WASHINGTON—Marilyn W. Thompson, then the executive editor of the Lexington Herald-Leader in Kentucky, faced a problem last year that's afflicting more and more newspaper editors across the country: She wanted to initiate a major reporting project but lacked enough money to pay for it.

Thompson, who wanted the paper to take a deep look at Mitch McConnell, Kentucky's senior U.S. senator, a Republican, came up with an answer: She'd seek support from the Center for Investigative Reporting, a California-based nonprofit group that's financed or conducted groundbreaking work in television and print journalism.

The idea was approved by Thompson's bosses at Knight Ridder, which owned the Herald-Leader at the time. The center approved a $37,500 grant, and Herald-Leader reporter John Cheves went to work.

This week, with Cheves winding up a six-month examination of McConnell—and the senator's staff raising questions about the unusual grant—the Herald-Leader's new owner, McClatchy Co., came to a different conclusion. McClatchy acquired Knight Ridder in June.

Howard Weaver, McClatchy's vice president for news, announced that the company would reimburse the Center for Investigative Reporting for the grant.

"If we want one of our staff members to do a report for one of our papers, we should pay for it," Weaver said.

The Herald-Leader said the four-part series would be published as planned, beginning Sunday.

The newspaper's report comes on the eve of an election that could make McConnell the majority leader of the Senate.

First elected to the Senate in 1984, McConnell has risen to be the chamber's No. 2 Republican.

He drew national attention for his outspoken opposition to a bipartisan campaign-finance bill that President Bush signed into law in 2002. He was the lead plaintiff in a lawsuit against the measure, which the Supreme Court upheld in December 2003.

McConnell's stance "begged the question" of how he himself had become such a prodigious political fund-raiser, said Thompson, who left the Herald-Leader in July to become the national investigations editor for the Los Angeles Times.

Cheves, 34, was assigned to answer that question. He's worked for the Herald-Leader since 1997, examining the political campaign finances of Democrats and Republicans alike in local, state and federal elections.

The decision to find outside funding put the Herald-Leader on the cutting edge of an industrywide wave of change, as cash-strapped newspapers, facing increased Internet competition, explore new revenue sources beyond the traditional advertising and circulation streams.

"The old business model of just having advertisers and readers fund journalism is giving way to a new model where news organizations go to philanthropic and other groups to subsidize watchdog projects," said Tom Rosenstiel, a former Los Angeles Times reporter who founded the Project for Excellence in Journalism, a research center that monitors the performance of the press.

Public TV and radio networks long have used money from a broad array of foundations to finance documentaries and other news reports, but the practice is more recent in print journalism.

"It would be better if it didn't happen, but the old model does seem to be giving way," Rosenstiel said.

As the Herald-Leader prepares to publish a series on McConnell focusing heavily on how he raises money and who provides it, the senator is trying to turn the tables on the paper.

In a series of e-mails and phone calls to Herald-Leader editors, McConnell's top aides accused the Center for Investigative Reporting of liberal bias.

Don Stewart, McConnell's communications director, said a search of campaign contributions by members of the center's board of directors and staff members had revealed donations only to Democratic candidates or affiliated groups.

McConnell's aides delved further: Cheves' work on McConnell had really been funded by the Deer Creek Foundation, a St. Louis organization that's giving the Center for Investigative Reporting $300,000 over three years to pay for an in-depth look at campaign financing by both parties.

Stewart noted that in 2002, Deer Creek gave $100,000 to New York University's Brennan Center for Justice to help defray the costs of litigating against the lawsuit that McConnell and others brought over the campaign-finance legislation. The Brennan Center was co-counsel in the case.

"Just as (gun-control advocate) Sarah Brady would question the objectivity of a reporter paid by a pro-gun-rights group, it should be easy to see why we question the objectivity of a reporter whose salary was paid by a group that provides millions of dollars to the senator's political opponents," Stewart said.

From 2001 through 2004, the Brennan Center received more than $1 million from the Deer Creek Foundation, according to the foundation's IRS filings. Seven other groups that many conservatives regard as hubs of left-wing politics got a total of nearly $2.6 million from the Deer Creek Foundation, among them Public Citizen, the Center on Budget and Policy Priorities and the Alliance for Justice.

Stewart said that Joan Claybrook, the president of Public Citizen, called McConnell "King of the Prevaricators" in 2001 and accused him of having "feasted on today's legalized bribery and corruption." Deer Creek gave Public Citizen a total of $458,000 from 2001 through 2004.

In its solicitation of grant proposals, Deer Creek says projects should "focus on the preservation and advancement of majority rule in our society, including the protection of basic rights as provided by the Constitution and Bill of Rights and education that relates to this concept."

Mary Hawker, the director of the Deer Creek Foundation, declined to be interviewed. In three faxed statements, however, she challenged McConnell's motives for protesting the Herald-Leader series.

"We think false issues are being raised (what better way to divert attention from the main story)," Hawker said. "Deer Creek has been supporting organizations working for campaign-finance reform since 1984. Organizations receiving grants often point up abuses under current law (by Democrats and Republicans) to support and demonstrate the need for reform."

The allegations that the Center for Investigative Reporting is biased surprised Dan Noyes, its acting executive director.

"We certainly have been attacked over the years, but I'm not sure I've ever seen somebody attack the story in the media before it has even appeared," he said.

The center, Noyes said, collaborated with PBS' "Frontline" program to produce ambitious investigations of the campaign finances of both parties in the 1992 and 1996 presidential elections. A 1997 project, also financed in part by Deer Creek through the center, became an award-winning book called "Secrets: The CIA's War at Home," Noyes said. It revealed the clandestine efforts of President Lyndon Johnson, a Democrat, to undermine reporting that was critical of the Vietnam War, he said.

Cheves, the McConnell series' reporter, said the Center for Investigative Reporting "has reviewed various drafts of the stories" but has "made no suggestions or changes."

The center doesn't show material to the Deer Creek Foundation or any of its other funding sources, Noyes said.

Cheves and his editors at the Herald-Leader said neither group placed any constraints on his reporting. They said he had limited contact with the Center for Investigative Reporting and none with Deer Creek as he produced the series.

"It is extremely thorough and very fair," said Sharon Walsh, the enterprise editor at the newspaper. "I don't know how else I would be able to associate my name with it. I think it's an excellent piece of journalism."

The controversy over the McConnell series and its funding ended up in the lap of Weaver, McClatchy's vice president for news. After consulting with several editors involved in the project and with McClatchy Chief Executive Officer Gary Pruitt, Weaver decided to reimburse the Center for Investigative Reporting for the original grant to the Herald-Leader.

"I'm not uncomfortable with the journalism, and I'm certainly not uncomfortable with the journalist," Weaver said. "I just think that the relationship (with the outside groups) was sufficiently unorthodox that we don't need to do it."

The decision to refund the grant drew various responses from some of the main players in the controversy.

For McConnell, the move comes too late.

"Returning the money after the fact doesn't change the product or any of the concerns we've raised," Stewart said. "It would be hard to explain why the paper is running stories that McClatchy has determined came as the result of an inappropriate funding process."

For Bob Steele, who teaches journalism ethics at the Poynter Institute in Florida and in newsrooms around the country, the decision to return the money was the right one.

"I would think that kind of specific funding by an organization with a direct stake in the players and the issues is ethically problematic," Steele said. "You can't erase the board here in its entirety because there's a history, but at least it's wise for McClatchy to say it's going to pay for the costs of doing this reporting."

The decision disappointed Thompson, the former Herald-Leader executive editor, whose Knight Ridder bosses had praised her for producing important journalism with outside funding.

"The truly important thing is that revelatory reporting will be published, after it has been thoroughly vetted for accuracy and fairness," Thompson said. "Which, of course, was our goal from the very start."

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(c) 2006, McClatchy-Tribune Information Services.

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