Soon after EveryBlock's $1.1 million grant from the Knight Foundation expired, founder Adrian Holovaty announced his company had been acquired in August by MSNBC in a reportedly 'multi-million dollar' deal, sending eyebrows skyrocketing throughout the nonprofit world.

EveryBlock, a software platform for aggregating local news and information, received the grant in 2007 on the only condition that the code created to work its magic be open-source and published once finished. Now that Holovaty has started his company for free and profited from its sale, the Knight Foundation is looking to change its grant conditions for profit startups.

"We always hope that innovations Knight Foundation funds are supported by the marketplace," said Gary Kebbel, Knight's journalism program officer, citing the foundation's gratification at EveryBlock's move to MSNBC. But "It's a safe bet that grant agreements are going to change in the future," he told an audience gathered for the latest Knight News Challenge.

While remaining generous and innovative, the Knight Foundation could ask recipients to return part of a startup grant. "It might be a certain percentage, it might be a certain dollar figure, it might be the amount of the grant...What we're thinking about is creating another nonprofit that would receive that money, and that money would be either for the future development of open-source software...or it might be for community news," said Kebbel. The return conditions would apply only to companies that are sold after the grant period, not those that achieve commercial success.

Sources: Nieman Labs
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