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Oct. 19, 2023, 1:42 p.m.
Business Models

LION Publishers aims to “help members raise money for themselves” — and to decrease its reliance on a couple big funders

“While we recognize our members need more funding, we’ve decided that’s not our role as a membership association.”

Meta’s move away from news doesn’t just affect your Facebook feed. It’s also shaping the growth plans of journalism organizations that once counted on the platform’s funding.

Earlier this month, LION Publishers — the association for local independent online news publishers, which counts more than 475 member organizations in the U.S. and Canada and 14 full-time employees — released its five-year strategic growth plan.

The plan includes lots of interesting bits about how LION sees its role in the news space going forward. It also reveals how dependent the organization is on philanthropic funding, including from Meta and Google. (LION is by no means alone in this regard; Report for America currently lists Meta as its single largest funder, for instance.)

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Ultimately, change is both necessary and inevitable, as as is clear from LION’s own description of its member organizations: They are “nonprofits and for-profits; publishers of daily news stories alongside civic efforts that recruit, equip, and train residents to file stories; podcasts that offer thoughtful analysis; and newsletters that make the news easier to understand — and to-be-determined methods of sharing news and information on new platforms that will inevitably disrupt all of that again.”

A few takeaways from the plan:

LION is moving away from funding news organizations directly. That’s been a goal for awhile (Nieman Lab wrote in 2019 that “LION from this point forward is charged with teaching people how to fish, not giving them fish”), and is now an even more explicitly stated one. Executive director Chris Krewson explained this shift to me in an email:

We never set out to be a funder, but as we started to develop programs, we had the opportunity to offer direct dollars to members who completed those programs. We offered small amounts of funding ($5 to $20K per program) so we could help lower the barriers for members to act on/implement what they learned in the program. These funds were not necessarily meant to be “grants” in the sense of having them be general operating funds, but we know some members thought of them that way (i.e. in order to get this money, I have to complete this program).

While we recognize our members need more funding, we’ve decided that’s not our role as a membership association. Instead, we want to leverage what we do offer — our Sustainability Audits, training and community — to help members raise money for themselves. Also, as an association, we’re best positioned to help them lower their business costs by designing economies of scale they can take advantage of. That’s the way we hope to help, and we’ve articulated that in this five-year strategic plan.

Direct dollars LION has given out in total: By the end of 2024 we will have given out over $10 million in direct funding to publishers, more than half the amount we’ve raised over the past four years. This includes the Meta-funded Revenue Growth Fellowship Program; our Boot Camps, Startups and Sustainability Labs, and our Audits and funding programs.

(The Audits program, for example, has included direct donations of “up to $20,000 per organization.”)

— LION is almost entirely funded by philanthropic donors. In 2023, 98.4% of its revenue came from “institutional giving.” The organization notes in its report that “our greatest risk is that we only have three institutional funders that comprise more than 90% of our total annual revenue” — those funders are the Knight Foundation, the Google News Initiative, and the Democracy Fund. [Disclosure: Nieman Lab has received funding from Knight in the past.] The Meta Journalism Project was also previously one of LION’s large funders, giving “at least $500,000 annually”; it no longer is.

The rest of LION’s 2023 revenue comes in slivers: Direct payments (0.84%, coming from membership dues, awards submission fees, and event tickets), individual giving (0.23%), and sponsorships (0.07%).

From the section of the report on diversifying revenue streams:

Our primary strategy is to diversify our funders. By 2029, we want to add at least three more funders with the goal of multi-year agreements. While we’ll continue seeking opportunities from existing journalism funders, we must also look elsewhere to banks, family foundations, and civic-engagement-focused foundations. We’ll do that by capitalizing on a newfound understanding that we’ve helped articulate and that funders are realizing is core to supporting this field: Rebuilding local news isn’t a journalism problem — it’s a small business problem.

Our secondary strategy is to increase our other revenue streams. Currently, Institutional Giving comprises more than 90% of our revenue. We want to shift this to 80–85% by 2029. We’ll do that by exploring opportunities to increase revenue across our other revenue streams, including creating a fee-for-service offering of existing LION products, building an annual donor program and/or fundraising drive, and developing our annual Summit into a revenue-generating event.

Overall, LION seeks to raise at least $23 million by 2029 and to double the size of its full-time staff, to 28.

LION is making its “sustainability audits” an increasingly large part of its offering. LION’s “sustainability audits” assess news businesses’ health “to help members answer their most-asked question: ‘How is my business doing?'” Ultimately, the organization hopes that audits — free, but requiring an application — will be open to all of its members.

The audit places organizations on a path from “Preparation” to “Sustainability,” with stops along the way for “building” (“iterating based on audience and market research while building a foundation for revenue and operations”), “maintaining” (“increasing journalistic impact and audience growth while seeking operational and financial stability”), “poised to grow,” and “growing” (“steadily and simultaneously growing revenue, audience, and operations, which could include scaling”). Of the 105 member organizations that were audited in 2022 and assigned a stage of sustainability, LION put 20 in the “building” stage, 34 in the “maintaining” stage, 31 in the “poised to grow” stage, and 10 in the “growing” stage. These numbers will be updated for 2023 soon, Krewson said.

The audit application process will reopen in 2024 and “is made possible with generous support from the John S. and James L. Knight Foundation and the Google News Initiative.”

LION will “prioritize specific members who historically face the greatest institutional barriers to building a sustainable news business and are in the best position to receive and act on our support to get to the Growing stage of sustainability.” It aims to “remove as many systemic barriers as we can for founders and leaders who identify as Black, Indigenous, Hispanic, Latine or People of Color, and/or those who identify as LGBTQIA+,” and identifies member organizations that both fit those leadership criteria and are either in the “building” or “maintaining” stages as its “Focus Members.”

As of September 2023, nearly one-third of our member organizations are led by one or more people who identify as BIPOC or LGBTQIA+. Of those member organizations, about 36% are currently in the sustainability stages of Building, Maintaining, or Poised for Growth based on members self-reporting their sustainability stage in their membership application. That’s about 10% of our overall membership.

LION separately interviewed BIPOC leaders about some of the specific problems they face:

LION’s data shows that the median amount of original funding for early-stage publications with leaders who identify as BIPOC, LGBTQIA or immigrants is $7,000 and the maximum amount of original funding is $100,000 compared to a median of $17,500 and a maximum of $1 million for publications with leaders who don’t identify as coming from historically marginalized backgrounds.

According to our data, though early-stage, BIPOC/LGBTQIA/immigrant-led publications have an average annual revenue that is higher than their counterparts, the former group tends to have much less cash on hand and a lower maximum revenue. The financial lows, then, are lower and the highs aren’t quite as high.

You can read the full strategic plan here.

Laura Hazard Owen is the editor of Nieman Lab. You can reach her via email (laura_owen@harvard.edu) or Twitter DM (@laurahazardowen).
POSTED     Oct. 19, 2023, 1:42 p.m.
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