The Chicago News Cooperative will cease publishing content on Feb. 26, the Chicago Reader reports, due in part to a delay in a crucial MacArthur Foundation grant. The Internal Revenue Service has yet to decide if CNC and similar web news operations are 501(c)(3) nonprofits; CNC has been receiving funding via its fiscal agent, pubstation WTTW. But recently a MacArthur staff attorney advised the foundation that until the IRS ruled, MacArthur grants should go to specific programs instead of generally sustaining the co-op — that meant a different approval process and a longer wait for the money to arrive, the Reader notes. The CNC had been producing local pages twice weekly for the New York Times but the newspaper realized that CNC's financial position was "precarious," the Reader said, and on Thursday (Feb. 16) canceled that arrangement. James O'Shea, former managing editor at the Chicago Tribune and founder and editor of the CNC, informed the staff of the shutdown Friday afternoon.
UPDATE: Dan Sinker, who leads the Knight-Mozilla News Technology Partnership for Mozilla and wrote a piece for the Huffington Post when CNC launched, writes on his blog that "CNC’s web presence was too little too late," and its social media activities were "too little too little."
UPDATE: O'Shea posted a letter to CNC readers Feb. 20 confirming the closure. "Unlike similar start-up efforts like the Texas Tribune in Austin, the Bay Citizen in San Francisco and ProPublica in New York, we never recruited the kind of seven figure donations from people of means concerned about the declining quality of news coverage around the country," he wrote. "As a result, CNC never raised the resources to make investments in the business side of our operation that would have generated the revenue we needed to achieve our original goal — a self-sustaining news operation within five years. CNC always has been an experiment in trying to figure out a way to finance accountability journalism, the kind of reporting that many news organizations are abandoning as they struggle with a deteriorating business model and financial problems."
"In the coming days and weeks," O'Shea added, "we will be examining our potential to see if we can identify an alternative path and preserve some of the journalistic assets we have developed."