When the Huffington Post Investigative Fund was announced last March, Arianna Huffington modestly described its mission as "to save investigative journalism." Ten months later, it's safe to say the fund's chief accomplishment is providing free scoops to the Huffington Post.
(And burnishing Huffington's reputation and monstrous ego, but that goes without saying.)
The fund is supposed to act as a sort of disembodied newspaper i-team, with experienced reporters and editors bankrolled by tax-exempt donations from the Atlantic Philanthropies and the Schumann Center for Media and Democracy doing the time-consuming and expensive investigative work that strapped newspapers are increasingly abandoning. It is axiomatic that investigative reporting is the most precious casualty of the demise of print journalism, and the fund has been heralded as one of many "new models" of funding real journalism in an increasingly blog-eat-blog world. Its work-product—"Some Nonprofit Student Lenders Accused of Misconduct" is one recent headline—is freely available, via a Creative Commons license, to any and all content providers who want to republish it.
That last bit is crucially important: Arianna and others were at pains to point out when it was announced that, despite the shared name, the fund will operate at arm's length from the Huffington Post. HuffPo-the-commercial-web-site won't get a heads up on the stories that HuffPo-the-journalism-saving-nonprofit is working on, and the Huffington Post has precisely the same access to the fund's stories as any other web site or newspaper. The reason for the distinction is that in order to qualify for tax-exempt status, the fund has to demonstrate that it is benefiting something other than a for-profit entity of the same name. Commercial operations can't simply fob off expensive parts of their operations—newsgathering costs, for instance—into nonprofits unless those nonprofits have a wider public benefit.
So who has benefited from the Huffington Post Investigative Fund so far? The Huffington Post! When the Knight Foundation announced a $200,000 grant to the fund last month, a joint press release trumpeted the outfit's impact by claiming that "in addition to The Huffington Post, more than 40 other outlets have republished the Fund's pieces." Who were those outlets? The Seattle Times picked up one of the fund's stories, but it was by former Seattle Times reporter David Heath, and contained an editor's note saying that Heath "began reporting this story as a Seattle Times staff writer." As for the rest, it's an assemblage of blogs and poorly trafficked aggregator sites—Commondreams.org and AlterNet have made frequent use of the fund's stories, Current.com picked up one, and so did the Michigan Messenger. Those are indeed "outlets," but we doubt they're what Arianna had in mind when she set out to save investigative journalism with a nonprofit named after her. Indeed, we think what she had in mind is precisely what has happened: The Huffington Post is the only outlet of any scale or reach that has made consistent use of the Huffington Post Investigative Fund's free content.
Nick Penniman, the fund's executive director, says he is trying very hard to convince more sizable outlets to take advantage of its work—with substantial talent like former Washington Post investigative editor Larry Roberts and Polk Award-winning reporter Fred Schulte on board, it has produced stories worth picking up—and is in talks with two "very large broadcast news organizations" to co-produce stories. But it doesn't matter, he says, that aside from the Huffington Post, virtually no outlet of significance is using his content. "The size of their platform isn't relevant," he says. "AlterNet and Commondreams.org have very engaged audiences. I'm trying to create a new model that keeps investigative journalism alive."
The fund's application for tax-exempt status is still pending at the IRS, and one tax expert we spoke to said it might run into trouble if it can't prove that it offers a benefit to anyone aside from the commercial operation with which it shares a name. "If a putative charity is organized and conducts its business in such a way that it unduly benefits a commercial operation, that's a problem," says John Colombo, a tax law professor at the University of Illinois. "The contours of the law in this area are difficult to get your hands around, but if it's true that these stories are available to all comers and it just so happens that the Huffington Post is the only one that's interested in them, then my sense is that's probably OK. But it creates suspicions, and it's a very murky area."
John Pomeranz, the attorney handling the fund's application, acknowledges that it will attract special scrutiny from the IRS, but says he's confident that it will pass muster. "That's clearly one of the things the IRS is going to look at. We absolutely have to demonstrate that no one individual or organization is benefiting improperly, and I think we can."
In the grandest of ironies, the guiding precedent on tax issues like this involves Newt Gingrich's failed attempt in the late 1980s to shift some of the GOP's campaign costs into a tax-exempt entity by founding the American Campaign Academy, a nonprofit school for political operatives. The ACA was an educational institution, and it was ostensibly open to all applicants. But in 1989, the U.S. Tax Court denied ACA's application for tax-exemption, finding that it was little more than an attempt by the National Republican Congressional Committee to reduce its training expenses. While it was true that left-wing activists were free to attend the ACA and learn how to run campaigns, the facts of the matter were that the ACA exclusively trained GOP operatives who went on to work for GOP campaigns. The case—which Arianna actually wrote about in 1997 by way of excoriating the Gingrich aide responsible for coming up with the idea—is remarkably similar to what the Huffington Post is doing now: While anyone is ostensibly free to use the fund's stories, the Huffington Post is the only one of any size that seems to actually do so.
Whatever the IRS decides, the Huffington Post's close relationship to the fund has raised eyebrows in the tiny world of nonprofit journalism. In addition to a name, the two operations share an office space in Washington, D.C. Arianna sits on the board of the fund, and has been known to assign stories to it, according to people who've worked with the fund. And when the fund gets kudos for its work, the benefit can rebound to the Huffington Post: The Poynter Institute's Roy Harris recently gave the fund a big bump by including its series on mortgage fraud in Southern California on a list of possible Pulitzer finalists—except he called it "a Huffington Post examination of fraudulent subprime mortgage lending." So Arianna gets stories to put on her web site, credit for saving journalism, and Pulitzer buzz without spending a penny of her own company's money. As one veteran of nonprofit journalism put it, "I was surprised and perplexed that the Atlantic Foundation gave money for a for-profit entity to extend its brand." UPDATE: As noted in the Huffington Post's response below, the company does support the Huffington Post Investigative Fund financially—to the tune of $500,000 so far—so it wasn't accurate to say Huffington gets the benefit of the fund's work "without spending a penny of her own company's money." We knew when we wrote that sentence that the Huffington Post is one of the fund's donors, and we intended it to mean "without directly paying for it." It would have been better to write, "So Arianna gets stories to put on her web site, credit for saving journalism, and Pulitzer buzz all while taking $500,000 in taxable income off her company's balance sheet and getting other people to pony up even more."
In a statement, a spokesman for the Huffington Post wrote that "the Huffington Post is a separate entity than The Huffington Post Investigative Fund.... The purpose of the Fund is to create investigative journalism and make it available in an open-source way to all outlets at the same time. It has succeeded in that mission so far. The Huffington Post supports the Fund in many ways: financially, with pro bono PR help, and by offering it access to its community of citizen journalists. Of course, the Fund also benefits from HuffPost's large and active audience, as it was meant to do when it launched."