For Wake County readers, the biggest issue of the Nov. 7 election was the $970 million school bond referendum. The referendum, which was approved by voters, attracted some 200,000 votes, pro and con.

The News & Observer devoted more coverage to the school bond story than to any other single race in the election. That was appropriate, given its importance.

But a few readers expressed concern that The N&O not only covered the referendum campaign but also was a part of it. That's because the paper made a $10,000 contribution to Friends of Wake County, the group that promoted the bond issue.

"The N&O abdicated its journalistic objectivity regarding the school bond issue the day it gave $10,000 to the Friends of Wake County," Reader Darrel Mathis wrote in a letter to the editor. "I think any article regarding the bond referendum should carry a disclaimer. 'Caution: The N&O has donated money to one side of this political issue, and any "facts" listed here should be used at your own risk.'"

The N&O disclosed its contribution in three stories during the campaign, including a final story on campaign finance the Sunday before the election. The first two stories did not disclose the amount, although one described it as a "major donation."

Orage Quarles III, the newspaper's publisher and CEO, said the paper made the contribution because the company supported the school bonds and thought it was an important community issue. It was not, he said, a political matter, like contributing to a candidate of one party or another. "I'm contributing because I believe in making the schools better," he told me. "This wasn't a political campaign. It's a community issue for the betterment of the schools."

The N&O strongly supported the referendum on its editorial page, Quarles said, and making a public contribution was simply being above-board and honest with the public about its position.

Kelly McBride, ethics group leader for the Poynter Institute for journalism education, said the contribution by a newspaper was "very unusual." More typically, she told me, such a contribution in an election campaign would come from an executive of the newspaper, such as the publisher, or from a parent company.

Having the contribution come from the newspaper itself, McBride said, runs the risk of associating the newsroom and its reporters and editors with the money, which can undermine readers' confidence in the neutrality of their coverage. Some reporters expressed discomfort to me about The N&O's financial involvement in the bond campaign.

"In the long run, we're talking shades of gray here rather than something black and white," McBride said. "But I always recommend that the journalistic organization be kept off the check that writes the campaign contribution."

Melanie Sill, the executive editor, said she thought the contribution did pose a challenge for the newsroom. "I think the money creates an appearance that we have to point out and respond to," said Sill, who did not know about the donation in advance. She said she had received a few questions from readers.

The issue came up in that letter to the editor and in some readers' comments to blogs on The N&O's Web site, www.newsobserver.com. In response to one comment, the education reporter pointed out that the contribution was directed by the publisher in "a decision made independently of the newsroom. We weren't consulted ahead of time."

The N&O is not the only media company to jump into the fray with its dollars. Capitol Broadcasting Co., owner of WRAL television and other media properties, contributed $25,000 to Friends of Wake County. Capitol CEO Jim Goodmon said he had received no criticism about that donation, and he made no apologies for it: "I have no concerns. Doesn't bother me. I thought I should do it. And it didn't have any effect on (WRAL's) news coverage. And by the way, I support The N&O doing it."

There is precedent for contributions by the newspaper to recipients it covers. The N&O makes many other donations to community causes -- among them, United Way, Wake Medical Center, the Wake Education Partnership. Sometimes they are involved in controversy that creates news. (Quarles last year was chair of the Board of Trustees of the Wake Education Partnership, which supported the bonds.)

But there's a difference between contributing to community causes and participating financially on one side of a contested issue upon which citizens will be voting. That can give cause to advocates on the other side -- in this case, opponents of the bond issue -- to question The N&O's impartiality.

I don't think anyone can legitimately challenge the paper's impartiality in covering the bond referendum. It extensively reported arguments on both sides and ran many letters to the editor and an op-ed piece against the referendum. The paper published a poll two weeks before the election showing the referendum likely to fail -- not a good news story for bond supporters.

All that said, a financial contribution to a campaign by the newspaper covering that campaign creates the potential for readers' perception of partiality. Rather than running that risk, The N&O should keep its support for a contentious election issue confined to the editorial page; its voice likely has substantially more impact than its dollars.

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