Why philanthrophy won’t fund online news

Sad, but true. From Reflections of a Newsosaur.

Rick Edmonds, the estimable media economics expert at the Poynter Institute, calculated that American newspapers are spending $4.4 billion today on news-gathering, or about 29% less than the $6.2 billion that funded newsrooms as recently as 2006. That’s a drop of $1.8 billion.

If you wanted to sustain the current level of newspaper coverage by replacing for-profit funding with non-profit dollars, the typical approach would be to raise an endowment that would be invested conservatively to produce an annual return of 5%. The investment income would be distributed each year to provide the operating budgets for non-profit news organizations.

The endowment necessary to provide $4.4 billion in annual newsroom funding would be $88 billion. This happens to be 29% of the entire $307.7 billion contributed to charity in 2008, according to data published by the Giving USA Foundation, the non-profit arm of an organization of professional fund-raisers.

Given the downturn in the economy since 2008, it is a safe bet that charitable donations dropped in 2009 and probably will be less than $307 billion in this year, too.