Jim O'Shea, former managing editor of the Chicago Tribune, deserves credit for trying to pull news reporting out of its death spiral, at least in his city. But the nonprofit he has organized has a false and misleading name.
O'Shea made a big splash the other day by announcing that he has landed an agreement for his new organization to supply reporting to The New York Times. The organization has additional, big plans -- in the form of a web site, to debut next year, called the Chicago Scoop.
All of that is just swell. But what's not so swell is calling the effort the "Chicago News Cooperative."
The problem is that the CNC is not, in fact, a cooperative. According to the Chicago Tribune, "[i]nitially, the CNC will operate with a handful of staffers and free-lancers as an extension of the tax-exempt parent of Chicago public television outlet WTTW-Ch. 11, enabling the co-op to immediately conduct business under WTTW's 501(c)(3) status and seek charitable funding."
Then, the Tribune reports, the CNC will transform itself after January 1 to a so-called LC3, once the Illinois statute authorizing this new kind of business entity takes effect. Often described as a cross between a nonprofit organization and an investor-owned business -- LC3 is an abbreviation for "low-profit limited liability company" -- an LC3 is, in fact, a vehicle for big foundations to make so-called "program-related investments."
Translation: This is a way for Foundations to assume ownership of organizations they would otherwise be limited to supporting through donations. Indeed, the McArthur Foundation is already supplying a big part of the Chicago News Co-op's bankroll.
What would a real news cooperative look like? Well, how about a news service organized as a consumer co-op, owned by its readers and run purely for their benefit? Or how about a news service organized as a worker co-op, owned and operated by O'Shea and his fellow journalists?
Although either of those ideas are well worth trying, and arguably offer the truly compelling alternative to the extinction prone news organizations on which we currently rely, one can't really quibble with the fact of O'Shea's organization. The problem is its misleading name, which will (if allowed to persist) have the effect of devaluing and diluting the very concept of the cooperative. Public broadcasting has already been allowed to dilute the word "membership" -- once upon a time, members had rights; now they're just donors to organizations with unelected boards dominated by the major donors. We shouldn't allow public broadcasters and the McArthur Foundation, however virtuous their intentions, to capture the word "cooperative" in the same way.
Someone who is familiar with Illinois law should look into whether it is even legal in that state for an organization not a cooperative to use the word in its name. This would be verboten in New Hampshire, for example.
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