Independent Journalism – The Special Case of the Virginia Mercury

by James C. Sherlock

I look every day to the Virginia Public Access Project’s (VPAP) VaNews.

I am a donor.

It proclaims:

VaNews will consider ‘original news reporting’ that is published online by print newspapers, broadcast radio and TV stations and outlets that meet our standards as ‘online news providers.’

On that same page VaNews defines qualified “online news providers”, among other criteria, as publications that are “not produced by a political organization.”

Yet it endlessly publishes stories from the Virginia Mercury. Nothing wrong with progressive commentary. God knows Virginia Mercury is one voice in a very large chorus.

But those stories are produced by a hierarchy of political organizations founded by what both Politico and The New York Times have called a progressive “dark money” network.

A tax-exempt not-for-profit political network. Amplified by VPAP’s VaNews.

Arabella Advisors. It all starts, as do so many progressive political endeavors, with Arabella Advisors. Arabella is a consulting company that “has helped hundreds of clients representing more than $100 billion in assets increase their philanthropic impact.”

Their clients increasingly recognize that promising ideas with the power to effect deep social change often require up-front capital, rapid prototyping, and a higher tolerance for risk than governments or the market can provide.

Arabella serves as the hub of what Politico has labeled a progressive dark money network made up of non-profits.

A very wealthy dark money network.

The Sixteen Thirty Fund and the Hub Project. From Politico, more from a story subtitled a “Massive ‘dark-money’ group boosted Democrats in 2018”:

A little-known nonprofit called The Sixteen Thirty Fund pumped $140 million into Democratic and left-leaning causes.

the Hub Project controlled the flow of money for this effort from Sixteen Thirty Fund into states and districts, according to reporting by The New York Times.

From a New York Times story in April of this year:

Long before he emerged as a potential champion of journalism with his bid for Tribune Publishing, the Swiss billionaire Hansjörg Wyss quietly created a sophisticated political operation to advance progressive policy initiatives and the Democrats who support them.

The organization, called The Hub Project, was started in 2015 by one of Mr. Wyss’s charitable organizations, the Wyss Foundation, partly to shape media coverage to help Democratic causes. It now has 60 employees, according to its website, including political organizers, researchers and communications specialists. Mr. Wyss and his charitable foundation are not mentioned on The Hub Project’s website, and his role in its creation has not been previously reported.

The Hub Project’s activities include organizing paid advertising campaigns that criticized Republican congressional candidates in 2018, as well as a series of marches in 2017 that called on then-President Donald J. Trump to release his tax returns.

These funds originate primarily with major left-of-center foundations and individual donors, not with the company Arabella Advisors, and are controlled by the nonprofits, which in turn “hire” Arabella Advisors to consult in exchange for a fee. Many of Arabella’s top officials, including firm founder Eric Kessler and former managing director Bruce Boyd, are current or former principal officers on the nonprofits’ boards of directors.  Between 2008 and 2020, Arabella’s nonprofits paid the company over $182 million in contracting and management services fees.

The Hub Project came out of the idea that Democrats should be more effective in conveying their arguments through the news media and directly to voters. Its business plan, a 21-page document prepared for the Wyss Foundation in 2015, recommended that the group “be solely funded by the Wyss Foundation at the outset” and that it would work behind the scenes to “dramatically shift the public debate and policy positions of core decision makers. The plan added that The Hub Project “is not intended to be the public face of campaigns.” [Emphasis added.]

Hopewell Fund. Another 501(c)(3) organization that is advised by Arabella is the Hopewell Fund.

Hopewell has told the IRS that it “aimed at advancing public good and achieving equity.” In 2018 it sponsored a number of websites designed to look like standalone nonprofits. One was Verified Virginia.

Lee Bodner is the Board Chair and President of the Hopewell Fund and President of the New Venture Fund.

Lee … previously served as a Managing Director at Arabella Advisors, leading its engagement with the New Venture Fund and many national nonprofit organizations that Arabella has managed, including the Sixteen Thirty Fund, the Latino Victory Project, and others…. Lee also built strategic partnerships with nonprofits, including the Clinton Foundation and the Nature Conservancy.

On the revenue side, Hopewell in 2020 realized more than $150 million in contributions and grants. One contributor gave $51 million. Another $18 million; four more in the $3-5 million range. It finished the year with $160 million in net assets and fund balances.

It reported $128 million in 2020 expenses, including $80 million in grants. It reported spending $5 million in attempts to influence legislation. It gave $8 million to Acronym, a Democratic get-out-the-vote organization.

As for Virginia grants:

  • Freedom Virginia in Richmond got $320,000. “Freedom Virginia urges General Assembly to override Youngkin vetoes”;
  • New Virginia Majority Education Fund in Alexandria $13,000;
  • Plus Communications LLC in Arlington $100,000. “PLUS Communications was founded in 2011 by three of the nation’s top political and public affairs strategists after working together on dozens of hard-fought campaigns;”
  • The Commonwealth Institute for Fiscal Analysis in Richmond $25,000. “The Commonwealth Institute for Fiscal Analysis (TCI) advances racial and economic justice in Virginia by advocating for public policies.
  • Virginia Interfaith Center for Public Policy $89,200. It “advocate(s) for racial, social, and economic justice in Virginia’s policies and practices.”
  • Virginia 21 Action in Richmond $24,500. A progressive get-out-the- vote organization, it’s target audience is college students. “Virginia21 will provide young Virginians with clear and easily accessible information on candidates, ballot initiatives, issues, and whatever else is needed to ensure that they are well-informed voters;”
  • Whole Woman’s Health Alliance headquartered in Charlottesville is listed as a health company in Hopewell’s Form 990. It runs a series of abortion clinics, including one in Charlottesville. Hopewell granted that organization nearly $1 million in 2020.

Nothing illegal or unethical about any of that. It’s a free country.

But VPAP does not consider Hopewell to be either a political organization or partisan. Some might find that conclusion unusual.

States Newsroom. In 2017, Hopewell launched States Newsroom, a network with initial sites in 15 states. It now has 29 sites and content-sharing agreements with eight other nonprofit newsrooms.

(States Newsroom publishes a daily newsletter on reproductive rights. No kidding. Daily.)

From States Newsroom 

now employ(s) more than 140 full-time editors, reporters, and support staff in 29 states across the country. States Newsroom has established a new, philanthropic business model that focuses on state politics and policy.

It is also a strategic spender.

In 2019, it booked a profit (revenue less expenses) of nearly $5 million on contributions and grants revenue of $7 million. In the presidential election year of 2020, it spent all but $300,000 of contributions and grants of nearly $10 million.

Chris Fitzsimon is the publisher of States Newsroom.

Chris oversees the content and themes of the organization, managing financial resources, and supervising the state editors. He also travels frequently to hire and visit editors and grantees and appears weekly on the TV political talk show NC SPIN. [Emphasis added.]

From 2004 to 2017, Fitzsimon was the founder and original director of NC Policy Watch, a project of the North Carolina Justice Center.

Fitzsimon was also the founder and director of Common Sense Foundation, a now-defunct progressive think tank in Raleigh.

States Newsroom files a Form 990 for all of its affiliates. I note from its 2020 Form 990 Schedule I that it donated $310,000 to North Carolina Justice Center.

Probably a worthy cause.

Courtney Cuff, listed as a $300,000 a year project director on Hopewell’s 2020 Form 990, was listed on States Newsroom’s 990 as Treasurer.

But States Newsroom is not considered a political organization by VPAP. That probably would come as news to the Hopewell Fund. And Ms. Cuff.

Virginia Mercury. States Newsroom subsidiary Virginia Mercury started operations in 2018.

The Virginia Mercury is an independent, nonprofit online news organization covering state government and policy. The Mercury launched in 2018 to bring a fresh perspective to coverage of the state’s biggest political and policy issues and fill the gaps in statehouse reporting created by a shrinking media industry.

The Mercury is part of States Newsroom, a national 501(c)(3) nonprofit supported by grants and a coalition of donors and readers. We retain full editorial independence and are a proud member of the Virginia Press Association and the Virginia Capitol Correspondents Association.

The Virginia Mercury generally features progressive commentary.”

“Independent.” From States Newsroom. Whose publisher hires the editor of Virginia Mercury. Whose headquarters stories Virginia Mercury regularly republishes. As then does VaNews.

If true, that independence would come as a distinct disappointment to Hopewell Fund donors.

The Virginia Press Association “champions the common interests of Virginia newspapers and the ideals of a free press in a democratic society.”

The Virginia Capitol Correspondents Association is comprised of “print, broadcast, and on-line professional journalists who report on state government and politics in the Commonwealth of Virginia.”

Define free press. And journalism.

And consider why and how Virginia Mercury might report on state government and politics in Virginia.

Philanthropic Non-Profits. State Newsroom is not only ”philanthropic,”,it’s a “non-profit supported by grants and a coalition of donors and readers.”

Those two labels are expected to be self justifying, because, for many, they are. They signal virtue.

  • Mother Teresa was philanthropic;
  • Greta Thunberg is a non-profit person. (Sometimes the virtue signals get mixed in her world. “Under the suggestion and guidance of the BIPOC members” of the group, a New Zealand youth environmental protest group inspired by teen activist Greta Thunberg disbanded, accusing itself of racism.)

People should say what they want, write what they want, and donate to whatever causes they favor.

But Hopewell, States Newsroom and Virginia Mercury are “public charities” only by the grace of the tax code. They are in fact tax-exempt political organizations.

Legal, but you might not tell your mom, or VaNews, you had done that.

Bottom line. Ignore detailed exposés from Politico and The New York Times.   Ignore the Forms 990.

Virginia Mercury says it is both “part of States Newsroom” and independent (except for that hiring and firing of the editor thing).

I’d have to ask them to pick one  But that’s just me.

Virginia Mercury is as independent and non-political as parent company States Newsroom. And States Newsroom is as independent and non-political as the Hopewell Fund.

They certainly claim they are independent, philanthropic even, and non-political.

Clearly VPAP’s VaNews believes them.

The Executive Director of VPAP is the genuine article, a committed free press guy. The Board Chairman is a Democrat and the Vice Chairman a Republican. It really tries to be what it says it is.

VPAP, to whom I donate, tells the IRS its mission is:

To elevate public understanding of Virginia politics and government by organizing and printing public information in ways that are easily accessible to all and free of partisan bias.

So let it be written.