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Sept. 18, 2019, 10:26 a.m.
Business Models

Nonprofit news outlets aren’t relying as heavily on foundations — but journalism philanthropy continues to grow

“Nonprofit news organizations have much in common even if their scope or mission differs. Their journalistic missions are shaped largely by the gaps they are trying to fill — investigative at the state, national and global level; more general news at the local level.”

Nonprofit news does not mean news without a business model. As more and more 501(c)(3) status–granted outlets emerge in the last decade of journalism, more and more are building out ways to make money beyond foundation grants — though with less impact from membership than their commercial counterparts.

Throughout 2018, nonprofit news outlets brought in $450 million in annual revenue — $100 million more than the previous year — and employ 3,000 people (two-thirds of them journalists). Those numbers come from the Institute for Nonprofit News’ annual INN Index surveying its 230+ members on the state of their journalism finances and operations. With a 56 percent response rate, INN says the index is representative of its members (other than public broadcasters).

The majority of nonprofit news outlets launched in the past ten years, post-recession, as commercial advertising bottomed out and Facebook/Google/et. al’s digital dominance grew. (INN itself is also celebrating its tenth anniversary.) The nonprofit approach develops a closer relationship with foundations, folks with money, and readers/people who may be inclined to give a range of small-dollar donations to their work, rather than corporate owners, advertisers, and one-size-fits-all subscribers.

A separate report from Media Impact Funders, out last week, showed that journalism philanthropy has quadrupled since 2009, with 17,750 total grants made to 2,369 U.S.-based organizations for journalism-related projects. The 108 respondents to INN’s survey are clearly just a slice of the sector’s reach, but read together, the MIF report, by Sarah Armour-Jones, and INN report, by Michele McLellan and Jesse Holcomb, show a trend that is only growing.

Who gives? (And what are they giving?)

According to INN:

Individuals and families now donate nearly 40% of all the revenue going to news nonprofits. For the first time in studies of the field, foundation funding of nonprofit newsrooms fell below 50% in 2018….By comparison, the Pew Research Center found that in 2011, foundations contributed nearly two-thirds of revenue while donors accounted for about a fourth across the nonprofit news field.

Nearly a third of the news organizations reported having a membership program in 2018 but most of these programs are very young — less than 3 years old — and may not have realized their full revenue potential. Sixteen percent said they planned to launch membership programs.

But overall, the increase in individual-giving donor revenue was driven by donors of $5,000 or more, who accounted for more than two-thirds of all donor revenue.

Via Media Impact Funders:

Journalism-focused philanthropy has nearly quadrupled since 2009, when just under 300 funders made $69 million in grants to just over 300 recipient organizations in the United States. By 2017, over 1,200 funders made over $255 million in journalism grants to 925 organizations.

Since 2009, 114 community foundations gave $68.5 million of the $1.4 billion (excluding Newseum grants), or 5 percent…. Of $17 million in community foundation support for investigative journalism, more than $6 million—or 35 percent—was directed toward two national investigative news outlets: ProPublica and the Center for Investigative Reporting.

Where is non-foundation money coming from?

Both reports point to NewsMatch as a powerful training program and new donor generator; the end-of-year initiative brought in 50,000 first-time journalism donors in 2018 alone. Outlets put in the work during the year with hires specifically focused on revenue generation and finding new sources beyond donors. Here are INN’s findings:

More than half of the organizations generated $500,000 or more in total revenue in 2018 and more than a third generated $1 million or more. Their position has improved significantly since 2015, when fewer than a third of INN members took in $500,000 or more….

More than two-thirds now report having three or more revenue streams….

Earned revenue accounted for 12 percent of total revenue. The largest sources were advertising, sponsorships, events and subscriptions, with none topping 3%…. Fewer than 10 outlets are generating 10% or more of their revenue from member contributions.

Where is the money going?

INN:

[The responding nonprofit news outlets] invest minimally in revenue development at a time when the disruption of economic models in journalism requires innovation and warrants more such investment…. A comparison of data for 47 outlets that provided expense information for 2017 and 2018 showed a shift in resource allocation away from editorial toward business functions…. A third of all CEO time is spent on fundraising.

More than three-fourths of the nonprofits have at least one investigative reporter. The nonprofits also fight government secrecy and advance public access to information in significant ways beyond story reporting. The 108 publications surveyed filed 31,011 public records requests in 2018 and more than 40% of the newsrooms made at least one database available for public use….

Nonprofit news organizations have much in common even if their scope or mission differs. Their journalistic missions are shaped largely by the gaps they are trying to fill — investigative at the state, national and global level; more general news at the local level.

Media Impact Funders:

3,106 funders gave $1.7 billion in journalism-related grants. Of that, $306 million was directed toward the Newseum. Of the $1.7 billion:

  1. $326 million was for investigative journalism projects
  2. $88 million was for constituency journalism projects
  3. $42 million for citizen journalism projects
  4. $185 million for advocacy journalism projects
  5. $1.6 billion for projects in the journalism, news and information, general category.

Philanthropy is playing a critically important role in advancing new business models, reporting collaborations and innovative partnerships [with the examples of the Colorado Media Project, collaborative networks reporting on local environmental issues, and NewsMatch].

Media Impact Funders’ full report is available here, and INN’s report is here.

Image of a piggy bank by Fabian Blank used under a Creative Commons license.

POSTED     Sept. 18, 2019, 10:26 a.m.
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