UPDATE: For a more recent and fuller account of the closing of the Chicago News Cooperative, please follow this link.
The Chicago News Cooperative will cease operation February 26, founder James O’Shea told his staff Friday afternoon. CNC, which has contributed four news pages a week of Chicago news to the New York Times and maintained a news-centric website since O’Shea launched it in the fall of 2009, asked the Times for financial support that would allow it to continue, O’Shea said, but the Times refused. There’s been no quarrel in New York with the quality of the report that CNC provided, but it didn’t increase circulation or draw advertising to an extent that made the Times willing to commit more money to it.
CNC’s financial crisis came to a head last week, O’Shea explained, when the IRS issued a ruling that compromised the level of corporate underwriting and foundation support CNC could expect in the future. According to the IRS, tax benefits that would be received for funding particular projects would be denied if the funds were simply intended to sustain the operation. CNC’s primary financial lifeline has been the MacArthur Foundation, which has given it a million dollars.