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Texas Observer will continue publishing after staff crowdfunds more than $300,000

By Sewell Chan, The Texas Tribune

Texas Observer will continue publishing after staff crowdfunds more than $300,000” was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

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Three days after voting to cease publication and lay off its journalists, the nonprofit publisher of the Texas Observer said on Wednesday that it would change course and keep the 68-year-old liberal magazine going, following an emergency appeal that crowdsourced more than $300,000.

“Today, upon receiving significant financial pledges over the past few days, the Texas Observer board gathered to vote to reconsider previous board actions,” Laura Hernandez Holmes, the president of the board of the Texas Democracy Foundation, which publishes the magazine, said in a statement. “The vote to rescind layoffs was unanimous, and the board is eager to move the publication to its next phase.”

She praised the donors who had stepped forward and expressed “gratitude to the Observer’s staff for stepping up and working hard to keep the publication alive.”

The Observer still faces significant obstacles to its survival, however. Board members have acknowledged that they allowed the budget, which reached $2.1 million last year, to grow beyond what was sustainable. Its top business officer resigned on Thursday, and its chief fundraiser stepped down Monday, both in protest of the board’s decision to close the magazine. The fundraiser, James Canup, started the GoFundMe appeal hours after resigning.

Hernandez Holmes announced that she is stepping down from the board on Friday, though she will remain a donor.

“The long-standing issues at the Observer, regardless of the personalities who fill the org chart, are structural,” Canup said in an interview before the board reversed its decision. “The board of the Texas Observer has always been informal in its operations. It’s easy for a sense of distrust to develop between the board and the staff, and similarly between the small business and editorial sides of the publication.”

Among the reforms needed, he said, are a CEO to oversee both the business and editorial teams; changes in bylaws that would improve governance and accountability at the board level; and new board members with experience in media, technology and business. Board members have been “consumed by day-to-day operational considerations over the last couple of years and, reasonably, haven’t had the opportunity to pull their heads up, look into the distance, and think strategically,” Canup said.

Canup said he was elated at the strong response to the fundraising appeal but ruled out rejoining the staff. “If the journalism of the Texas Observer is a delicious meal, I think I want to eat the meal, not be in the kitchen,” he said.

The Observer has always been scrappy, even in good times. This was not the first time the magazine had faced a near-death experience, although it was perhaps the most visible, attracting attention in The Nation and The New York Times after The Texas Tribune first broke the news of the decision to close on Sunday night.

Robert R. Frump, a longtime board member who joined the staff of the Observer last summer to temporarily oversee business operations, and who resigned in protest on Thursday, said the Observer has always been a dicey economic proposition.

“I know it seems improbable, but it has been improbable since 1954,” he said.

Monika Bauerlein, the CEO of Mother Jones, the San Francisco-based liberal magazine, said the issues at the Observer resonated since both publications “were born into the same family of scrappy muck-raking magazines.” Such magazines, she said, “can do rigorous journalism and be openly committed to core values of justice and democracy.”

She added: “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 at which a magazine like the Texas Observer takes aim.”

Even as the journalists, led by editor in chief Gabriel Arana, cheered the board’s reversal, the magazine continues to face substantial questions: whether to move to online-only publication (which would save around $300,000 a year); how to stabilize an organization that has churned through leaders repeatedly in recent years; and how to make the Observer economically sustainable.

In a statement she released separately from the board’s, Hernandez Holmes noted that she had been recruited to join the board in early 2020 because of her experience as a political fundraiser and campaign strategist. But senior staff members were not transparent with her about the organization’s finances, she said.

“After requesting budget statements from senior staff for several months, I finally received a clear picture early this month, and my fears of a potentially dire financial situation were realized,” Hernandez Holmes said. “Much of the $200,000 the board had put into savings to rebuild our reserve account had been spent without board approval, and we felt we could no longer sustain the operation in its current form.”

Frump has insisted that it was customary to dip into reserve funds, but in a statement on Wednesday he acknowledged that he had not properly managed some of the magazine’s finances, including a crucial $1 million pledge by the Tejemos Foundation, a family foundation run by former journalists Lynne Dobson and Greg Wooldridge. The foundation disbursed $400,000 last year and was in talks with the staff about the remaining $600,000.

“The grant was designed to be match based, and was intended to drive fundraising and build a long-term financial viability,” he said in a statement. “The Observer did not follow the correct protocol in applying for distribution of the 2023 portion of the grant. We made incorrect funding assumptions.”

The board said “the Observer organization as a whole misunderstood the nature and schedule of their gift, which was always designated as a matching gift.”

Sharp disagreements among Hernandez Holmes, Frump and Arana in recent months mirrored a similar clash less than two years earlier. Arana’s predecessor, investigative journalist Tristan Ahtone, who was the magazine’s first Native American editor in chief, resigned in August 2021, saying that the board had tolerated a racist attack on him by a staff member.

Several other editorial staff members followed Ahtone out the door. The staff wrote a letter to the board at the time, asking that the board clarify the “firewall” between the editorial and business sides of the operation; open future board meetings to the staff, including meetings of its budget committee; and set about “a clearer and more explicit HR conflict resolution process.”

The publisher, Mike Kanin, soon left, as did the board chair, Abby Rapoport, whose family has supported the Observer since its founding.

In 2022, the magazine hired Canup, the fundraiser, and Frump, the senior adviser, along with Arana, who had built his career in left-leaning journalism at the American Prospect and HuffPost. Now two of them are gone, along with the board president, Hernandez Holmes. The board has not decided who will succeed her, she said.

Frump said the core challenge for the Observer was to regain relevance and attract a younger, more diverse audience. “The Texas Observer’s base is Ann Richards- and Molly Ivins-era liberal white people,” he said, referencing the former Democratic governor and legendary Observer writer and editor. “We’re aging out.”

In her statement, Hernandez Holmes insisted that her intention had not been to shut down the magazine permanently.

“My intent in voting for layoffs and hiatus was never about closing down the publication,” she said. “The actions I took as board president were intended to allow space for the Observer to be reconstituted, and reimagined in a more sustainable form, so as to develop a strong business model that could adapt to an ever-evolving media landscape.”

Rapoport, the former board president, said she was gratified by the outpouring of support from readers but that sustaining such support will be a challenge.

“Can those thousands of people sustain support — not just this one big push, but over and over again, because that’s what it’s going to need?” she said. “That’s the million-dollar question.”

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