What do a Kenyan woman who wants to become a dairy farmer and a journalist interested in reporting on unprocessed rape kits in Los Angeles have in common? Until recently, both would have had trouble getting their hands on some startup cash. Microlenders like Kiva.org have dramatically changed the way small scale enterprises get off the ground in poor countries like Kenya. A similar model holds promise for funding the kind of local coverage and investigative reporting previously provided by the decaying newspaper industry—but new proposals for massive federal interference in the journalism industry threaten to undermine bottom-up solutions.
Kiva was started in 2005 by a couple inspired by the work of Grameen Bank founder and Nobel Prize winner Muhammad Yunus. Here's how it works: Organizations on the ground in, say, Kenya help a woman in need of a cow put a proposal online, and the San Francisco-based site lets would-be investors club together to fund her venture. When enough donors contribute to add up to her requested loan, she gets the cash and picks out a nice Bessie. She eventually pays back the loan with interest, and the donor can either sink that money back into another investment on the site, or extract his money and use it to buy another part of another cow—in the form of a steak dinner, say. Kiva is a non-profit, but other players in the field are for-profit. By late 2009, Kiva had facilitated over $100 million in loans.
Microlenders like Kiva and Microplace appeared on the scene only after huge aid institutions failed to make significant headway in encouraging entrepreneurship in impoverished countries, often despite budgets in the billions of dollars. Today, a similar lament can be heard throughout the journalism world: Traditional institutions are failing, little guys are suffering, and opportunities to do real social good are being left on the table by unwieldy, old-style organizations that can't figure out how to adapt to changing times and allocate resources efficiently.
One sign of desperation about the state of the industry is last week's Federal Trade Commission (FTC) plan to save/reinvent journalism. Wimpily titled "Potential Policy Recommendations to Support the Reinvention of Journalism" [PDF], the report suggests ways that government might step in to prevent the collapse of local newspapers. Enacting the recommendations in the FTC discussion draft would cost $35 billion annually. As my colleague Peter Suderman explained yesterday, the draft proposes massive government subsidies at all levels of journalism, including additional money to existing public organizations like the Corporation for Public Broadcasting, a journalism division of AmeriCorps to "ensure that young people who love journalism will stay in the field," and a flow of public dollars directly to private enterprises, such as a fund of federal tax dollars to encourage local reporting.
Suggesting that the best way to get high-quality local reporting is to pay grants and journalists' salaries out of federal coffers is like proposing that the U.S. government buy cows, put them on a boat, and then have U.S. government employees walk around the countryside offering them to Kenyans. While the FTC suggests clunky, top-down solutions to support a failing industry, a Kiva for journalism is already up and running.
Spot.Us calls what they do "community powered reporting." The goal is to allow the public to "commission and participate with journalists to do reporting on important and perhaps overlooked topics." And here's the good news for reporters: "On some occasions we can even pay back the original contributors." Right now, a pitch for a story on a failed redevelopment project in Los Angeles has picked up $450 in donations and is looking for $1,050 more. A pitch about space-based solar panels has snagged $205 worth of interest, with $145 to go. A ongoing investigation into the question of whether regents in the University of California system were making private profits by investing public funds garnered $6,117 in cash, with $3,883 to go. One installment of that story, which was republished by the San Francisco Public Press and North Bay Bohemian, tied Gov. Arnold Schwarzenegger to the scandal and inspired a California state senator to call for an audit of the system—just the kind of awareness raising, watchdogging, and dogged digging that doomsayers were afraid would fall by the wayside as traditional local papers faded away. That story on L.A. rape kits? Twenty-six people donated $718—most in increments of $10 or $20—and the story was published in March.
Also located in the Bay Area, the Spot.Us model mirrors Kiva, except that donors don't get their money back at the end; instead they get to read a story. Newspapers, magazines, or other media organization can fund stories too, as a way to secure the option to run the completed story in their pages, essentially using the site as a handy recruitment tool for freelancers. Otherwise, all stories are released on the Spot.Us site under a Creative Commons license, which permits any publication to re-run the story. But most donors on Spot.Us are, as they say during the beg-athons for public radio, "viewers like you."
This model is forcing an evolution of the ideas of accountability and transparency for journalists. One story from late March about the mysterious resignation of a community college chancellor begins with a note from Spot.us indicating that "after several months of digging" in which reporters "requested documents, files and asked the hard questions when everyone else turned away" they failed to get "hard answers." "As a result, Spot.Us and the reporters have agreed to reimburse the original donors." Spot.Us also caps individual donations at 20 percent of the cost of any project, to avoid the appearance of bias or conflict of interest.
Lamenting the death of the local paper has become commonplace in Washington. Fretting about who will cover city council meetings and do vital-but-tedious investigative reporting is fashionable in public policy circles, just as discussions of the intractability of poverty in Africa have long been typical fodder for chatter in the world of international aid. But as Kiva and Spot.Us demonstrate, defeatism on both counts is too hasty.
Katherine Mangu-Ward is a senior editor at Reason magazine.
Start your day with Reason. Get a daily brief of the most important stories and trends every weekday morning when you subscribe to Reason Roundup.