Knight Foundation rethinks its stance on for-profit deals

Explore Harvard's Nieman network Nieman Fellowships Nieman Lab Nieman Reports Nieman Storyboard

Nick Denton says Gizmodo's new design focus is aimed at taking advantage of Gawker's discussion platform, Kinja. nie.mn/18QzLAz

Pushing to the future of journalism — A project of the Nieman Foundation at Harvard

Oct. 3, 2009, 6:08 p.m.

Knight Foundation rethinks its stance on for-profit deals

By Zachary M. Seward

Everyblock won a $1,100,000 grant from the Knight Foundation in 2007 to build its innovative platform for aggregating local news and information. Two years later, soon after the Knight grant had expired, founder Adrian Holovaty announced that MSNBC had acquired EveryBlock.

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. Soon after the deal was announced, Gary Kebbel, Knight’s journalism program officer, said the foundation was gratified by EveryBlock’s move to MSNBC. “We always hope that innovations Knight Foundation funds are supported by the marketplace,” he wrote.

But in a session just now at the Online News Association’s conference in San Francisco, Kebbel said that Knight is rethinking how to deal with projects funded by the foundation that are later sold. “It’s a safe bet that grant agreements are going to change in the future,” he told a large crowd gathered to hear about the Knight News Challenge. (He also described EveryBlock’s sale to MSNBC as a “multi-million-dollar deal.”)

When a Knight-funded project is acquired in the future, Kebbel said, the founders may be required to relinquish some of that money: “It might be a certain percentage, it might be a certain dollar figure, it might be the amount of the grant…What we’re thinking about is creating another nonprofit that would receive that money, and that money would be either for the future development of open-source software…or it might be for community news.”

So for-profit acquisitions would still be allowed — even encouraged — but not in the same way that EveryBlock found its way into the hands of MSNBC.

What to read next

Mark Coddington May 17, 2013

This Week in Review, Spy vs. Spy edition: Backlash against snooping by DOJ and Bloomberg

Plus: New developments in online video, The New Yorker’s Strongbox leak submission system, and the rest of the week’s future-of-news news.

http://www.theoccasional.org Andrew Hazlett

The National Endowment for the Humanities (and, I believe, some other federal grant-making agencies) has a provision in grant awards to recoup taxpayer dollars in the event of a big commercial success.

Of course, this almost never happens. I think the only example in NEH history was Ken Burns. When “The Civil War” exploded into a major media phenom, he ended up “paying back” much of the grant money he received during the years of scripting and development.

Seems like a similar model could be used by the Knight Foundation folks.
Zachary M. Seward

Interesting comparison, Andrew. Thanks. It’s such a tricky issue for a foundation like Knight because they want to encourage innovation through the open market but also need to be concerned about their charitable purpose (and appearance). There’s a lot of pressure in all directions. —Zach
http://www.danielbachhuber.com/ Daniel

Worthwhile question: Would the Knight Foundation take equity in the company/project, or would this just be a requirement if the company/project were “sold” to another company? For instance, if my company/project started making money on what we did, will Knight be a recipient of some of those profits? This is a lot more significant than it appears on the surface, I think.
Matt Terenzio

It’s impossible to know what secret sauce is being held back from an open source project like Everblock. The framework is useful, but all the value is in the personalization of it for extracting information from that particular town’s websites I wonder if Everyblock handed over every piece of code that was related to the project or did they hold some back to sweeten the acquisition pot. I am not saying they did. If someone did do that, it would amount to theft of Knight money and it’s a very hard thing to police.
Matt Terenzio

Nothing against EveryBlock, by the way. I have great respect for the founders and their contributions to open source software. But man, 1.1 million is a lot of money. Imagine what software you could build for that money these days. I can’t see that money making it’s way back into the news community in this case, but we’ll see.
http://twitter.com/TammiM TammiM

I asked this question for exactly the reasons you all are commenting on — when a foundation gives money, is this along the same arrangements as a VC or angel money, where there is some expectation or quid-pro-quo.
It seems like the right thing to do is to give back to those who got you started, but unless their is a contractual obligation, someone might not do that.
That said, I think Gary was pretty clear that the intention of the KF and News Challenge is to consider this and see what matches their values, doing work that maps to the mission.
I hope this wouldn’t stop anyone from entering the news challenge — but in fact, could be seen as a good way to continue promoting and supporting innovation in journalism.
http://blog.thescoop.org/ Derek Willis

Always great to see a version of the “When did you stop beating your wife, Senator?” question surface. There *is* a way of knowing, Matt, and it involves asking the people involved and looking at the code itself. Raising an accusation (and then quickly denying you did so) without evidence is a cheap shot, and lazy.
Matt Terenzio

Wrong Derek. Don’t try to tell me what my intentions were please. That’s just rude.

And asking and looking at the code is meaningless. Excuse me, did you cheat? No, okay thanks, we’ll take your word for it.
http://www.b-list.org/ James Bennett

First off, I haven’t actually looked at the EveryBlock code, because it’s GPL and I can’t touch that with a metaphorical ten-foot pole. But I am a developer well-versed in Django and with experience working with it in a news context, including projects which expose useful interfaces over similar data sets (albeit on a smaller scale).

So what I’d wager, even if I didn’t know Adrian (who’s the sort of guy who honors his obligations and does the right thing), is that what you see is what you get. The code release was the EveryBlock codebase, and there was no “secret sauce” *in code form* that was withheld.

I’d bet on that because, having worked on smaller projects involving this sort of data, I know what the real secret is: getting the data in the first place. Lots of agencies are awfully shy about letting you get at their data for any sort of public, accessible use. Maybe they think they could make money off it, maybe they’re afraid of not having spin control, maybe it’s just normal stupid politics and bureaucratic impenetrability, but *that* is always the big obstacle.

You can whip up useful, attractive presentations on top of the data in a few days or weeks, but spend months or years wrangling over the right to get the data in the first place, and that’s where EveryBlock really succeeded. There’s no bit of code which will get your city to agree to provide real-time or near-real-time feeds of data; it’s purely a social, political and legal thing.
Matt Terenzio

I was not making an accusation. i thought I made that clear. I was saying it is not an easy thing to police. And it isn’t.

And I am a developer of news applications myself and if you think extracting data from unstructured forms making structured data out of it is easy, then I think you ought to contact Tim Berners Lee nd the rest of the Semantic Web community that is working on that. ; )

Of course presenting it in an attractive way is easy. It takes talent, for sure, but it is a less time consuming process.
Pingback: Medial Digital – Medien, digitale Medien, Medienwandel, Journalismus, Internet, soziales Internet, Social Web, Web 2.0» Journalismus Neu » Ist das Journalismus-StartUp Everyblock gierig? Ein Denkfehler der Knight Foundation
http://blog.thescoop.org/ Derek Willis

Matt,

You did make it clear – after you raised the prospect of cheating in the first place (without a shred of evidence).

I’d argue that looking at the code – or better, actually using it create an app – would be useful in determining whether the idea you floated has any weight, and not meaningless. But James is right; the secret sauce also lies in the people and acquisition of data.

There’s also a contact involved here, and I imagine that any prospective buyer of a property would want to know whether there were any outstanding legal issues (such as non-fulfillment of said contract) before making an acquisition.
Matt Terenzio

Well, I’m just trying to help the foundation think about how things are structured in the future. I don’t need evidence to postulate about potential shortcomings of the current model, especially when I clearly state it’s not aimed at the subject. Next time I’ll say Company A, to make sure no one gets the wrong impression.

Anyway. . .

How does looking at code tell you whether some code was omitted? Is every line of code written while under contract part of the project?

You are right. There is a contract and maybe these things are covered. Maybe not. I’m trying to expose potential issues that might not be covered.

For example, had they used Gnu Affero license, then all subsequent projects might indeed need to be open source as well. But the standard Gnu license allows for modification as long as the code is not redistributed. (like most)
http://kthread.com Kristen Taylor

Let’s call a spade a spade.

~~The Everyblock team did not release the government scrapers–the part that was most interesting in the code.~~ [See Kristen's follow-up comment below retracting this. —Zach]

The goal of the News Challenge is to, at the end of the grant, release the work so others can build on it. It’s one thing to hold back a few new features, another not to release the innovative part of the work (i.e. the reason it received funding).

I thought it odd Adrian did not reference Knight during the announcement, a glaring omission in an economic moment when everyone is looking for funding.

The sad part is that Adrian and the Everyblock team’s poor form in the acquisition now potentially punishes new applicants to the process. Knight is unusual (in the philanthropic world) in its openness to funding for-profit ventures.

I know from my time working as Knight’s Community Manager that this grant was very exciting for the organization; good that this was one grant in many of News Challenge winners, many of whom deserve more attention than they’ve received so far.
http://www.holovaty.com/ Adrian Holovaty

Kristen, I don’t know of a nice way to put this. Your comment is flat-out wrong. I’m incredibly insulted by it.

The government scrapers were indeed released, in the “everyblock” package. Download it. Read through it. Scrape your government’s Web site. :-)

You may have been led astray by misinformation spread by people who didn’t actually look at the code thoroughly. One of these people, Brian Boyer, has since corrected himself: http://twitter.com/brianboyer/status/4154636491

Also, I’m not sure why you’re saying I “did not reference Knight during the announcement.” I assume you’re referring to our acquisition announcement, right? If so, read the second paragraph — http://blog.everyblock.com/2009/aug/17/acquisition/ . I also made a point of bringing up the Knight grant in the many interviews I did at that time, because I was, and continue to be, very grateful to Knight for the opportunity.

I’m reminded here of the adage that every journalist ought to be covered by journalists at some point. When you’re on the other side of the reporter’s notepad, you get to see with terrifying clarity how inaccurate journalists can be.
Derek Willis

Kristen,

The charge that the scrapers were not released is false. If you check the code, you’ll see that EB includes a scraping framework, and that agency/data-specific information to instruct the scraping framework is part of each *app*’s details. Just because the scrapers were not done the way that most ppl – myself included – expected them does not mean that code was not released. Yours is a false accusation without support and should be withdrawn.
Pingback: Medial Digital – Medien, digitale Medien, Medienwandel, Journalismus, Internet, soziales Internet, Social Web, Web 2.0» Linktipps Neu » Linktipps zum Wochenstart (28)
C.W. Anderson

Sadly, a really interesting post by Zachary has been somewhat waylaid by questions of whether or not Adrian “held something back” in his open-source release of the code. While that’s a fairly incendiary question (one that I’m not qualified to answer, though it appears that the full story is out there and documented), its not really the point of the post. Nor was it the point of my original post

http://journalismschool.wordpress.com/2009/08/18/the-nuances-of-the-everyblock-sale-to-msnbc/

which helped to jump start this conversation, and has since been taken up (and better addressed) on many other blogs.

A couple things are going on here. First and foremost, I get the sense that this has been a learning experience for everyone involved: the funding community, the journalism community, and the open-source community. For funders and journalists in particular, I feel like we’ve learned:

a) that the legalities of “open source” are way more complicated than many of us realized and

b) most importantly, perhaps, that there are *real live politics* operating in the programming / development world. This a good thing to learn about a social group that often portrays itself as apolitical and “technical” in nature, and able to “save” journalism through its expertise.

My initial concerns with the Everyblock sale had nothing to do with whether Adrian had held back code, and everything to do with the points that Knight themselves now seem to be raising; the fact that there’s an element of “venture-capital-ese” in the way that a public-interest foundation basically subsidized the development of a product that has made a few individuals a lot of money and has given a large corporation a now-proprietary product. These are fair — and complex– concerns, with no easy answers. The most important thing is that Knight seems to be listening to the conversation.

One final point: Adrian, its disappointing to me that the first I’ve seen you engage with any of the many blog posts in this topic is now, and under these circumstances. I understand your point about journalists needing to be watched by other journalists, but you’ve basically chosen to cede the field on this discussion to others, engage with “big media” in order to promote the sale, and not address any of the very valid concerns a number of people have raised about the implications of this sale. I myself tried to contact you for comment on all this, and you didn’t reply. At the least, you could have addressed this on your blog in a way that went beyond the fairly “press-release-esque” post you did announcing the sale. When you cede the field to others in this way, this is what often happens.
http://www.pauladamsmith.com/ Paul Smith

>> questions of whether or not Adrian “held something back” in his open-source release of the code. While that’s a fairly incendiary question

More innuendo! And in a post were you have it straight from the horse’s mouth! That takes sack, dude.

>> When you cede the field to others in this way, this is what often happens.

Which is another way of saying, “engage with me on my terms, or have unfounded accusations made against you.” Victim blaming is always a classy line of argumentation.
Zachary M. Seward

Wow, well, I was traveling all day from San Francisco to Boston, but this post certainly lived on. I appreciate all the input, and it looks like we got somewhere, even if it was more turbulent than my flight. —Zach
http://mike.teczno.com Michal Migurski

James, I can see from your about page that you’re an open source developer with Django, so I’m curious what it is about the EB GPL code that you can’t touch with a ten foot pole. Academic question, really – are you worried about some sort of clean room / contamination situation?

As for the rest of you, this comment thread has seen some incredibly unpleasant innuendo.
http://www.b-list.org/ James Bennett

Michael, I do work on open-source projects, but my day job involves working on a proprietary news CMS, and GPL code is off-limits for that. So both for practical and ethical reasons I have a policy of not even looking at GPL code that overlaps with what I do at work (and EveryBlock’s codebase certainly does). This is probably much more paranoid than is necessary, but I like to err on the side of caution.
Pingback: Medial Digital – Medien, digitale Medien, Medienwandel, Journalismus, Internet, soziales Internet, Social Web, Web 2.0» English Blogposts » Is Everyblock greedy? No, the Knight Foundation’s reasoning is wrong.
Pingback: What Everyblock owes Knight after its open source success | Open Source | ZDNet.com
http://kthread.com Kristen Taylor

Adrian,

I was going from Brian’s tweets about it and missed his mea culpa tweet you reference. I apologize to you and your team. [Zach, if it's possible to strikethrough that in my earlier with retracted in caps, please do.]

I do think it’s curious Knight is mentioned in most of the articles in passing at the bottom (I took a cursory glance at about forty articles); you certainly thank Knight in your announcement. Sometimes it’s in the spirit rather than the letter.

Wouldn’t it have been great to mention the News Challenge at Gov 2.0 with all of those interesting developers working on local applications? My bias, and it’s a big one, is always toward more people finding out how to receive funding for their project, especially those that might not otherwise know about foundation support.

I thank you for the compliment, but I’m not a journalist. As I know many who hold you in the highest regard, I’m happy to have been wrong.

Here’s to hoping everyone can find and use this code as the grant intended–
http://mike.teczno.com Michal Migurski

Thanks James, that’s kind of what I figured. BTW I think you’re absolutely right above when you say that the real secret sauce is EB’s ability to get data out of agencies. Nobody here has mentioned Daniel X O’Neill, so I’ll just say that I have seen how incredibly valuable it is to have someone on your team who’s a data-chasing phone monster. I’ve done projects like Oakland Crimespotting that deal with similar, smaller datasets to those featured on EveryBlock, and I know from firsthand experience that servers and code aren’t enough to keep delivering a site like that. You download the EB source, you don’t get Dan.
Pingback: What Everyblock owes Knight after its open source success | Open Source Blog
http://www.patthorntonfiles.com/blog Patrick Thornton

This sounds like the right plan. The real key will be pulling this off correctly.

Kebbel has said that Knight is considering asking for up to the full amount of the grant back, but I have to wonder if that would cause some people to seek venture capital instead of working through the News Challenge? Adrian, do you have thoughts on that?

Ultimately, however, if Knight pulls this off correctly, it could help keep the News Challenge going for years to come.

Knight is taking this a step further, and will be continuing development of EveryBlock and other popular Knight-funded open source projects. Kebbel told me that the idea is to take this great open source code and making it easy for people to install. Most news organizations could not utilize EveryBlock because they don’t have the staff resources on hand to install the code, but Knight is hoping to lower the barriers to entry.
Zachary M. Seward

Thanks so much for following up with that, Patrick. A really interesting and probably smart move by Knight. —Zach
Pingback: Everyblock, Nonprofiteering, and the Affero License « Digifesto
http://www.patthorntonfiles.com/blog Patrick Thornton

Zach,

I’m very interested to see how this turns out and how much time, effort and money it takes to make EveryBlock and other projects easy to install. And then it will be interesting to see how many news orgs will install the software. I have a suspicion that some are so lost right now, that they wouldn’t even install something that came with an easy installer.
Pingback: The Knight Foundation News Challenge, Open Source, and the Future of Hyperlocal | Open Parenthesis
http://www.growthspur.com Dave Chase

I think this misses the real opportunity that Everyblock is Exhibit A of (in a good way). That is, an increasing trend in foundations is Mission Related Investing or Program Related Investing (google those terms for a deeper explanation than I’ll provide). The core idea is that foundations can focus not just on the 5% of their endowment they give away to charity but on the 95%. You can think of the endowment as a sizable “mutual fund” given the investable dollars. If just 2% of those investable dollars were invested in businesses congruent with their mission, the foundation could expand their ability to impact the market and hopefully get financial return but even if there’s a lower financial return than the rest of the portfolio, it’s still helping their mission. The companies they invest in could be mature or startups as long as they fit the mission objectives.

The most common examples these days are environmentally focused non-profits investing in clean tech/energy companies rather than their portfolio having holdings in companies not congruent with their mission.
Pingback: Our 2010 Knight News Challenge coverage » Nieman Journalism Lab
Pingback: Data-visualization duo turns down Knight funding over open source » Nieman Journalism Lab
Pingback: Sleeping Around: The Nonprofit Edge | The Hub
Pingback: Knight Foundation expands into investment with an Enterprise Fund » Nieman Journalism Lab » Pushing to the Future of Journalism