Why Should Family Offices Invest in and Donate to Newspapers?

Family offices and newspapers are not strangers to each other. Billionaires like Rupert Murdoch and Michael Bloomberg made their wealth in the news business. Jeff Bezos, John Henry, Carlos Slim and Warren Buffett all have shares in leading regional or national newspapers such as the Washington Post, The Boston Globe or The New York Times.

But these are exceptions, not the rule. Only very seldom private equity investments in newspaper companies are part of a family office portfolio. The same holds for philanthropy. According to the latest Global Philanthropy Report, education is the main target, with 35% of nearly 30,000 foundations focusing at least some of their resources on the sector. Other sectors covered by donations are human services and social welfare (21%), health (20%) and arts and culture (18%). Newspapers are not part of the picture.

This mismatch between global flows of capital and the newspaper industry is bad news. Whatever the indicator we look at – sales/circulation, revenues, number of active journalists, number of active newspapers, or ad revenues – we are bound to conclude that newspapers are experiencing a life-threating situation.

And ironically this reminds us of their critical role in society. Newspapers are guardians of democracy and the rule of law. When trusted and credible news sources decline, we can become vulnerable to fake news. Newspapers are a fundamental part of a spirited democratic society, by serving as watchdogs against wrongdoings or excesses of power and by empowering citizens to contribute to the social and economic development of their countries and local communities.

To address this critical issue the Granito Center for the Impact Economy, part of the Granito Group, has just launched the Newspaper Impact Rating (NIR), a tool to measure the relevance and social impact of newspapers. The beta version of the NIR presents 38 questions in four categories: “Content” (15 questions), “Reach and Engagement” (10 questions), “Independence” (10 questions), and “Seniority” (3 questions). There are 220 aggregated points allocated to these four categories. At the end, newspapers are placed in a four-tier ranking, ranging from Superior Impact (+176 points), High Impact (110-175 points), Regular Impact (68-109 points), Low Impact (22-67 points) and No Impact (below 22 points).

The NIR will facilitate family office’s engagement with newspapers, either as impact investors or as philanthropists.

Impact investing, a trendy investment discipline within the much broader sustainable finance field, is defined as investments made into companies, organizations, and funds with the intention to generate both financial return and positive social and/or environmental impacts that are actively measured.

To move capital, impact investors demand both the financial and social angles of their allocations to be properly measured. With that in mind, the impact investing industry has developed a set of metrics to help investors allocating resources to sectors such as education, healthcare or affordable housing. The NIR expands the impact investing menu of options by offering the necessary metrics for investors to channel resources to the newspapers with the highest social relevance.

The same principles apply to philanthropy. Most family offices maintain a philanthropic arm that increasingly demands sophisticated data to assist in the selection of targets and to inject effectiveness into the process. Several newspapers are actually non-profit corporation or foundations (e.g. Harper’s Magazine, Voice of San Diego) making them even stronger candidates to be picked out by family offices donations. The NIR is the necessary tool to bridge intent to impact.

Newspapers are a necessity of modern life. Their formats may adjust to readership interests and demands, but they will always be essential to a functioning democracy. As such, they are contributors to an ecosystem driven by liberty and economic openness that directly benefits family offices and impacts their capacity to operate.

By investing in or donating to newspapers family offices are actually benefiting themselves.

Article published in UK magazine Family Capital. Available here.