Minutes after being voted onto the board of the National Magazine Awards Foundation last October, Margaret Wente, editor of Report on Business Magazine, spoke up to pass on a message from her boss, Globe and Mail publisher Roy Megarry. The meeting had moved on to the perennial subject of replacements for retiring sponsors when Wente announced that the Globe felt uneasy about having commercial sponsors for the National Magazine Awards: unless an alternative method of funding was found, the Globe would be “forced to reevaluate its participation in these awards.”

When Wente finished speaking, the reactions around the room ranged from recognition to resentment. After all, the topic had been discussed by the board members before. But due to the success of the program, there had never been any pressure to find alternatives to commercial funding. Among the more seasoned members, the mood was definitely cross. Lynn Cunningham, executive editor of Toronto Life and a board member since May 1986, resented the Globe’s implications that “we were a bunch of unethical schmucks.” After much lively discussion, the board meeting ended with a resolution to form a five-member Endowment Committee including Wente-to investigate alternatives.

The Globe’s reservations wound up a year of controversy about media awards, set off in 1987 by the publication of Elaine Dewar’s article entitled “The Mysterious Reichmanns: The Untold Story” in Toronto Life. The Reichmanns slapped Dewar and Toronto Life with a $102-million libel suit. Because of the action, Dewar’s piece was rejected for consideration last spring by the Royal Bank-sponsored National Business Writing Awards. In the ensuing uproar, two judges resigned and nine publications representing 134 entries withdrew amid cries of censorship. By the end of the year, the National Business Writing Awards program had folded and another-the Canadian Food Writers Awards-was looking for a new sponsor.

Despite the controversy and the Globe’s criticism of the National Magazine Awards program, the problem is not the value of journalism awards-virtually all members of the Canadian media agree that they encourage and reward high standards of writing and visual presentation. The debate, particularly within the Toronto area, is instead over the sources of funding for the awards programs, and the degree to which a special-interest group or commercial sponsor becomes involved in the decision-making process. The issue splits the print media right down the middle. One side contends that as long as the sponsor remains at arm’s length-as a mere financial underwriter-the integrity of the program is uncompromised. The other side maintains that commercial sponsorship automatically taints the awards process by raising the spectre of potential conflict of interest.

But there are different kinds of commercial sponsorship, and the media industry itself makes distinctions. Generally, few awards programs might be justifiably accused of being directly influenced by the sponsor or sponsors. Those that might are usually sponsored by special-interest groups like the North York Fire Fighters Association or the Metropolitan Toronto Police Association, and are put down by most journalists. The fire fighters unabashedly reward favorable coverage of their members. The winners are chosen in four categories-news story, photography, television coverage and radio coverage-from a scrapbook and tapes kept by the association. And while the police awards try to maintain the appearance of neutrality by employing a three-member judging panel of former journalists with no direct ties to the police, all winners are cleared with the association before being made public.

At the opposite end of the spectrum from the special interest group awards lie the pristine National Newspaper Awards-a program funded and administered entirely by the newspaper industry itself. The program’s money comes from a trust fund established in 1949 by the late George McCullagh, former owner of The Globe and Mail and The Toronto Evening Telegram. Over the years, many Canadian newspapers have also contributed to the trust fund. The Toronto Press Club administers the program. While the prizes ($1,000 for each of 13 categories) and administration together cost around $21,500 annually, the president of the press club, Manuel Escott, says the program consistently turns a profit on the dinner (costing an additional $12,500 or so) through ticket sales and advertising for the magazine, The Byliner, which announces the winners.

It is the middle ground that is being fought over programs like the National Magazine Awards, the National Business Writing Awards and the Canadian Food Writers Awards. The complaints are not with the programs per se but how they are funded. Single sponsors of awards programs are particularly vulnerable to criticism, and the withdrawal of a single sponsor is far more likely to kill a program if the sponsor decides that participation is no longer desirable. The possibility also exists that administrative decisions could be aimed at appeasing the sponsor rather than protecting the integrity or reputation of the program itself.

What happened last year with the Canadian Food Writers Awards is a case in point. The awards were established in 1985 for Nabisco Brands Ltd. by Argyle Communications Inc., a Toronto public relations firm. Argyle administers the program and selects the judges from the ranks of food and media experts. In 1987, Gerry McAuliffe, a reporter with CBC Radio and a long-time crusader against commercial sponsorship of journalism awards, asked the Ontario Press Council to rule on the ethics of this program. At the awards banquet last June, while McAuliffe’s complaint was pending and the uproar over the National Business Writing Awards was still in the news, Nabisco announced that it was withdrawing its sponsorship of the program. The company blamed corporate restructuring for the pullout, but it was apparent that the program was no longer yielding the goodwill Nabisco expected. Argyle, which owns the rights to the awards, hopes to find another sponsor to fund the approximately $100,000 in annual expenses.

When the controversy erupted over the banned Reichmann article, the Royal Bank wasn’t getting any goodwill either. The terms of its sponsorship of the National Business Writing Awards called for three bank representatives on the organizing committee; the Toronto Press Club, which coordinated the program, appointed three others. The committee in turn named 25 judges, most of whom, including the chief judge, Kenneth Barnes of Barnes Investor Relations Ltd. in Toronto, had legal or business backgrounds. After the Reichmanns sued Toronto Life and, subsequently, The Toronto Sun (for a review of Dewar’s piece) and the Globe (for a report on the first two actions), Barnes sought a legal opinion. He was advised of the possibility that the bank and the judges could also be sued if the story was admitted. On that basis, Barnes disqualified the piece. The judging panel wasn’t consulted in the decision. Both of the judges who resigned (Peter Desbarats and Robert Fulford) were journalists. And Escott, who was on the organizing committee, says neither he nor the press club was consulted. He defends the club’s lack of protest, saying that the whole thing happened so fast the club had no opportunity to take a stand.

Last September, the Royal Bank and the press club quietly buried the awards in a press release stating that the bank’s major goal in establishing them in 1972-to “underline the importance of business journalism as a distinct field”-had been fulfilled. The bank has refused further comment.

The news of the death of the National Business Writing Awards only served to remind the industry of the vulnerability of single-sponsor commercial programs, no matter how they are organized. David Olive, senior writer at Toronto Life and the new president of the National Magazine Awards Foundation, saw the dissolution of the program coming but nonetheless mourns its passing: “The bank folded completely in the face of this first significant controversy in the history of those awards I’m extremely disappointed in the Royal Bank of Canada.” Geoffrey Stevens, then managing editor of The Globe and Mail (one of the first to join the stampede of entry withdrawals on the heels of Toronto Life), says he was approached by the Royal Bank in an effort to salvage the program’s besmirched reputation but would have nothing to do with it.

The Globe’s quest for purity was reinforced by McAuliffe’s complaint and the Ontario Press Council’s subsequent ruling. In his complaint, McAuliffe states his belief that accepting money from corporations is a serious conflict of interest which can result in “selective journalism” and the loss of credibility in the eyes of the public for the writers and news organizations who accept such awards. In its ruling last November, the press council concluded that, while media sponsorship alone would be ideal, there is nothing to stop commercial sponsors from setting up their own programs. Prohibiting staff from entering such contests would be “impracticable” and “discriminatory.”

Drawing on submissions from several commercial sponsors (including the Royal Bank) and from media industry members, the council issued a seven-point list of guidelines to try to “ensure that commercially sponsored awards are free of direct control of sponsors.” Among those recommendations: having a committee to select judges that is independent of both sponsors and entrants; having the judging panel chosen by the committee and composed of journalists and/or those with “expertise in the broad field to be judged”; and notifying sponsors, who should have no right to overrule the judges, of the results at the same time as the winners are announced to the public.

The Globe used the press council’s decision as an opportunity to codify its policies on commercial sponsorship. In a November memo from Norman Webster, then editor-inchief, the staff is encouraged to aim for industry-sponsored awards. The paper, Webster wrote, plans to both publicize the winners and match the prize money for awards in this category. On the other hand, awards sponsored by special interest groups-such as the North York Fire Fighters and the Metropolitan Toronto Police-cast doubt on the credibility of the entrants and are to be avoided. Webster’s memo tried to reduce the issue to black and white.

For its part, the Ontario Press Council simply avoided the black: its judgment sidestepped McAuliffe’s primary concern about the ethics of commercially sponsored programs. His reaction to the ruling was predictable. “This changes nothing,” he says. “I’ll just have to continue making speeches and try to embarrass these people.)n conflicts of interest, there are no grey areas.”

But there are grey areas. Webster’s memo itself described a middle category of awards with arm’s length judging but commercial sponsorship. The Globe disassociated itself from this category, and staff members were urged to consult the Ontario Press Council’s guidelines prior to entering on their own. McAuliffe himself, in spite of his declarations to the contrary, has been faced with his own hazy boundaries. As a reporter with the Globe, he accepted a $1,000 National Business Writing Award in 1972-before he began his crusade against corporate sponsorship.

For the National Magazine Awards Foundation, the problem was resolved by what some saw as a clear moral victory over those controversial grey areas. The catalyst to the commercial sponsorship debate-Dewar’s piece on the Reichmanns-was allowed entry into the 1987 awards by the foundation’s board of directors. Dewar went on to win two categories: the Jackman Foundation Award for Investigative Journalism and the University of Western Ontario President’s Medal for Excellence in Magazine Articles. At the awards night last May, virtually everyone in the Grand Ballroom at Toronto’s Sheraton Centre stood up and cheered when the victories were announced. Dewar’s triumphs appeared to vindicate the awards foundation, which has always maintained that multiple sponsors-properly insulated from the administrative and judging process-are less vulnerable to bad publicity than single sponsors.

At the moment, the magazine awards program has commercial or private sponsors for 14 of 17 written categories and for six of eight visual categories. Each sponsor annually contributes $2,500 toward the program-$l,OOO for the gold (first place), $500 for the silver and the rest for administrative costs. Other than writing the contribution cheque and standing on stage to hand the prizes to the winners, the sponsors have nothing to do with the awards. The program is administered entirely by a foundation with a board of directors composed of members from a cross-section of the magazine industry. The board sets the criteria for categories and selects the judges. None of the commercial sponsors has representation on either the board or among the judges.

Yet, just as the board members were congratulating themselves on their successful program formula, along came The Globe and Mail to dampen the enthusiasm. Olive, the president, says the concerns of the Globe, which it had voiced before, are valid. Nevertheless, he felt some resentment when the “new kid on the block” came in and tried to change a fundamental aspect of the program. Olive finds it ironic that the Globe is taking this stand given that, since its formation in 1985, the paper’s magazine division has been quite actively participating in programs such as the National Magazine Awards and the National Business Writing Awards.

Indeed, Webster’s classification of awards programs reflects the Globe’s own ambivalence concerning the whole issue. For example, the National Magazine Awards are mentioned in the memo as an example of the desirable category despite the Globe’s being on record as dissatisfied with the way that program is sponsored. Still, Olive would not like to see the National Magazine Awards program without the Globe’s participation (the threat implicit in Wente’s statement). For Olive, that would cheapen the program because not all of the best magazines would be competing.

There are several options available to the foundation’s Endowment Committee. But appeasing the Globe’s desire to eliminate commercial sponsors will not be easy. The yearly costs, including the annual awards banquet and salary for Sandra Eikins, the program’s executive director, run in the $160,000 range. The short-term options include hiking the entry fees (now $25) or the dinner ticket prices (from $60). Magazine industry sponsors, such as Key Publishers and Telemedia, which already contribute to the administrative costs could be asked to increase their annual donations to cover all the costs of the program. A more long-term possibility-and the foundation’s ultimate goal-is the establishment of an endowment fund: Olive says $800,000 would be needed to allow the program to be completely self-sufficient and to hedge against inflation.

Other options include seeking government funding or drastically cutting back on the awards banquet-with its flashy sound-and-light show-to the type of volunteer-run, bare-bones presentation that the National Newspaper Awards puts on. Olive dismisses these last two choices as unlikely. He says there is already a long lineup for government handouts-many of them more deserving than the magazine awards. And to scale down the awards presentation dinner would be unacceptable since it represents the height of the industry’s celebration by and of itself. In fact, says Olive, the foundation would like to seek ways of making the dinner even more first-class once the program’s long-term financial health has been assured.

The most likely short-term option calls for pooling the contributions of sponsors to end the association of individual corporations with specific award categories. That would likely meet with mixed reactions from the current sponsors. For example, Murray Stewart, public relations manager for Canada Packers Inc., says his company wants to support “excellence in journalism, and that means factual and balanced journalism” in a category that relates directly to the company’s own business. Although Canada Packers has never sought any influence over the administration of the program, Stewart makes it clear that the company’s interest is exclusively in the food writing category it sponsors. Given Stewart’s position, it’s possible that any change in the approach to sponsorship might result in the withdrawal of Canada Packers’ financial support.

However, the pooling option should still be acceptable to other sponsors-the Toronto Dominion Bank, for instance. The bank sponsors the humor award, a choice it deliberately made, according to the bank’s public affairs representative Susan de Stein, in order to “avoid any kind of suggestion of conflict.” As a participant among a pool of contributors, the bank would remove itself one step further from any possibility of perceived conflict. According to Margaret Wente, The Globe and Mail views this option as a step in the right direction.

The discussion concerning the ethics of commercial sponsors and the viability of alternatives is fascinating for Wayne Grady, the editor of Harrowsmith. As one of Wente’s fellow inductees to the National Magazine Awards Foundation board, Grady just sat and listened, for the most part, to the debate around the room. He recognizes that Wente and the Globe have a valid point, but he knows from his experience at Harrowsmith before its purchase by Telemedia Publishing that many magazines operate on a shoestring. He has concerns that if the industry itself takes over the program’s funding exclusively, the smaller independent magazines -This Magazine, for example-might be shut out of the decision-making process by the affluent members. Olive disagrees, pointing out that the board of directors always seeks a fair representation of large and small magazines as members. In fact, Lorraine Filyer, managing editor of This Magazine, is a veteran member of the foundation’s board.

Regardless of the alternatives being discussed by the foundation, there will be no changes in the program and awards dinner this May for the 1989 competition. Still, the issue of commercial sponsorship continues to nag at the consciences of many board members, including Grady. He won a National Magazine Award for a piece about tobacco farming and migrant workers entitled “Tobacco Road” which was published by Saturday Night in 1982. The story won the silver medal in the agriculture category then sponsored by Canada Packers. Grady recalls he had no worries about the sponsor nor any compunction about accepting the award at the time. Still, he muses about his possible response if the sponsor had been, say, Macdonald Tobacco. Or, he wonders, what if the story had been about milk-fed veal?