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Sept. 11, 2014, 2:33 p.m.
Business Models

Refocusing on revenue: How The Lens is dealing with budget shortfalls in New Orleans

The Lens has reduced staff and altered coverage plans after a donor and foundation cut funding for the local news nonprofit.

Most students in New Orleans now attend charter schools after the widespread damage caused to the city from Hurricane Katrina. That presents a challenge for most news organizations because there are more than 40 different boards governing the different charter schools. The nonprofit news site The Lens saw it as an opportunity, making these boards a focus of its coverage with the Charter School Reporting Corps, which it launched in 2011.

But as the new school year starts, The Lens’ education coverage is changing. Earlier this summer the site announced that it was putting the Charter School Reporting Corps “on hiatus” due to unexpected funding shortages. The site has also laid off three employees since December, and now says it’s no longer going to dedicate a reporter to covering the state government beat. They’ve also eliminated a popular daily email newsletter that rounded up news affecting New Orleans.

News nonprofits like The Lens are often dependent on philanthropy for financing and as a result can be subject to the whims of individual donors or changes in the flow of dollars from foundations. The site’s financial shortcomings are illustrative of some of the challenges facing nonprofit news organizations and underscores the importance of diversifying funding sources.

The source of The Lens’ recent financial shortcomings has been two-fold, editor Steve Beatty told me. A local donor was unhappy with some of The Lens’ coverage and decided to pull a significant pledge that The Lens had been counting on and used to make new hires. A national foundation also decided to stop funding The Lens, and though that was expected, it was no less difficult, Beatty said. (Beatty wouldn’t name who reneged on their pledge, saying “In fundraising it’s ever say never. Just because somebody has told me they’re not going to give me any more money doesn’t mean that I’m not going to ask them again when the time is right.”)

“All that resulted in a significant drop in our revenue that we just weren’t able to completely bounce back from in time,” Beatty said.

The Lens’ current budget is around $700,000, Beatty said, adding that he expects that number to drop next year even as the site undertakes an aggressive fundraising push.

Tight times might bring urgency to attract new sources of revenue, but news organizations like The Lens should be focused on trying to ensure a steady and diverse cash flow before their situations get dire, said Michael Giusti, a journalism professor at Loyola University New Orleans.

“Once it’s the emergency, once the boat is taking on water, that’s not when you need to be looking for the lifeboat,” Giusti said. “You need to make sure you know how it’s going to work before the emergency.”

Fundraising for an outlet like The Lens can be difficult in a place like New Orleans, where the median household income is about $36,000 and there are fewer individual philanthropists, local foundations, and other groups focused on supporting nonprofit news.

“We don’t have quite as deep a well of philanthropy as other towns might,” Beatty said. “Some of our peer organizations are flourishing in San Diego, Berkeley, Austin, and Minneapolis, places I think might be a little better off in terms of people who can pay for the news they value.”

The Lens has about 500 individual members, and most give in smaller amounts. Altogether that accounts for less than 10 percent of the outlet’s total revenue. Compare that to MinnPost in Minneapolis, where individual memberships accounted for nearly 30 percent of its $1.6 million budget in 2013. At the Texas Tribune, memberships account for 13.2 percent of the budget. At the Voice of San Diego that number is 14 percent.

Still, The Lens continues to push individual memberships while pursuing other foundation support. The site is now also selling commercial sponsorships on its site — “As a nonprofit it’s not truly an advertisement,” Beatty said — and is in the process of hiring someone to sell sponsorships on a commission basis. Beatty said he hopes that person could bring in as much as $100,000 in additional revenue.

Since it was founded in 2009, The Lens has allowed other local media outlets, including the city’s two daily newspapers, The New Orleans Times-Picayune and The New Orleans Advocate, as well as local TV stations and public radio outlets to cross-publish its work for free. It’s now looking into charging for that service.

The Lens has also added Google Consumer Surveys to its site where users will sometimes have to answer a question before being able to read a full story. It’s also putting an added focus on events, which have been a notable source of income for many nonprofits. The Texas Tribune, for example, hosts an annual weekend-long festival that features national speakers and draws attendees from around the state. But it also puts on regular discussions with public figures, and that’s a model The Lens is hoping to replicate. Last year it began a series called Breakfast with Newsmakers. The forum has already attracted a sponsorship that covers the costs of the events, allowing The Lens to actually make a small profit, Beatty said. “Everybody wants to be like the Texas Tribune, right?” he said.

The Lens is also considering more less-traditional revenue sources like furthering its relationship with WWNO, New Orleans’ public radio station. The Lens and WWNO have produced stories together and have also received a joint grant from Knight Foundation. In St. Louis, The Beacon, a nonprofit news site, merged with St. Louis Public Radio last year, an idea that Beatty is open to potentially replicating in New Orleans. But there have only been conceptual discussions about the possibility and nothing has been decided, he said.

Even with the demands from donors that have resulted in losses of funding, Beatty insisted that The Lens is committed to its editorial independence and continuing to produce worthwhile journalism. Just last week The Lens partnered with ProPublica to produce a thorough and visually dazzling report on the continued erosion of the Louisiana coastline, which is a topic that The Lens has covered in-depth.

“We’re trying to piece it all together,” Beatty said.

Photo by Wally Gobetz used under a Creative Commons license.

POSTED     Sept. 11, 2014, 2:33 p.m.
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