• James O’Shea

James O’Shea, founder and editor of the Chicago News Cooperative, told his staff Friday afternoon that on February 26 the CNC would shut down. Or to be more specific, it would stop publishing in the New York Times and stop maintaining its website, the two forums in which it publicly exists.

Two pieces of bad news drove this decision.

O’Shea was counting on a substantial grant from the MacArthur Foundation, which had helped put CNC on its feet in the fall of 2009 and had already given it a total of a million dollars. But a problem arose. The IRS has yet to rule that CNC and similar web-based news operations in other cities deserve the not-for-profit 501(c)(3) they’ve applied for. This hasn’t been a problem for these operations, which have been able to receive through fiscal agents — which in the case of CNC has been WTTW.