Tiny Foundation is supporting Canadaland with a three-year, $1 million investment.

Is this the future of philanthropic support for journalism in Canada?

Tiny Foundation just invested $1 million into Canadaland — and they’re going to use the ROI to fund more journalism.

H.G. Watson  - June 29, 2020

This week, Canadaland announced big news — it got a CAD$1 million investment from the Tiny Foundation, a new foundation run by tech entrepreneur Andrew Wilkinson and angel investor Holly Rohani Wilkinson.

It’s not just the amount of money involved, or the choice of organization, that makes this a transaction to examine. It’s that there was an investment like this at all.

There is, for better or worse, not much philanthropic donation or investment into media outlets in Canada. This is in stark contrast to the United States, where massive foundations support journalism ventures small and large. 

Over the last few years, philanthropists and investors have coined a new term: venture philanthropy. It’s when a person, or group, donates or invests in an organization — but unlike in typical venture capitalism, the purpose of the investment isn’t 10x returns. Instead, the desired outcome can be social impact or, in the case of Tiny Foundation, modest dividends that are then reinvested into other independent media. Basically, if the investors themselves aren’t making money but the deal incorporates some elements of venture capital, you’re looking at venture philanthropy.

It’s an interesting model, and one that could pave the way for more philanthropic support of journalism in Canada.

Big deal in Canadaland

Canadaland, which started as a media criticism podcast but has since expanded to a podcast network as well as a website that publishes investigative work, is considered one of the success stories of independent media in Canada. It’s supported by its audience — it makes just under USD$30,000 a month from Patreon support, and makes money from its new subscription platform — and advertising. 

Jesse Brown, its founder and publisher, told me in an email that the company has always been able to turn a profit. “Micro-profitable, but profitable,” says Brown. But without support from their audience, the Canadaland team can’t pursue projects like a follow-up to their acclaimed Thunder Bay podcast. 

Enter Andrew Wilkinson and Holly Rohani Wilkinson.

Wilkinson has a long tech entrepreneur resume. He founded MetaLab, an interface design firm, and has since co-founded Tiny Capital, a company that is in the business of investing and starting other companies. Rohani Wilkinson is founder of 8-Bit Capital and Wilkinson’s wife.

For the past year, Wilkinson has been dipping his toe into journalism — he’s an investor in The Logic and the publisher of The Capital, a local site in Victoria, B.C. (The Capital’s founding editor, Tristin Hopper, was included in Canadaland’s annual review of best and worst tweets in 2017 and 2019, most recently for his infamous thread about allegedly stomping a racoon to death.)

Wilkinson and Brown got to know each other when Wilkinson called him to pick his brain about the media in Canada in general. “Eventually, I asked him what he would do if he had more resources, and I pitched him on this journalism fund idea,” says Wilkinson in an email. 

Here’s how it will work: Tiny Foundation is investing $1 million in Canadaland in monthly installments over three years. Brown says ultimately Tiny will own about 10 to 16 per cent of the company, depending on company performance. “If there is no return on investment, they own more of the company. If there is return on investment, they own less,” Brown says. 

Tiny, and by extension Wilkinson, have no say in the editorial content Canadaland produces. “I told him I don’t even want to hear a compliment about our stuff,” says Brown. What Wilkinson will lend is his expertise in strategy and business. 

Assuming Canadaland once again turns a profit, Tiny Foundation will get dividends — however, instead of that going directly into investors’ pockets, as it would a traditional investment, it will be reinvested into the Tiny Journalism Foundation and parcelled out to other journalism organizations. 

“Ultimately, we think a profitable model creates independence and diversifies the voices that we hear in Canada,” says Wilkinson. “Wealthy individuals and corporations shouldn’t decide what gets covered — audiences should decide what we hear, and they will vote with their attention and dollars.

And if Canadaland doesn’t turn a profit? “I will continue to fund other publications, we just won’t be able to do quite as much,” says Wilkinson.

When your ROI is making better journalism

What the Tiny Foundation is doing falls broadly under the umbrella of venture philanthropy.

“Venture philanthropy is …trying to apply some of the tenants of venture capital or venture investing to nonprofit news and independent newsrooms,” says Jim Friedlich, the executive director of Lenfest Institute. “What that means is that investors are looking for …reinvention in journalism, just as they would in technology or healthcare or other traditional venture capital sectors. But they’re not looking for a direct financial return on investment. They’re looking for a return on social impact.” 

Lenfest itself has used this model to support media organizations. It owns the Philadelphia Inquirer, the largest newspaper in America operated as a public-benefit corporation and owned by a non-profit organization. (It differs from traditional corporate structure in that it is chartered to serve a public benefit purpose.) The Institute also works with a number of other news organizations, offering grants and expertise without taking any equity. They too are completely hands-off from any editorial decisions that organizations that work with the institute make.

Many American models of venture philanthropy differ from Tiny Foundation’s arrangement with Canadaland. The American Journalism Project, for example, only funds non-profits, and does not expect dividends in return — but they do expect other kinds of growth. 

“Our return on investment is the impact on communities,” says Sarabeth Berman, CEO, in an email. “Our venture philanthropy approach is designed to give civic news organizations the capital and capacity building they need to achieve sustainable growth. We provide sustained coaching, operational support,  strategic guidance and a community of like-minded organizations across the country.”

However, there are similar examples to what Wilkinson is doing in other sectors. In 2019, entrepreneur Michael Hyatt invested roughly CAD$100,000 in a Toronto SickKids hospital research project on congenital muscular dystrophy type 1A. If the research produces anything that results in profits, Hyatt will reinvest in other medical research. “It’s not about Michael Hyatt making any money, it’s about the foundation placing investment into a researcher who wants to try and make a discovery that could change the world,” he told the Financial Post

This begs the question: why not just make a normal investment? Friedlich says the reason is two-fold. “When the primary motivation is to make the most money possible, the journalism often suffers or becomes secondary,” he says. “In the second respect, as straight up venture investments, news in general has not proved highly lucrative.”

Taking the leap in Canada

Making donations to Canadian news organizations is difficult for a number of reasons, chief among them Canada’s tax laws. “[The] Canada Revenue Agency has long rejected proposals to turn media into philanthropic ventures that could issue tax receipts for charitable donations,” writes Christopher Waddell, professor at the Carleton University’s School of Journalism and Communication, in a recent piece for The Philanthropist. (Full disclosure: Waddell was my boss when I was managing editor of J-Source, and we are currently working together on the Canada Press Freedom Tracker.)

The 2019 budget did open the door for media organizations to become qualified donees, which allows them to issue charitable receipts — however, according to Waddell, the process appears to be quite arduous, and may not be worth it for small organizations.

But there are other reasons that Canada doesn’t have Knight Foundations or American Journalism Projects. “There aren’t as many families that have made as much money in journalism in Canada as there are in the United States,” Waddell told me. “In the United States, a lot of the families that have made money in media then turned around, put it in foundations, and then took that foundation money and reinvested it.” That includes Gerry Lenfest (former owner of the Philadelphia Inquirer and founder of the Lenfest Institute), Nelson Poynter (former owner of the Times Publishing Company and founder of the Modern Media Institute, later renamed the Poynter Institute), and John S. and James L. Knight (co-founders of the Knight Ridder chain of newspapers and co-founders of the Knight Foundation).

There are some media families in Canada that have made enough money to start foundations — the McConnells, Thompsons and Atkinsons, to name a few. But their foundations don’t primarily focus on funding journalism. And there is some foundation-funded journalism in Canada. For example, the Tula Foundation supports Hakai Magazine and partners with the Tyee, High Country News and Smithsonian Magazine. However, what these foundations have contributed pales in comparison to the infrastructure available to independent and non-profit media in the United States.

But times are changing. Over the last 10 years especially, there has been a growing public awareness around the increasing precarity of the news industry. The number of Canadians paying for news is growing — the Reuters Institute Digital News Report found 13 per cent now pay for news, which is still behind the 20 per cent of Americans that pay but still almost a 50 per cent increase over the previous year. Canada has more millionaires than ever before — and that’s only expected to rise.

What makes Wilkinson’s approach potentially exciting for independent Canadian newsrooms is that it provides an avenue for deep-pocketed donors to make large investments without running afoul of Canada’s tax laws or getting bogged down in burdensome and unclear regulation by the CRA.

However, it takes no huge logical leap to worry that venture philanthropy could replicate the same diversity and equity issues that plague venture capital and mainstream media. For example, a 2019 study by RateMyInvestor and Diversity VC found that most venture capitalists still give most of their money to college-educated white male founders. “The funding gap starts at day zero, because of a lack of friends and family capital,” Monique Woodard, an investor and founder of Black Founders, told Wired earlier this year. “It also happens with access to networks and access to angel investors.”

Wilkinson says that Tiny Foundation will be prioritizing funding to women and people of colour. He also said that the key criteria for funding will be if the outlet is sustainable or on the path to it. This differs from, for example, the American Journalism Project, which Sarabeth Berman says uses a grantmaking framework, “that prioritizes ensuring organizations reflect the communities they serve and our support for grantees includes support in building diverse and inclusive organizations.” (They currently have 11 grantees from across the United States.)

New union wants investment to increase resources

On June 25, 2020, Canadaland’s staff announced that they were unionizing, citing the need for clear policies around organizational structure, editorial vision and concrete measures for achieving greater diversity in the workplace. In doing so, the group revealed that sustainability is not just measured by revenue.

“We’re excited about the opportunities that this investment will bring, and are glad to be able to increase the ambitions and scope of our audio journalism,” the union told me in an emailed statement. “But we want to ensure that our resources are increased alongside that growth, so that we could have more reasonable workloads and not just more work.” 

“In transportation planning, there’s a principle called ‘induced demand,’ where building new roads to relieve congestion only ends up leading to more of it. We’ve seen a similar phenomenon at Canadaland in the past, where increased staffing has often meant more people working unmanageable schedules on newly ambitious projects, rather than relief of the pressures that already exist.” 

In response, Brown says the message to producers has been that they are not expected to do any unpaid work and should be compensated for overtime, however, he is aware that producers “under-report their hours to management,” and they’ve had many management meetings trying to fix the issue. “’I’m thrilled that our employees have taken the initiative to propose a solution themselves,” he said, adding that he is prepared to increase resources to make sure that it happens.

The other question is what happens when that initial investment runs out? For Wilkinson, the goal is for Tiny’s support of Canadaland to eventually get smaller. “I worry that too many publications become pet projects of the wealthy, with one big donor pushing an agenda, or rely 100 per cent on advertising which is its own can of worms of misaligned incentives,” he says. “As Jesse has shown, a hybrid model of sponsorship along with member support/subscription, then distributing reporting across different mediums (written plus podcasting) makes independent media far more feasible.”

But that’s not the only model. Friedlich points out that some organizations — hospitals, art galleries, museums — always have foundation funding built into their budgets. Why should it be any different for news organizations? “We don’t think philanthropy is a bridge to an independent commercial sustainable future,” he says. “We think it’s a permanent part of the infrastructure.”

In the news

Opportunities

And one more thing… 

In a normal year, I’d be trying to attach Twitter profile photos to actual faces at several journalism conferences right now. Failing that, get the online experience with ONA Insight’s online sessions — you can watch all the seminars online here.

Thanks for reading,

H.G. Watson
Senior Editor, Indiegraf

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