After crowdsourcing more than $300,000, the nonprofit publisher of the Texas Observer said on Wednesday that it would keep the 68-year-old leftist magazine going.
“Today, upon receiving large financial pledges over the past few days, the Texas Observer board assembled to decide to revisit earlier board actions,” said Laura Hernandez Holmes, president of the Texas Democracy Foundation, which publishes the magazine. The board voted unanimously to rescind layoffs.
She thanked donors and the Observer crew for “stepping up and working hard to keep the journal alive.” Yet, the Observer faces significant challenges to its survival. Board members have admitted that they allowed the budget, which reached $2.1 million last year, to grow unsustainable.
The magazine’s chief fundraiser quit Monday, and its top business officer resigned Thursday to protest the board’s decision to close it. James Canup started the Crowdfunding campaign hours after leaving. Hernandez Holmes resigned from the board on Friday, but she will donate.
Canup noted before the board changed its judgment that the Observer’s problems were fundamental. “The Texas Observer board has always been casual. It’s easy for the board, personnel, and tiny business and editorial sides of the journal to distrust each other.
He suggested a CEO to manage the business and editorial teams, bylaw modifications to strengthen governance and accountability, and new board members with media, technological, and business experience. “Consumed by day-to-day operational issues over the last couple of years and, reasonably, haven’t had the time to raise their heads, gaze into the distance, and think strategically,” Canup said of board members.
Canup was thrilled by the fundraising response but ruled out returning to work. “If Texas Observer journalism is a beautiful feast, I think I want to taste the meal, not be in the kitchen,” he remarked.
Even in good times, the Observer was scrappy. After The Texas Tribune announced the magazine’s closure on Sunday night, The Nation and The New York Times covered its latest near-death experience.
Robert R. Frump, a longstanding board member who joined the Observer staff last summer to temporarily handle commercial operations and quit in protest on Thursday, said the Observer has always been a risky company. “It seems unbelievable, but it has been since 1954,” he stated.
Mother Jones CEO Monika Bauerlein said the Observer’s concerns resonated because both organizations “were born into the same family of scrappy muck-raking periodicals” that “can perform rigorous journalism and be openly committed to essential ideals of justice and democracy.”
“That kind of unapologetically engaged journalism is difficult to sustain financially at the best of times, and it’s getting more so at a time when wealth is getting more and more concentrated, and those people and corporations in whose hands it is concentrated are the same people and corporations a magazine like the Texas Observer aims,” she said.
Even as journalists, led by editor-in-chief Gabriel Arana, cheered the board’s reversal, the magazine still faces major questions: whether to move to online-only publication (which would save $300,000 a year); how to stabilize an organization that has repeatedly changed leaders; and how to make the Observer economically sustainable.
Hernandez Holmes, a political fundraiser and campaign strategist, said she was recruited to join the board in early 2020. She alleged senior personnel was not forthright about the organization’s finances.
“After demanding budget statements from top employees for several months, I finally obtained a clear picture early this month, and my fears of a potentially severe financial scenario were realized,” Hernandez Holmes stated. “Much of the $200,000 the board had saved to rebuild our reserve account had been spent without board approval, and we felt we could no longer support the operation.”
On Wednesday, Frump admitted that he had mismanaged the magazine’s finances, including a $1 million contribution from the Tejemos Foundation, a family foundation established by former journalists Lynne Dobson and Greg Wooldridge. Last year, the foundation gave $400,000 to the employees and was discussing the remaining $600,000.
“The award was match-based and intended to drive fundraising and develop a long-term financial viability,” he said. “The Observer did not apply for the 2023 funding correctly. We miscalculated funding.”
The board noted, “the Observer organization as a whole misunderstood the nature and schedule of their gift, which was always designated as a matching gift.”
Recently, Hernandez Holmes, Frump, and Arana clashed like they had two years previously. In August 2021, investigative writer Tristan Ahtone, the magazine’s first Native American editor-in-chief, resigned, stating the board had permitted a staff member’s discriminatory attack on him.
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Ahtone left with other editorial staffers. The staff responded to the board asking that it explain the “firewall” between editorial and business, open future board meetings, including budget committee meetings, and establish “a clearer and more explicit HR conflict resolution process.”
Managemant Impact Solutions Consulting tweeted that Texas Observer will continue publishing after staff crowdfunds nearly $300,000. You can see below:
Texas Observer will continue publishing after staff crowdfunds nearly $300,000 (Sewell Chan/The Texas Tribune) https://t.co/roQykg59nH pic.twitter.com/KlxDkdBKFM
— Management Impact Solutions Consulting (@MiExecSearch) March 30, 2023
Mike Kanin, the publisher, and Abby Rapoport, the board chair, left. The magazine hired fundraiser Canup, senior adviser Frump, and left-leaning journalist Arana in 2022. Two of them, including board president Hernandez Holmes, are gone. She stated the board had not chosen her successor.
Frump said the Observer’s most significant issue was regaining relevance and attracting a younger, more diversified audience. He stated the Texas Observer’s base is Ann Richards- and Molly Ivins-era, liberal white people. “Aging out.” Hernandez Holmes denied wanting to close the magazine permanently in her statement.
“My vote for layoffs and sabbatical was never about terminating the publication,” she stated. “As board president, I created room for the Observer to be rebuilt and remade more sustainably to develop a robust financial model that could adapt to an ever-changing media landscape.”
Former board president Rapoport said she was grateful for reader support but that maintaining it will be difficult. “Can those thousands of individuals sustain support—not just this one major push, but over and over again, because that’s what it’ll need? She said. “The million-dollar question.”
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