When The City launched in 2019, it was a nonprofit beacon of hope for local news in NYC at a time when for-profit outlets were shrinking and shutting down. In its 2019 annual report, The City acknowledged that it had “received extraordinary launch support from lead founding donors the Charles H. Reason Foundation, the Leon Levy Foundation, and Craig Newmark Philanthropies and its distinguished board.”

Less than five years later, that support has ebbed, making The City the latest well-respected nonprofit newsroom forced to cut costs to keep going. As Semafor’s Max Tani reported Wednesday evening:

One person with knowledge of the situation told Semafor that funding had dropped by at least $1.5 million this year, a significant decrease for the local operation. In 2021, the City reported that it brought in just over $7.5 million in contributions.

Major donors have reduced funding or abstained from giving altogether. One of the biggest donors to The City, Craig Newmark Philanthropies, dialed its support down to just $10,000, a significant drop from the millions it had committed in past years. The Ford Foundation did not renew its grant for the City at all this year.

Tani noted that The City averted layoffs by cutting work hours by 20% “to take advantage of the New York State [Shared Work program], which allows employees to be partially compensated by applying for state unemployment with New York.”

New: New York nonprofit newsroom The City has seen a major drop in support from donors, including the Ford Foundation and Craig Newmark. The organization and staff reached an agreement for employees to take a 20% work hour reduction. https://t.co/dUDZEnTSJI

— Max Tani (@maxwelltani) September 21, 2023

Those cuts are happening despite The City’s audience growing by 33% this year, according to The City’s executive director Nicholas Dawes. Dawes’ statement to Tani that nonprofit journalism is “not exempt from the forces affecting philanthropy and the wider media sector” echoed the concerns raised by former Washington Post executive editor and Knight Foundation board member Marty Baron in an interview last month, when he commented that “nonprofits are not immune from business considerations. It’s not like being a nonprofit immunizes you from having to make enough money in order to pay people’s salaries and to invest in the future, to invest in the technology that’s necessary and make the other necessary investments in the future.”

Recent research suggested that there is more funding going toward both for-profit and non-profit newsrooms. But in his reporting about The City, Tani ended with an observation that raises bigger questions about the nonprofit news model — its growing prevalence seems to be making philanthropy more of a zero-sum game:

Nonprofit news organizations have also run up against the success of their own model. Multiple nonprofit news insiders told Semafor that the increasing number of news nonprofits has outpaced the money available from donors, creating a competition for a limited pool of money.

Local news has been a five-alarm fire for a long time. But nonprofit news has been widely touted, and pursued, as the model to help put it out. Most recently, more than 20 organizations recently joined forces to announce the Press Forward initiative, which aims to invest at least $500 million into the local news ecosystem (including for-profit and non-profit outlets alike) over the next five years. Funding cuts at organizations like The Texas Tribune and The City illustrate just how dire the need for capital is for news nonprofits while highlighting a troubling bigger-picture problem: Financial sustainability still eludes even high-powered, relatively high-profile local news nonprofits.

The Ford Foundation, which chose not to renew its grant to The City, is a founding Press Forward coalition partner. “In 2021, the Ford Foundation supported The City with a one-time grant through our Social Bond offering, a special initiative which was intended to support organizations’ immediate funding needs due to the pandemic,” Lolly Bowean, The Ford Foundation’s program officer for journalism (and a 2017 Nieman Fellow), told me in an email. “This grant term completed its cycle, and is not related to the recent announcement of our support for Press Forward.” She added:

The Ford Foundation is committed to supporting local and national journalism, especially that which uplifts and sheds light on the lived realities of underrepresented groups. Our existing journalism strategy – and our support for Press Forward – reflects our commitment to support local journalism, re-center local news, and close the longstanding inequities that exist in journalism’s coverage and practice today.

The City’s cost cuts have attracted attention across the news industry:

The crisis of nonprofit local news outlets is especially bleak because lots of industry experts had hoped this model would be the solution to dying newspapers. If you’re a civic-minded person with money to spend, please consider supporting these places. https://t.co/6QMjmCIelg

— McKay Coppins (@mckaycoppins) September 21, 2023

It’s been a tough year for media, including nonprofit media. ⁦@THECITYNY⁩ covers my hometown with courage and insight. I proudly support this newsroom, its journalists and its leaders ⁦@NicDawes⁩ ⁦@RichardKimNYC⁩. You should too! https://t.co/EO00lSZKsF

— Sewell Chan (@sewellchan) September 21, 2023

the market – philanthropy included – will not support the information ecosystem required of a healthy American democracy. https://t.co/vGbJt9OSMH

— Wesley (@WesleyLowery) September 21, 2023

https://t.co/rdKpKBjvxs https://t.co/mApLfPsUpu

— Jesse Holcomb (@JesseHolcomb) September 21, 2023

It is an outrage that in a city this rich, with this many problems, there aren’t more wealthy people willing to support local public service journalism. But it also demonstrates that billionaires will not save local journalism – we are going to have to find another way. https://t.co/7ZJ3AFTgH9

— Lydia Polgreen (@lpolgreen) September 21, 2023

All these situations are unique.
If this key sentence- “Large and small funders have reduced donations significantly to news nonprofits across the country this year.”— means on net basis across the sector, not sure the facts bear it out. Evidence? https://t.co/3WDe2qVy24

— Richard Tofel (@dicktofel) September 21, 2023

A few years ago, Elizabeth Hansen Shapiro and Jesse Holcomb wrote a Nieman Lab 2020 journalism prediction that has aged well, for better or worse: “Local news initiatives [will] run into a capital shortage.” Among their five scenarios for possible sources of growth capital and “unintended consequences of growth in non-commercial news” in the face of that challenge, one in particular sounds familiar today: “A big, coordinated play by philanthropic leaders to boost production of noncommercial news.” But in that prediction, they caution:

Even with a game-changing funding renaissance in local news (which would require the significant participation of community foundations), it probably won’t be fast enough or big enough to refill the bucket as local newspaper talent and jobs continue to drain away. There may not be enough philanthropic capital, even on the sidelines, to support the scope and depth of local news-gathering that our democracy requires.