Center for Public Integrity mulls merger or closure amid dire financial woes

The Center for Public Integrity, one of the oldest and most highly regarded nonprofit newsrooms in the United States, is considering merging with a competitor or closing its doors amid unrest within its senior ranks and of financial difficulties that significantly undermined its reserves, according to two people familiar with the organization’s internal workings.

The nonprofit lost about $2.5 million short of its 2023 budget goal of about $6 million, according to the two people, who would speak only anonymously to protect their relationships within organisation.

This month, Paul Cheung, the organization’s chief executive, resigned after an employee accused him of unethical behavior. The board also eliminated the position of its editor-in-chief, Matt DeRienzo, who left the nonprofit.

In a statement, the Center for Public Integrity said it had experienced a “financially challenging past year,” like many other nonprofit media organizations.

“The board remains committed to CPI and its core mission, and is working hard to determine the best path forward for our journalism,” the nonprofit said in a statement. In a statement, Mr Cheung denied any wrongdoing.

The financial peril facing the Center for Public Integrity threatens to destroy a newsroom of about 30 journalists who have monitored powerful institutions for decades. Much of its funding comes from foundations interested in supporting investigative journalism, including the Knight Foundation and the Robert R. McCormick Foundation.

As its reserves dwindle, its board of directors is considering drastic measures to remedy the situation. The Center for Public Integrity explored a potential combination this year with The Markup, a nonprofit newsroom that publishes investigative stories about technology, but it never came to fruition. The organization also requested cuts to its 2024 budget, three people familiar with the discussions said.

Many newsrooms have fallen on hard times in a difficult market for advertising and subscriptions. Several, including the Washington Post, the Wall Street Journal and the Los Angeles Times, have laid off staff.

Founded by investigative journalist Chuck Lewis in 1989, the Center for Public Integrity has won numerous awards for its journalism, including the Pulitzer Prize in 2014 for an investigation into a rigged system depriving coal miners of health benefits . Last year, he won an Edward R. Murrow Award for general excellence.

Along the way, he pioneered a model of investigative reporting that served as a blueprint for the next generation of nonprofit newsrooms. Over the next three decades, several nonprofits, including ProPublica and the Marshall Project, followed in his footsteps.

“CPI was a very important news organization in the formation of modern nonprofit news,” said Richard Tofel, former president of ProPublica. “What Chuck Lewis really innovated was a dedicated team that would do long-form investigative work designed to generate widespread media coverage in the hopes of generating change.”

Before Mr. Cheung resigned, he was the subject of a human resources complaint that included a Slack message he sent to another employee saying they had to “fudge some $$$” for a presentation to a foundation. After the message was reported to human resources, according to the complaint, Mr. Cheung changed his message to say “explain some $$$,” which the complaint said was “a material change intended to alter the meaning and the intention of his writing.

Mr. Cheung, in a statement, denied misrepresenting the nonprofit’s financial data to its staff, board and partners. He added that he had “worked diligently to ensure the sustainability of the organization.”

“CPI is facing the same economic challenges that many of our peers have faced since the pandemic,” he wrote.

The Center for Public Integrity reviewed the incident and found no evidence of financial impropriety, according to a person familiar with the matter.

Employees also expressed dissatisfaction with the nonprofit’s lack of communication about financial instability and its business plan. In a December letter to the nonprofit’s board of directors, its staff said morale was low in several departments due to a decline in trust that led to “a rift between our CEO and the editorial team.

“This rupture is leading us down a catastrophic path, both financially and culturally,” the letter reads.

Several nonprofit newsrooms have considered mergers in recent years to strengthen their journalism and make a more compelling case to potential funders. In December, Mother Jones announced its merger with the Center for Investigative Reporting, an investigative news organization co-founded by Lowell Bergman, a former investigative producer for “60 Minutes.”