Business Models for Local News: Field-Building to Grow a Culture of Philanthropy

Part Two of “Business Models for Local News: A Field Scan” from The Shorenstein Center and The Lenfest Institute.

This post is one section of a new report published by the Shorenstein Center on Media, Politics and Public Policy at the Harvard Kennedy School and The Lenfest Institute for Journalism, “Business Models for Local News: A Field Scan.” On May 18, 2018, Shorenstein and The Lenfest Institute gathered industry leaders discuss prospects for finding and seeding new business models for local journalism — and how best to support those working in communities across the country to facilitate change. The report is based on those conversations. The full report is available here.

The Issue: In the current environment, advertising is shrinking as a source of news production subsidy. What would it take to build an ongoing source of philanthropic subsidy for journalism?

Key Takeaway: Building a culture of philanthropy for journalism will require overcoming two key barriers, as one participant put it: a “lack of prepared mind” among a new class of potential donors who must be able to identify the free press as worthy of investment, paired with the “lack of capability” within news organizations to deliver sustainable, long-term funding.

Success will require creating and negotiating relationships and alignment between three sets of stakeholders: an informed and engaged set of philanthropists, funders, and donors; publishers with viable news products in areas lacking needed coverage; and civil society players, including local officials, who understand and help lend legitimacy to new funding models.

Existing Experiments and Initiatives

Attendees articulated the most significant differentiators among current, successful nonprofit newsrooms as existing leadership and whether the organization had secured a sizable amount of funding from the beginning — leaving startup news organizations without incumbency in their respective areas of reportage at a disadvantage. There are, however, outlets that have overcome the latter challenge:

Berkeleyside — a Berkeley, California-based daily, local, digital news publication — represents a community-oriented model that has successfully leveraged funding from members in addition to larger philanthropic contributions. (Voice of San Diego was additionally referenced as an important example of local news excellence and fundraising prowess).

  • Media Impact Funders’ experimentation through an ongoing and wide-ranging network of funders and supporters provides a valuable guide for funders seeking investments in specific subject-matter areas.
  • The Columbia Graduate School of Journalism’s now-defunct accountability project The New York World represented a “teaching hospital” approach to journalism based in academia. Like other new journalism efforts founded at universities, the project benefited from a base of donors familiar with the institution and its focus on results-driven journalism around particular subject areas.
  • Chicago’s Block Club sought to fill the void left by the closure of its local DNAinfo site, raising more than seven times its Kickstarter goal from small-dollar donors interested in local journalism.
  • Attendees reflected the power of NewsMatch, a model that has motivated non-journalistic community foundations to match contributions as a low-friction approach to supporting news organizations.
  • Others, like Civil, are helping to build a new marketplace for quality journalism by deploying decentralized support linking journalists directly to their patron readers in an effort to push the boundaries of the audience’s role in supporting new models. Some participants suggested the development of a NewsMatch model that enables for-profit news organizations to build cultures of philanthropy in their communities.
  • Leaders such as former American Society of News Editors President Mizell Stewart III are creating vital examples of national models for funding quality journalism, educating national funders, and building training toolkits to enable editors to execute funding appeals — an education initiative that has seen success in Phoenix, Milwaukee, and Indianapolis.

Opportunities and Challenges

During conversations on this topic, representatives from news organizations sought guidance around how to replicate these effective approaches to funder engagement and management, and long-range sustainability once funding is secured.

Funder engagement

Foremost, attendees emphasized the need to stimulate a “philanthropic vanguard” — to build a new culture of giving that sees institutions acting together instead of alone, effectively “priming the pump” for future contributor interest, said one person. In recent findings from the Shorenstein Center regarding the allocation of philanthropic support for media, of the $1.9 billion in grants to news organizations, more than half were devoted to large public media stations. Of the remaining $900 million, over half of that was devoted to climate change. Given this, there’s demand for an “order of magnitude shift” to change the landscape of philanthropic support for news — something similar to “An Inconvenient Truth for the industry,” said one person. We are “in the early innings of telling this story in a way that elevates journalism as a priority,” noted another.

Participants especially voiced the importance of further education to inform target communities, subject-area funders, and high net-worth individuals about a range of opportunities to support news. Philanthropic endeavors must be marketed differently, they said, beyond the idea of “giving something for nothing — except a tax break.” Attendees suggested that one solution could involve national funders, philanthropies, or “an intermediary group for local journalism” engaging community foundations in an education “roadshow” to elevate the understanding of local news ecosystems. These explanatory opportunities could create experiences for potential philanthropists to better understand the need for investment and “feel part of the team.” Across all funding strategies, the single largest driver for contributions to news organizations is alignment with the news organization’s mission. Attendees said journalists themselves should “speak in human terms” about their journalism, process, and accomplishments in more public ways.

Beyond large-dollar funders, participants reflected the urgency to redesign the individual supporter’s experience, modeling donor experiences after the episodic, sustaining, or regular contributions to public radio or arts institutions — rather than current models that rely upon singular instances of giving. Multiple participants addressed the consistency with which NPR hosts and journalists articulate these appeals as a model of effective engagement. In shifting from intermittent funding to positioning news support as a routine commitment, attendees put forth the idea that this become both a product and programming conversation. In addition to refocusing the donor and member experience, news organizations need new strategies to expand and enhance membership offerings and events.

Finally, news organizations must develop mechanisms and programs to target entities that do not currently include media as a priority in their funding missions. Some participants reflected the need to cultivate relationships with political figures and officials that can further understand the value of public service and local journalism without overstepping ethical boundaries. Others mentioned that nontraditional actors like platforms continue to play an important role in funding scaled experiments that enable news organizations to reach subscribers with new formats. Broadening the aperture on the types of entities that can engage in giving is key.

Best practices and toolkits for attracting funders

News organizations identified a void of comprehensive databases including best practices for fundraising across their organizations, agreeing that the field generally lacks case studies for funders and institutions alikeFor community foundations and nonprofits, “public service” and journalism as a public good are often “too abstract” for funders. Participants reinforced the need for positive narratives around quality (and error-free) journalism across contexts and audiences to affirm the viability of philanthropic investments. (For a good start on fundraising resources for engaged journalists, see this guide from the Gather collaborative.)

Participants also voiced the desire for consistent funding documentation that clarifies principles of journalistic integrity and ethics for funder audiences and high net-worth individuals who might be new to supporting journalism. Some suggested something as simple as “how-to fund” guides. News organizations, especially, said they want new mechanisms for managing the conflicting interests of funders and the funded. Key issues discussed included maintaining independent reporting free of donor agendas, cultivating sources of unrestricted funding rather than subject-area funding, and guidelines for transparently disclosing sources of philanthropic support.

Several people identified what they called the “black box” of funding appeals, wherein news organizations don’t want to expose all of their activities to a potential funder, and donors don’t want to completely reveal their interests. This imperfect information often leads to mismatched purposes. Given the potential for funding that seeks to advance a particular agenda, attendees sought tools to clarify to community foundations and local nonprofits what they can expect to secure for their funding — including a toolbox of letters for initial requests. News organizations emphasized the usefulness of accessing consistent fundraising templates, emails, and proven messages that have effectively engaged funders, matched with “clear guidance for what funders can and cannot request.”

Changes inside the newsroom

The shift in sources and methods of philanthropic support for news must be matched with an internal culture change at news organizations around sustainability, business best practices, and the discussion of the future of journalism itself, attendees shared. The industry needs to shift from its reactive positioning to one that tests sustainable, long-term models ahead of disruptions around the curve.

More clearly integrated databases for the sector would enable news organizations to avoid the duplication of fundraising efforts, some participants said, including those potentially conflicting with existing news and editorial efforts from local universities and programs within other institutions. Others posited the development of a central database of funders and new organizations seeking funding. Existing tools like Raiser’s Edge can organize data around potential funders, but news organizations systematically lack access to these expensive resources. Other suggestions to help with startup efforts included a “news business in a box” that could practically guide entrepreneurs in their beginning stages and the creation of a pilot media impact team that could offer coaching, development, or training.

Once funding is secured, attendees agreed that news organizations must develop the tools to responsibly deploy and measure the effectiveness of the investment. Philanthropy and funding should build capacity rather than dependency in news organizations, including asking the question “how do we equip newsrooms to run themselves?” This requires removing the silos between business, advertising, revenue, and editorial sides of the news organization’s ledger to ensure every member of the organization is directly engaged in the long-term strategy, participants said. Only “a small subset of individuals in the newsroom have the time to think about innovation,” one person noted. Funding strategies must seek to sustainably expand that capability — including embedding business-thinking inside newsrooms and sourcing operational support from outside.

This report continues with Part Three, “Finding and Seeding Growth Capital for Mission-Driven Journalism Enterprises.” You can find the executive summary here, and the full report is here.

Leave a Reply

Your email address will not be published. Required fields are marked *