In October, The Huffington Post launched a new section with an unusual goal: turning an audience of passive readers into activists for good causes. The section’s underlying business model is novel, too: All of its content is outsourced to an outside company, a for-profit firm that has nonprofits for clients.

In exchange for that content, HuffPo shares the advertising and sponsorship revenue the section generates with the outside company, Causecast. And Causecast gets a platform to promote its services and the nonprofits it chooses to highlight, some of which are its partner organizations.

The arrangement emerges at the same time news organizations are struggling to make display advertising alone a viable business model. The HuffPo-Causecast arrangement, in conjunction with ads, could be an example of the kind of hybrid solution publishers are struggling to find. However, by blurring the line between advertising and content, it also raises questions about conflicts of interest and editorial responsibility.

A platform to encourage giving

I first noticed the section — Impact — a few months ago, with its hot-pink branding and tagline “in partnership with Causecast.” There’s no further explanation of the relationship between the two organizations on the page; you have to browse away to Causecast’s site to learn that it provides nonprofits with online and mobile fundraising tools. Causecast’s site uses social networking to encourage users to become fans of nonprofits and then donate to them, using a single login and donation platform. About 60 nonprofits, ranging from local homeless shelters to national organizations like Planned Parenthood, are listed as affiliates. Causecast offers nonprofits a menu of services, some of them free, like getting a fan page on Causecast’s site, and others for a price, including technical support for mobile device fundraising. Causecast declined to say how many nonprofits are paying clients.

When I talked to the Impact section’s editor, Jonathan Daniel Harris, I was surprised to learn that — despite having a bio and byline like other Huffington Post editors — he is not a HuffPo employee. He is paid by Causecast and works out of their Santa Monica offices. As part of the arrangement with the Huffington Post, Harris oversees two other writers, who are also Causecast employees, in producing the site’s content, which includes short original stories and aggregation from around the web. The stories and curated links are generally about a social cause, or person in need; The earthquake in Haiti, for example, dominated the section for weeks this winter. But other causes, like malaria or homelessness — many of the same problems Causecast’s partner nonprofits aim to solve — are also featured.

At the end of some of the original posts, which look like other Huffington Post content, readers get a chance to donate money to a nonprofit. Often, the nonprofit highlighted is a Causecast-affiliated organization and the link will take the user to a Causecast-facilitated donation page. Causecast says it does not take a cut from any of the donations. The money is filtered through Causecast’s nonprofit arm and the money — about $200,000 so far — goes directly to the organizations.

When I asked Brian Sirgutz, Causecast’s president, if a Causecast client could pay for a link or a story on the Impact page, a spokeswoman for the organization responded in an email that they could not. I also asked if Causecast clients get any priority in the editorial process when determining what nonprofits to feature. I was told “no.”

Multilayered relationships

But that doesn’t mean Causecast isn’t writing about or linking to affiliated organizations. Here’s an example: On Jan. 31, Harris wrote a 76-word post titled, “Malaria Is The Cause of 2010, Declares Matthew Bishop and Malaria No More.” The quick post notes that the nonprofit group Malaria No More expects the World Cup in South Africa to draw attention to the disease. Underneath the post, a box features a link to donate money to Malaria No More, using Causecast’s donation tool. Harris doesn’t mention in the post that Malaria No More is a member organization of his employer, or that Causecast ran Malaria No More’s mobile fundraising campaign. Causecast lists the campaign as a case study for its text2give services.

Causecast has also linked to and promoted AARP’s project Create the Good. AARP contracted with Causecast to develop the concept and execute the site, which helps would-be volunteers find places in their community to pitch in. Create the Good was an early advertiser on the Impact section, noted by Arianna Huffington in her post announcing the new site. (Huffington didn’t note a relationship between Create the Good and Causecast in her post.) Including Huffington’s post, the Impact section has tagged seven posts with a “Create the Good” tag. None of the posts mention that Causecast was paid to create the site.

The Impact site has also run fundraising events. In the 12 days leading up to Christmas, the site ran a series of stories (about 1,000 words each) “highlighting Americans who have persevered to overcome incredible challenges and the nonprofits that helped change their lives.” I looked up some of the nonprofits readers were encouraged to support. Most are listed as partner organizations on Causecast’s website; some were not. Neither distinction was noted in the stories.

The same series also ran a disclaimer at the end of some of the profiles unlike anything I’ve seen in journalism: “Causecast Corporation and The Huffington Post make no representations or warranties as to the legitimacy of this person’s story, need for assistance, or the amount of any medical or other bills, if any, owed by this individual.” The Huffington Post and Causecast gave me statements noting they run the disclaimer when they ask readers to donate to an individual, rather than a vetted group with IRS nonprofit status.

I asked Harris about the editorial relationship between the two groups. He explained that the Huffington Post “pretty much gave up complete control of a section to another company.” But, he noted, he’s in regular touch with senior editors: “It’s not like we can do whatever we want.”

A joint arrangement

In an email response to questions, the Huffington Post explained that Causecast’s values are in alignment with its own and that the editorial process is similar to other sections on the site. “Impact editors receive this guidance jointly from senior editors at both HuffPost and Causecast. There is an ongoing back and forth between the HuffPost and Causecast teams.”

Sirgutz described the relationship as a service: Causecast takes care of a project that Huffington Post wants, but would not otherwise invest in. “This market is not exactly something where a big media company is going to say, ‘we want to spend resources and time and money to be able to develop this type of content or service for our readership,’ because it isn’t going to exactly blow off the charts on the profit margins or traffic,” he told me. “So, what we’re able to do was to bring our expertise, because this was our field, we were able to provide that service to the Huffington Post and come up with an arrangement where they don’t have to spend any money to cover this type of content or on providing the direct ability for their readership to take action.”

Both Harris and Sirgutz are hopeful about the future of the partnership with Huffington Post, and for these kind of partnerships more broadly. Both pointed to additional corporate sponsorships as an added revenue stream. AARP, for instance, sponsored the Impact site for six weeks, buying up all ads on the page. I asked Harris how he thought the project’s gone and where he thinks it’s headed. “It’s been successful so far,” he said, “and if it can continue to grow and sponsors are interested in paying us, that is kind of proof of concept right there.”