but the society they serve.

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