Everyblock has facilitated access to hyperlocal information since January 2008. The database journalism project, founded by the journalist and web programmer Adrian Holovaty, was financed initially by by a 1.1 million dollar grant from the Knight Foundation. In August 2009 Holovaty sold the plattform to MSNBC. And this doesn’t sit well with the Knight Foundation, as NiemanJournalismLab points out:
The sale raised questions about nonprofit funding of for-profit ventures. After all, Knight had essentially seeded EveryBlock’s development, while Holovaty profited from its sale.
But what is the problem? The grant was intended as initial support for two years. Within this time frame Holovaty could develop and run the platform with a small team of six people. And this is what the public got in return: a free service in meanwhile 15 major U.S. cities. The code for searches and the content management system Django ist open source. Now MSNBC took over the platform for an undisclosed sum and has guaranteed its independent existence and development.
This doesn’t seem to me like cheating on the grant conditions. MSNBC to Everyblock is the successor of the Knight Foundation. The alternative of a sale to a for-profit company would probably have been to close down Everyblock – and in that case the grant would have been wasted on a short-lived experiment. At this point, Everyblock is far from being profitable, the platform is only just starting to look into for-profit business models. For the past two years it has been concentrating on usability and expansion to new geographic regions. The new ownership will enable Everyblock not to rush their change to a for-profit model.
There is no mention that the Knight Foundation is going to demand the grant (or part of it) back. But it does want take this case as a turning point to possibly change their future rules of engagement. Their reasoning: Using grants that have been paid back enables fostering new promising journalism start-ups.
But these kind of finance models exist already: They’re called venture capital investors. They differ from foundations in that they only invest in projects which look promising to be profitable within the VC company’s exit strategy.
The Knight Foundation would be sending a wrong message to grant-aspiring journalism start-ups: Their projects would have to tailored so a later investor can stem the cost of his acquisition plus paying back the grant or part of it. This would probably lead to more ideas which calculate being on a fast track to profitability. And it would lead to less project ideas which rethink journalism in the digital age from the scratch. Projects which first and foremost aim for an innovative journalism for the benefit of society. The Knight Foundation should strive to foster projects in the latter category.