Loss of trust: Behind the two months of turmoil at the Judith Neilson Institute

As winter came to an end on an overcast Saturday in August 2019, some of the country’s senior newspaper editors climbed onto a super yacht in Sydney Harbour.

The boat, with leather seats and glossy wood-panelled interiors, was hired for a three-hour cruise to celebrate the Judith Neilson Institute of Journalism and Ideas, and its sponsorship of Sydney’s Antidote Festival. For editors who had spent the better part of the last decade battling to keep newsrooms open, the day wasn’t easy to forget: French champagne, oysters and prawns, according to multiple sources who attended.

Billionaire Judith Neilson and the executive director of her journalism institute, Mark Ryan: Parting waysCredit: James Brickwood/Judith Neilson Institute

It was also memorable for JNI’s newly appointed group of international advisors, who were flown in from offshore for the occasion and put up in Sydney’s Park Hyatt, one of the city’s most expensive hotels.

It was a cruise fit for a billionaire. But the billionaire in question wasn’t there.

Instead, the group - some uneasy about the flashiness of the event - were welcomed by Mark Ryan, a senior advisor to former prime minister Paul Keating and long-time advisor of the Lowy family, who was appointed to lead the Institute by its namesake founder, Judith Neilson.

Neilson, a billionaire who was formerly married to fund manager Kerr Neilson, was widely praised for a $100 million commitment to support Australia’s embattled media sector through a not-for-profit journalism fund, which she unveiled in 2018. But what has unravelled over the past eight weeks has put the entire Institute’s reputation on the line.

Over a two-month period, three years of JNI work has quickly unravelled. The independent directors of the board have all abruptly left and Ryan, known by some as the billionaire whisperer, has hired lawyers to negotiate his exit. Neilson, who until now was at arm’s length from the Institute, wants to be more involved as it changes direction. Staff feel uncertain about their future and some media companies are becoming wary of taking money from an institute that no longer appears to be independent.

Billionaire philanthropist Judith Neilson wants her journalism institute to change direction.Credit: James Brickwood

It is hard for the directors and international advisors of the JNI to pinpoint the precise moment that led to a shift in Neilson’s vision for the Institute, which was revealed by this masthead last week. Those that could be contacted said they were caught off guard by Neilson’s change of heart. Neilson is not commenting on the events that have unfolded over the past two months.

Multiple people familiar with the shift in direction, who requested anonymity to speak freely, claim the catalyst was the departure of Neilson’s long-time advisor, Jonathan Teperson on April 6.

Teperson, who was chairman of the Neilson family office and on the board of the JNI, left both roles quietly. The independent directors were not told the reason behind the decision. Teperson could not be reached for comment.

But it wasn’t until a letter was sent to the directors on May 12 that it became clear things were about to change. People familiar with the correspondence, signed by Neilson, said it apologised for what might come as a “surprise” to directors.

It detailed Neilson’s plans to remove Ryan from his position and requested the board not only appoint her daughter, Beau, and lawyer, Daniel Appleby, as directors, but vacate board meetings. The letter also backpedalled on long-term plans for a coveted international prize for ideas, which was about to be announced. Ryan and the board had spent more than a year on the work, which was believed to have been Neilson’s idea initially.

Ryan, who is unable to speak because he has engaged lawyers to negotiate his exit from the company, was not offered a package for his departure, according to people familiar with the matter.

“We’re an institute, not a foundation, and we’re not here to prop up failing businesses”.

What a failed JNI grantee claims they were told.

When Neilson sent her letter, there was an ambition for the board directors to review the Institute’s contribution to the sector. Simon Freeman, chief executive of Neilson’s family office, said Neilson was happy with the work of the Institute to date, but has decided her vision would be better served by a change in direction. He declined to comment on Ryan’s exit.

But a refusal by the independent directors to meet the requests of the letter has now put that review in the hands of Neilson’s family and advisors. Neilson’s involvement was a decision that concerned the directors, who believed independence was crucial to the success of the Institute.

For their part, the independent directors - former NSW Justice Jim Spigelman, Free TV CEO Bridget Fair, former Victoria State Library CEO and current boss of the Peter MacCallum Cancer Foundation Kate Torney, and The Australian’s editor-at-large Paul Kelly, felt the Institute’s work so far was a job well done.

The Institute - which contributes to the sector through grants, education programs and events - says it has funded 100 projects across 14 countries. It has facilitated fellowship programs, helped hire journalists, partnered with events such as Global Investigative Journalism Conference and provided emergency funding for COVID-19. The Institute has so far spent $5.1 million on grants and $991,500 on conferences, speeches and roundtables, according to documents filed with the charity register. About $6.8 million has been spent on “project development and implementation”. Nearly $4.7 million has been spent over three years on “employee expenses”.

But others aren’t so sure the Institute has done what it set out to achieve. The concerns in lack of direction and inconsistencies in the way funding was allocated were voiced by some within the company - including former senior officer Prue Clarke who left after 18 months - and members of the international advisory council, who are not paid for their positions.

Some independent media organisations said they struggled to get any engagement on their ideas, while others were confused why international organisations - such as the Columbia Journalism Review, which secured about $100,000 for an edition on climate change, could receive funding for projects when local players had been denied.

One hopeful, local grantee was told upon rejection of their application: “We’re an Institute, not a foundation, and we’re not here to prop up failing businesses.”

Sources familiar with the Institute’s inner workings said executives such as Ryan and chief operating officer Anthony Bubalo based grant decisions on what they considered quality journalism. Media companies either approached with fully formed ideas, or worked with the Institute on potential areas they could support. Once an idea was well-developed, it went before a finance committee, which included Ryan. Several pointed out to this masthead that it was difficult to draw funds from the $100 million trust that Neilson set up.

Multiple sources, who spoke anonymously, said they felt their voices were not heard and that captain’s calls were made by Ryan and Bubalo. A few people said it was unusual for large legacy media companies to receive philanthropic funding ahead of grassroots journalism and independent organisations. But they suggested this was an intentional move by Ryan to build the Institute’s reputation and give it international recognition. This idea that larger organisations were favoured is disputed by people inside the Institute who say this is not the case (the Institute supported more than 150 partners).

The disparity between the Institute’s expenses and objectives was not helped by lavish events that it held, or a first-class, round-the-world trip Ryan took shortly after launch to meet with potential stakeholders.

However, those familiar with the costs said these expenses were approved under a strategy to make a global impact in a few short years.

Some media executives said Ryan, considered by some to be the fourth adopted son of Frank Lowy, the Westfield founder, would only engage with influential people or those he had a personal relationship with. They felt the ability to get a grant was unachievable otherwise (those close to Ryan dispute this given the number of deals struck with small, medium and large players).

Clarke, who came forward this week to express her concerns with the direction of the institute, said there was “no guiding strategy”. While sources close to Ryan have assured there was a five-year strategy in place, multiple senior media executives - including those who received funding - said their experience with the Institute was “frustrating and inconsistent”.

Ryan declined to comment for this piece. Milton Cockburn, former editor of The Sydney Morning Herald and advisor for former Premier Neville Wran, who worked with Ryan on a feasibility study in the early stages of JNI, says it did have a clear strategy.

“I remained in touch with Mark on this and can assert, without contradiction, that the Institute would not have emerged - and certainly would not have emerged with a $100 million cheque - without Mark,” he said. “I can also assure you the final version of the feasibility study was far more detailed, and prescriptive, than that which was done for the Lowy Institute (with which I am familiar).

“The claim that the Institute does not have rigorous structures and processes in place for grants is nonsense and an insult to the board members of the institute and its finance committee.”

While media executives are quick to criticise the inconsistencies in funding allocation, none would go as far as to say they are ungrateful for what they have received. For some, such as Guardian Australia, the funding has played a crucial role in coverage of the Pacific.

Broadsheet Media founder Nick Shelton said he had a positive experience working with the institute. “They were great,” he said. “They came to us and said we are only as good as the ideas we receive. We collaborated with them and put forward a bunch of ideas. We agreed funding for a general news reporter was a great initial project that met both our objectives.”

The Sydney Morning Herald and The Age have both received funding from the Institute, including to hire Indigenous journalists and for reporting trips to Ukraine.

Freeman said last week the Institute will continue to run and has committed to continuing to provide funding for already approved projects. But concerns about the institute’s future run deeper than that.

A letter written by American journalist Bruce Shapiro and signed by four other members of the 12-person advisory council (two others intended to sign, but the letter was already sent) last week warned of the implications of a lack of independence. It was the view of Shapiro and others that it did not matter who was ultimately in charge, but a lack of independence would damage the good work of the Institute.

The advisory council and former independent directors are concerned about what the changes mean for public service journalism. They have seen other projects fall through when a donor takes back control. Neilson has not responded to the letter sent by the advisors last week.

A best-case scenario would be a robust, well-governed Institute that meets the objectives Neilson set out to achieve: coverage of under-represented communities, investment in grassroots and investigative journalism. Multiple people who spoke to this masthead say it is not tied to who is director or who is on the board, but an overall higher standard of governance.

What drove Neilson’s change of heart is unclear, but one philanthropic observer pointed out: “It is more likely that rather than any specific issue, [Judith] came to feel disrespected. If a donor loses trust in the leadership, it is very hard to get it back.”