Can nonprofits save journalism? Philadelphia Inquirer tests new model.

Philly philanthropist H.F. 'Gerry' Lenfest has donated the city's main media company to a newly-created nonprofit in hopes of preserving independent journalism, as newspapers around the country struggle to adapt to the digital age. 

Rich Schultz/AP
H.F. 'Gerry' Lenfest, owner and Chairman of Philadelphia Media Network (PMN), announces that he will donate PMN, the holding company for the Philadelphia Inquirer, Daily News, and Philly.com, to a newly created nonprofit institute in hopes of creating a better business model, January 12 photo.

Philadelphia philanthropist H.F. "Gerry" Lenfest, owner of the city's three major news outlets, will donate his company to a newly-created nonprofit institute and give $20 million towards its endowment, he announced Tuesday, an experiment that will undoubtedly be closely watched by struggling news organizations across the United States.

The Philadelphia Media Network (PMN), which Mr. Lenfest bought in May 2014 for $88 million, is home to the Philadelphia Inquirer, the Philadelphia Daily News tabloid, and Philly.com, with a combined 8.4 million readers each month. The Inquirer, one of the oldest newspapers in the country, has received 20 Pulitzer Prizes, and the Daily News has won three.

"Of all the things I've done, this is the most important," Lenfest said. Lenfest, and octogenarian who has donated over a billion dollars to education and the arts with his wife, Marguerite, after a career in publishing and cable television. They have pledged to donate their remaining wealth, according to a Philly.com profile. 

"My goal is to ensure that the journalism traditionally provided by the printed newspapers is given a new life and prolonged, while new media formats for its distribution are being developed," he said in a statement issued ahead of a Tuesday news conference in the National Constitution Center. The restructuring is meant to allow PMN to pursue and improve "independent public service journalism and investigative reporting that positively impacts the community, while also creating innovative multimedia content."

Newspaper staff in Philadelphia and around the country are watching to see if the new arrangement can deliver. PMN, like publications across America, has had a turbulent decade of layoffs, consolidation, and uncertainty as publishers try to adapt their business models to a world of ready, and usually free, information online.

Amid a revolving door of for-profit owners, the Philly papers' parent company Interstate General Media went from a more than $145,000 profit in 2000 to a more than $5,000 deficit twelve years later. In 2015, 46 journalists at PMN were fired before the holidays. 

Finding a more sustainable, multi-media model will be a key focus of the new PMN, which will draw on and invest in journalism research and education to help other publications also committed to public-interest reporting. 

Lenfest asked the Philadelphia Foundation to create the Institute for New Media, which will operate the papers out of the Foundation's special-asset fund. PMN will remain self-governing and for-profit, but its special-asset status will allow philanthropists to donate money for specific purposes, such as investigative reporting: a relationship compared to endowing orchestra chairs, or university professorships. The Institute is tax-exempt, which will encourage donations. 

According to Philly.com, separate boards will govern PMN and the Institute, offering editorial independence, and the news company is not obligated to accept funds from all of the Institute's donors. The Institute's Board of Members include Lenfest, as well as eight leaders in journalism, from deans of journalism schools to a Pulitzer-winning reporter. Employees' labor union will remain in place.

The donation is "an outstanding development for our news organizations and for the evolution of print and digital journalism in the United States," PMN Publisher and CEO Terry Egger said ahead of the news conference, calling it "a long view about the funding and future of journalism."

No papers of the Inquirer's size were previously owned by trusts or nonprofits.

But the company stressed that its papers will still have to fight for economic viability, and experiment with new forms of engagement and delivery. 

"We don't want this to be a crutch," Mr. Egger said. "We want this to be an enhancement to the journalism we do."

This report includes material from the Associated Press.

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