The Counter Has Money, So Why Is It Shutting Down?

On Thursday, Kate Cox, the editor-in-chief of the food site The Counter, published a piece called “The Hardest Story To Write.” If you have read about the media at all over the past decade, you can probably guess where she was going with this. The website — which has spent seven years publishing some of the more aggressive watchdog pieces on the frequently undercovered industries that churn out our daily grub — will be shuttering effective May 20.

The site employs an editorial staff of 17 people, as well as two business executives, four contributing writers, and the publisher, Jeffrey Kittay. The layoffs will impact all of the editorial team, except Kittay.

The website was founded in 2015 by Kittay, a publishing veteran and former Lingua Franca editor, as the “New Food Economy” — an outlet that would cover a shift in agriculture thought away from the dominant industrial modes towards regenerative farming and sustainable food. The name was changed in 2019 to The Counter, in part because of a redesign, but also because the food economy that had once been characterized as “new” had since entered the mainstream. In the time since, the site published pieces on everything from the use of prison labor in food production to the alcohol industry’s campaign to cover up booze’s carcinogenic properties to the problems within regenerative agriculture itself. But that’s over, apparently.

The primary reason, according to Cox, is money. Here’s what she wrote:

We are journalists in a community of journalists; we know there will be follow-up questions. The reasons are many, but the shorthand is this: We do not have sufficient future funding to keep publishing. When that reality becomes non-negotiable, the question isn’t whether to go on; it’s how quickly can we wind down with intention and care?

That’s a familiar justification behind the layoffs or closures at many outlets, both digital and print. But unlike many of the publications that have made similar announcements, The Counter is a non-profit newsroom — a public and donor-supported organization that many have hailed as the future and arguably only sustainable model for independent journalism. That’s alarming for anyone who cares about this stuff. It’s also slightly confusing — because unlike private companies, 501(c)(3)s are required to release their financial information. And The Counter’s financial information looks pretty good.

Take, for example, their annual report from 2020 to 2021, which is available on their website. This report claims that in 2020, the website had $6.5 million in assets. Their liabilities were relatively low — $229,391. In the description below, the magazine goes on to explain that despite the COVID-19 pandemic and because of PPP loans and donor support, they were able to “meet [their] charitable purposes without any disruption.”

In 2021, they had less money: a little over $5 million in assets. But they also had a lighter liability burden, at just over $23,000. The asset decrease may be explained in part by the fact that, per the annual report, they “invested significant resources and time” into fundraising, including hiring several people. But that seemed to pay off: “Fundraising increased 187 percent over the past fiscal year.”

That sounds like a lot of money, but obviously there are expenses. How much of that money is getting sucked up each year by the costs of operating a publication with some two dozen staff? Their most recent tax return, from the 2020 fiscal year, shows that The Counter’s functional expenses totaled to just over $1.8 million — $86,988 of which went to publisher Jeffrey Kittay’s salary. So they would presumably have had several million left over.

The site hasn’t filed a tax return for the 2021 fiscal year, but their annual report does mention their expenses. Last year, they totaled around $2.3 million. The spike can be partially explained by the fact that they “invested heavily in our editorial leadership,” hiring two senior editors, an audience-development editor, and four year-long fellows. And that still left several million in the bank. If that constituted a financial crisis for the website, they did not mention it in their report. They wrote this instead:

As we move into 2022, it is our strong goal to further build capacity on the editorial side and to strengthen the organization with strategic hires that are focused on our long-term sustainability for our reporting.

“Long-term,” it seems, meant May. Perhaps that had something to do with what Cox wrote — “We do not have sufficient future funding to keep publishing” (emphasis added). Did one or more of The Counter’s major donors back out of a future contribution?

The site’s biggest donor is S. Donald Sussman — the philanthropist and frequent funder of local news who made much of his estimated $500 million off the hedge fund Paloma Partners in the 1980s. Sussman provided the initial funding to launch the site back in 2015 and has continued donating in the time since. He long served as president of the non-profit’s board of directors; he stepped down last fall, but remains on the board. The report notes that in 2020, Sussman “provided a long-term multi-million dollar pledge to the organization.” There’s that word again, “long-term” — how long was Sussman’s contribution supposed to last?

We have some questions. Namely, why shut down when you still have several million dollars? And where will that money go? We reached out to The Counter for comment. They haven’t responded yet, but we’ll update if they do. In the meantime, if you’re a recent Counter employee and you’d like to chat, you can email us at tips@gawker.com or newgawker@protonmail.com, for secure messaging.

Update 4/18:

In a comment sent after this post first published, a publicist for The Counter denied that the site retained “millions of dollars,” though she did not dispute any of the details in our story. She attached a press release which claimed that, relative to their revenue last year, the site had operated at a $1.2 million loss. The release implied that this stemmed in part from the fact that the website’s $6 million “start-up pledge” had been restricted such that “only a third of the amount was available in each of the three years.”

We followed up to ask whether the pledge she referenced referred to, as the release suggested but did not specify, Sussman’s initial investment in the site or the subsequent “longterm multimillion dollar” donation in 2020. She did not say which, but clarified that the latter “was to be paid in quarterly installments over three years (FY ’21; FY ’22 (current year); FY ’23).” She did not specify what will happen with the later installments now that the site will close this spring. Here’s a quote from Kittay on the issue:

After intense fundraising efforts, we concluded it was not feasible to raise both sufficient funds to cover immediate projected losses in the current year and the additional funds which would be necessary during the following year when the start-up funding was exhausted.

The publicist could not confirm or deny our other questions: 1) whether Sussman had reduced his support for the site, 2) what would become of the site’s remaining assets, or 3) whether the departing staff would receive severance. But she did confirm that the publisher Kittay would continue to work for the non-profit “to manage the wind-down.”

We asked whether he would continue to receive a salary. She said: “How he is remunerated is up to the organization’s board of directors.”