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Home > Publications > Quill > Financier Backs Project to Beef Up Investigative Reporting


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Thursday, January 24, 2008
Financier Backs Project to Beef Up Investigative Reporting

Suzanne Perry

Herbert M. Sandler, who has decided to spend part of his fortune — up to $30 million over the next three years — on a new nonprofit investigative-journalism venture, has been stewing for some time about what he considers the poor performance of the country’s newspapers and broadcasters.

Among his gripes: too much focus on celebrities such as Britney Spears, not enough on serious issues such as the war in Iraq or global warming; failure to uncover bad actors in a timely way (the savings-and-loan scandal of the 1980s and the problems with “subprime mortgages” today); cutbacks in newspaper reporting staffs; and the “corporatization” of news-media organizations.

“There are a series of trends that are not happy trends for people who care about a strong, informed electorate and a strong democracy,” he said in an interview. “It’s kind of a race to the bottom.”

Recruiting an editor

Sandler and his wife, Marion, co-founded Golden West Financial Corporation, a savings-and-loan holding company in Oakland, Calif., in 1963 and sold it to Wachovia Corporation last year for about $24 billion.

Sandler says the sale freed him up to devote time to something he’d been contemplating for 10 or 15 years — starting some kind of journalism project. The Sandlers have agreed to put up to $10 million a year from their family foundation, the Sandler Family Supporting Foundation in San Francisco, into ProPublica, a news organization that will conduct investigative reporting and provide articles free to other news outlets.

They recruited one of the country’s pre-eminent journalists, Paul E. Steiger, the former managing editor and editor-at-large until the end of the year of The Wall Street Journal, to head a newsroom in New York of 24 full-time reporters and editors, which started operations in January.

In an era when the news media have been battered by scandals involving fabricated stories, accusations that they failed to do their jobs in the run-up to the Iraq war, and constant criticism that they favor entertainment over substance, Sandler retains a deeply romantic view of the power of good journalism.

“Stories which have moral force, stories that are important to the sustainability of a democracy,” he says, “those are the stories I hope we will be doing.”

Growing interest

The Sandlers’ move reflects a growing concern within the philanthropic world about cutbacks in investigative reporting and other public-interest journalism as traditional newspapers shrink their staffs in an effort to remain economically competitive in the Internet era.

Charles Lewis, president of the Fund for Independence in Journalism in Washington, D.C., says the size of the Sandlers’ gift signaled that foundations are starting to recognize that the “journalism component” of democracy is in peril.

“Just as the crisis is very serious, the response is starting to appear,” he says.

Lewis, who created the Center for Public Integrity, another nonprofit investigative-journalism operation, in 1989, wrote an article for the September-October issue of the Columbia Journalism Review urging foundations to help strengthen existing nonprofit news operations and create new ones.

Even some journalism experts who remain skeptical about how much foundations can do to support journalism have praised ProPublica.

“No, foundations are not the salvation of newsrooms as we knew them,” Jeff Jarvis, a media consultant and associate journalism professor at City University of New York, wrote on his blog, BuzzMachine. “But this one could demonstrate that we could save — even expand — the scope of investigative journalism.”

Layoffs in newsrooms

Sandler, who will serve as ProPublica’s chairman, sees the venture as an opportunity to curb corporate and government corruption, malfeasance and incompetence.

“For whatever psychological reasons,” he says, “I cannot stand it when the powerful prey on those without power.”

He says the news media were late, for example, to uncover the “predatory lending” that has been going on in recent years — that is, lenders offering “subprime” mortgages to people with poor credit histories, many of whom have now defaulted.

“A very large percentage of them were sophisticated players in the mortgage market, targeting and going after poor and moderate-income people and in the process attempting to strip their equity, another story that still has not been done,” he says.

Sandler says he was moved to act partly by the continuing stream of layoffs of reporters at daily newspapers.

“You go around the country, it’s a disaster that’s taking place in the reduction of news staffs,” he says.

ProPublica’s application to the Internal Revenue Service to win tax-exempt status as a charity says that “profit-margin expectations and short-term stock-market concerns” are leading the public companies that control most news organizations to shirk investigative journalism. It cites a 2005 Arizona State University study showing that 37 percent of the 100 largest daily newspapers had no full-time investigative reporters, and a majority had two or fewer.

ProPublica will perform public-service journalism to “uncover unsavory practices in order to stimulate reform,” the application adds, and will meet the tax code’s test by providing instruction “on subjects useful to the public and beneficial to the community.”

The group says it will offer each of its stories exclusively, at no charge, to a traditional news organization for publication or broadcast for a period of time, then later publish those stories on its own Web site — which will also carry investigative reporting produced by others.

Steiger says he’s already had conversations with eight or 10 major print and broadcast outlets about using ProPublica reports.

“At least at this stage, the number and the range and quality of news organizations that have said they will be happy to look at our stuff is very, very encouraging,” he says.

Giving for the long haul

Sandler says his foundation made an initial commitment to keep ProPublica afloat for three years, but that it normally supports projects for long periods.

“Unless there’s some extraordinary change in circumstances, which we haven’t really encountered very frequently, we’re long-term funders,” he says.

Other foundations that are providing smaller sums of money to ProPublica are the Atlantic Philanthropies in New York ($25,000 to start, with the possibility of more later); the JEHT Foundation in New York ($25,000); and the John D. and Catherine T. MacArthur Foundation in Chicago ($250,000).

ProPublica says on its Web site that it will seek additional philanthropic money and eventually, once it builds its “brand,” from other sources, such as readers, viewers and users. Steiger says it will be a “blessing” not to have to worry about circulation figures, advertising revenue or economic hard times.

“At least for the first three years, I will have deep pockets for all of the funding I’ll need,” he says.

The organization’s board will have several foundation representatives as members, including Alberto Ibargüen, president of the John S. and James L. Knight Foundation in Miami; and Rebecca Rimel, president of the Pew Charitable Trusts in Philadelphia.

Both Sandlers are big donors to Democratic candidates and liberal causes, according to Federal Election Commission records.

For example, they show that Sandler donated about $2.5 million to the MoveOn.org Voter Fund, which ran political ads attacking Bush administration policies before the 2004 election. The Sandlers also provided several million dollars to start the Center for American Progress, a liberal think tank, in 2003.

But Sandler says ProPublica will be “totally nonpartisan and without any exceptions whatsoever.”

When asked if that would include reporting on one of ProPublica’s donors, he responds:

“I don’t give a damn. If you make exceptions, who are you, what are you all about? You can’t be trusted.

“If everybody doesn’t hate us, then we’re not doing a good job,” he adds. “That would be my test. We’re not here to make friends. We’re here to help sustain and strengthen a democracy.”

Reprinted with permission of The Chronicle of Philanthropy, (www.philanthropy.com). Complimentary subscriptions to The Chronicle are available to journalists. Please send a message to press@philanthropy.com for more details.

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