In the early 1970s, Secretary of State Henry Kissinger is said to have asked Chinese Premier Zhou Enlai for his assessment of the French Revolution. “Too soon to tell” was Zhou’s reported response.

Perhaps it’s also too soon to tell the impact of changes that were taking place at the beginning of the 20th century when Jack and Jim Knight began their careers. But those times of ever-faster change set the stage and the example for how we live today. Technology progressed geometrically, and values were steadily more relative as the world became less parochial after World War II.

Jack and Jim Knight embraced their world and the technology that made possible their vision of a future far greater than their first newspaper, the Akron Beacon Journal. Today, that concept is our beacon, our North Star. They had the courage to take risks, the knowhow to execute, and the tenacity to see their plans through. They used advances in printing, telephony and transportation to build what would become one of the great newspaper companies in the world, at a time when newspapers dominated media.

The Knights sought actively and aggressively to reflect the communities they served. In doing so, they helped build, define and even transform those communities. The brothers believed strong communities would be good for their newspapers because newspapers, in effect, represented the whole community.

Instead of fearing or resisting change, they embraced it. We see in them the instincts of today’s great Internet and social entrepreneurs. And we believe we honor their memory, and their intent in creating Knight Foundation, by acting with vision and courage, and by taking risks in the areas of community advancement and journalism to which they dedicated their working lives.

In 2006, Knight Foundation continued fundamental shifts in its program practice, from print to digital in journalism, and from charity to social investing in community. These shifts, like any social enterprise, will take time to mature and for results to be understood. As Zhou understood, cultural change is slow. But as Knight showed in his career, when the time is right and new technology becomes available, you must seize the opportunity.

And so we did.

We accelerated a shift in our journalism program from traditional education and training programs to a search for new ways to do with digital technology what Jack and Jim Knight did with newspapers: share timely news and information that connects people within a defined geography. It sounds simple, and we made it simpler, by eliminating most rules and qualifications in the Knight News Challenge, our groundbreaking contest to create an opportunity for the wisdom of a crowd to emerge. In the first year of our five-year challenge, we received 1,650 ideas from thinkers, activists, journalists and inventors energized by our offer to spend $5 million each year. Some of the winners are detailed in this report.

Social entrepreneurship – the application of entrepreneurial business thinking to social issues – is an increasingly popular concept around the world. But it isn’t a fad. It is a simple and logical way to set visionary goals, plan for sustainability, and demand performance and accountability in social enterprises. We see it as part of our larger effort to identify transformational leadership and opportunities.

To that end, we funded the internationally acclaimed Ashoka organization to identify and help develop a new generation of social entrepreneurs in Knight communities. We sponsored urbanist Richard Florida to work in Charlotte N.C.; Duluth, Minn./Superior, Wis.; and Tallahassee, Fla., with groups of “community catalysts” tasked with identifying and building “the creative class.”

In Akron and Detroit, we increased our commitment to local leaders seeking alternative, entrepreneurial ways to transition from industrial to innovation economies. And in those and other Knight communities like Milledgeville, Ga., and Philadelphia, we’re working with local experts toward the goal of universal wireless access so that residents may enjoy and participate in the new age, digital town square. This report on our activities during 2006 and early 2007 details our excitement as we seek transformational change in journalism and communities. The stories you’ll experience here are found with additional pictures, sound and video.

Of course, none of this would be possible without a solid asset base. A summary of our financial information is included in this report. Our full audited financial statements are here .

In 2006, three new trustees joined Knight Foundation’s board. They are Earl Powell, chairman of the private equity firm Trivest Partners; E. Roe Stamps IV, founding managing partner of the private equity firm Summit Partners; and Paul Steiger, now editor at large of The Wall Street Journal. They are exceptionally able and experienced leaders and wonderful contributors to our board.

We understand that transformation takes time, commitment and risk. And we take seriously the rare privilege to invest this foundation’s assets to change our world and our communities for the better.

— W. Gerald Austen, M.D., chairman

— Alberto Ibargüen, president and CEO