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But I do wonder if an organization with it's own CEO, own programming staff, etc., couldn't push forward the goals of Wikinews much better than the Wikimedia Foundation ever will. I don't know. I merely raise the issue for contemplation.
If such an idea was to be prusued, I think it would be much better to have a Wikinews chapter, with the mission of promoting wikinews interests, well still being part of the foundation. There are probably some places where wikinews could use special attention, that the foundation is not in a position to provide, but its also very beneficial to be under the umbrella of the foundation.
I'm just not sure that it makes sense to operate all this stuff under one banner. There's no economy of scale. It's not like operating WikiNews AND Wikipedia will make both better. Quite the contrary. Either Wikipedia is the elephant hogging all the peanuts, or you have people leaving Wikipedia when it still needs talented people.
The only other alternative is that they're both independent, each with their own set of volunteers and mission. But then there's definitely no reason for the Wikimedia foundation to run both. If you want to attract two different kinds of volunteers, you want to have two different brands.
And then you factor in that you want each one to utilize different technology?
It's not that I don't think there is some merit to some of these other projects. But I just don't see the merit in operating all of them under Wikimedia.
In my opinion Bawolff is correct. There are two competing forces at work here:
1) There are substantial benefits to operating Wikinews (not WikiNews.com, btw. That site is controlled by an anti-WMF fanatic:P) under the banner of the WMF, not the least of which is the partial protection our explicit association Wikipedia occasionally lends us (IE, against government censors). Having an implied association ("Oh sure, we're friendly with the WMF. Look, we even use Commons!") just wouldn't be the same when combating problems that are common to both Wikipedia and Wikinews. To be Henry (Frank is in my bad books right now) Wikinews isn't big enough to fight these problems on its own.
2) As Jimbo pointed out, Wikinews is having trouble thriving in the current 'pedia dominated climate of the WMF. The WMF (rightly) directs most of its resources at its biggest projects, most of which are incarnations of Wikipedia. Everything from the software development to the hardware selected for the servers is controlled by the needs of Wikipedia. And you know what? That's not wrong. Wikipedia is big, and it needs a lot of time and effort put into it in order to for it to be maintained and grown. But Wikinews needs some lovin' too if we're ever going to achieve anything. So does Wiktionary, and every other project as well.
These two competing forces aren't going to go away. The only solution that I can think of that makes sense is something like what Bawolff suggested: keep Wikinews as part of the WMF, but spin it off into a partially autonomous organization that focuses entirely on Wikinews community & software development, with its own mini-leadership council that reports to the WMF board of directors.
Whatever happens Wikinews should be kept non-profit.