I’ve been looking lately at some of the “crowdfunding” models for journalism, in which audience members donate money to specific stories whose production they want to support. Here’s my idea for a “news mutual fund” – a concept slightly different from the crowdfunding models I’ve seen so far.

One well-known crowdfunding project for journalism is Spot.Us. This organization provides a platform for public donations to proposed stories in the Los Angeles and San Francisco areas. Potential donors can read a pitch for the story, follow the reporter’s blog and see other content related to the proposed story.

I’m afraid, though, that it’s a bit optimistic to expect the audience to evaluate, donate to, and follow up on stories at the international, national, state and local levels, as would really be needed to make this model widespread and effective throughout journalism. Not only is it a financial commitment, but it’s also a time commitment that goes beyond what most people will consider for news. I doubt most people will make this investment in news, especially given current levels of public appreciation for journalism.

It seems to me that if this model is to succeed, it needs to look at another model of investments that has been very successful: the mutual fund. As I see it, today’s crowdfunding possibilities – limited as they are – are like individual stock investments, with a “socially responsible investing” angle. A donor chooses to donate to X story because he or she feels that it has long-term value for a personal information “portfolio” and for a community.

But just like investing in individual stocks, picking those stories is a lot of work. People like mutual funds for their financial investments because they eliminate that detailed effort. In a mutual fund, a trusted manager with a proven track record is given funds to allocate based on a chosen model of investment. Many different mutual funds exist: some that are more risky, some that are less so, some that invest in particular industries and some that express particular ideological perspectives.

Maybe this is how crowdfunding could be approached – as a news mutual fund, rather than as a stock-picking process. Spot.Us does provide an option to simply donate money and allow the organization to choose where the funds are assigned. But little transparency is provided – as far as I can tell – as to how that selection is made.

In a news mutual fund, a manager would determine where news investors’ money was directed according to defined story selection parameters.

Sound like an editor? Does a news mutual fund sound a bit like buying a newspaper subscription and hoping your money goes to the “right” stories? Sure.

But most of the audience doesn’t know how editors select stories, and they have never had any input into that process. A more open “news mutual fund” process would lead to greater credibility and audience engagement, while eliminating the detail work on the audience’s behalf of doing the story selection work themselves. It would also maintain a degree of audience accountability for the manager, because if stories began to deviate from the investors’ chosen parameters, they could redirect their money to a different news fund.

I’m sure there are weaknesses to this model as well, just as there are in mutual fund investing, so the option to invest in individual stories – some of which could be collaborations among news producers – should still be available.

In a post on MediaShift, Spot.Us founder David Cohn noted that the site was able to fully fund a project that did not yet have a reporter assigned to it, meaning that the site’s managers developed the idea and then, once it was funded, could hire a freelancer to work on it. He says that the logistics of this process are much easier for the site, and also open up the chance to market the story to traditional news organizations that could reimburse Spot.Us its funding in exchange for first publication rights to the story. So here’s a case where Spot.Us could operate like the news mutual fund manager that I’m envisioning here. They control the funds and their allocation, and have already told the audience how this money will be spent. The development of the story, its assignment and its distribution would ideally be equally transparent through updates provided on the site.

The crowdfunding model for journalism is still in its early days, and there will no doubt be lots of experimentation. Testing the public’s willingness to invest in news is a daunting (and somewhat frightening) task, but with a variety of approaches, it might turn out to be an exciting and engaging process for journalists and the audience both.