Nonprofit Newspapers

  • Public-Policy Reform
  • 2016

The newspapers in Philadelphia, as in every city, have struggled mightily over the last decade to find a viable business formula in the era of Internet news. To save them from collapse, Philadelphian and prominent national philanthropist Gerry Lenfest some years ago purchased the Philadelphia Inquirer (America’s third-oldest newspaper) and the Philadelphia Daily News, plus the companion website Philly.com.

In 2016, Lenfest donated all three properties, along with a $20 million endowment, to a nonprofit entity. The notion is that the publications will continue to operate as for-profit businesses, adapting as necessary to balance their bottom lines, but that there will be no pressure on them to make money, and special projects can be funded with earnings from the endowment. So far, endowment grants have been applied to improving the use of technology by the papers. The one other major newspaper in the U.S. that operates as a for-profit under a nonprofit umbrella is the Tampa Bay Times, owned by the Poynter Institute.

In 2017, the nonprofit that owns the Philadelphia publications announced it had supplemented Lenfest’s original $20 million endowment with an additional $27 million raised from other donors. Lenfest then announced that if $40 million more in gifts could be raised, he would match that amount. That would leave the nonprofit trust with an endowment exceeding $100 million.

Given that declining circulation knocked the value of the Philadelphia newspapers down from $515 million in 2006 to under $50 million in less than a decade, it’s clear that even with these funds they’ll have to make many adjustments to their operations. But the executive director of their nonprofit trust says the philanthropic support will subsidize “a test lab for local news innovation.”