Working Title

Two other guys from Yale, chief investment officer David Swensen and financial analyst Michael Schmidt, are putting forth the idea of newspapers becoming endowed institutions like universities. That goes along with the idea from professors Ackerman and Ayres for an national endowment from a Guardian article a few weeks ago.

In the New York Times they opine that newspapers could have endowments to make up for revenue sources they have lost.

Although the problems that the newspaper industry faces are well known, no one has offered a satisfactory solution. But there is an option that might not only save newspapers but also make them stronger: Turn them into nonprofit, endowed institutions — like colleges and universities. Endowments would enhance newspapers’ autonomy while shielding them from the economic forces that are now tearing them down.
[...]
How large an endowment would a newspaper need? The news-gathering operations at The New York Times cost a little more than $200 million a year. Assuming some additional outlay for overhead, it would require an endowment of approximately $5 billion (assuming a 5 percent annual payout rate). Newspapers with smaller newsrooms would require smaller endowments.

Note that just as endowed educational institutions charge tuition, endowed newspapers would generate incremental revenues from hard-copy sales and online subscriptions. If revenues were to exceed the costs of distribution, the endowment requirement would decline.
– News You Can Endow NY Times 27 Jan 2009

Essentially this proposal suggests converting to a non-profit tax-free structure, of which examples already exist, but to also tack on a truckload of money to it in the form of an endowment. After asking where the money is going to come from the next question should be: Do we really want to throw money at continuing to deliver dead trees to doors steps? With the idea of a national endowment, at least they were focused on the news and not the newspaper.

What needs to be endowed, supported, bought or otherwise funded is that actual generation of news. The distribution part has already been solved.

I found a story in the Times about an Alabama family-owned newspaper planning to become not for profit.

H. Brandt Ayers, the publisher of The Anniston Star, a small newspaper in northeastern Alabama, announced a plan yesterday to ensure its long-term local ownership by establishing an institute to train journalists and a foundation that is expected to eventually own all the stock in the newspaper’s parent company.
– Alabama Paper Plans to Go Nonprofit NY Times 16 Dec 2002

But that story is from six years ago. Where did their plans go.

Well, I found a more recent NPR story with more details.

The Ayers family created a not-for-profit foundation. Over time, the holdings of the Ayers family in the publishing company will be turned over to that trust. The company’s earnings will be used to run the paper, and its dividends will help pay the cost of teaching the students. The Knight Foundation has contributed $1.5 million to the project.
[...]
Very few American papers are owned by not-for-profit groups. One paper in Tupelo, Miss., uses its money to encourage regional development. The St. Petersburg Times in Florida is controlled by the Poynter Institute, a professional training center. But there’s nothing quite like this.
– Small Paper Uses Profits to Train New Reporters npr.org 2 May 2006

So, here’s the program at U of A.

Our one-year master’s program in community journalism gives students an opportunity to explore what journalism means for communities, and to hone the special skills journalists need to serve their communities effectively. The program blends rigorous academic training from faculty at UA’s College of Communication and Information Sciences with hands-on community journalism experience at the award-winning Anniston Star, one of the few independently owned daily newspapers in the country.
– Com-J: The “Teaching Newspaper” | Master’s Degree in Community Journalism The University of Alabama

The fact that the newspaper was still independently-owned made it possible to make the shift.