Where Nonprofit Journalism Funding Stands Now

Welcome to Second Rough Draft, a newsletter about journalism in our time, how it (often its business) is evolving, and the challenges it faces.

There’s a lot of unease just now surrounding funding for nonprofit journalism, and I thought it might make sense this week to try to sum up where I think we stand, and where the industry is headed. The upshot is a mix of significant concerns, but also an emerging sense of opportunities.

We should begin with institutional foundations which, while they are not the most important funders, are the ones people tend to think of most often. It is also where the situation is least hopeful.

Foundation frustrations

Almost two years after the ballyhooed launch of Press Forward, it seems time to publicly acknowledge what I have been hearing privately for months— that the initiative has been largely a disappointment. The lead funders, both longtime generous supporters of journalism, made quite significant incremental grants, and that was helpful— very much so in some places. But the ambition to grow from an initial goal of a half billion dollars (a good bit of that not incremental) to a billion has pretty clearly been thwarted. Press Forward declined to provide me an updated figure for total incremental commitments to the initiative.

None of the adverse trends Press Forward identified at its outset— fragile newsrooms, limited shared infrastructure, historical inequities, a lack of public policy solutions— has been reversed, with a bit of progress on infrastructure and a huge setback in public policy standing out.

Way too much money ostensibly aimed at local news ecosystems has served instead to bolster community foundation operations. A misguided commitment of $20 million in one-size-fits-all grants to hundreds of smaller newsrooms, it is increasingly clear, will leave many of them facing funding cliffs in a more challenging climate next year. Yes, we are only two years into a five year initiative (although well into the third calendar year), but, after a slow start in the months before the formal launch, a good bit of the funding was frontloaded, so we’ve already likely seen most of it. Press Forward also declined to tell me how much currently remains for grantmaking in their pooled fund.

To be sure, a tough time

The climate, admittedly through no fault of Press Forward or foundations generally, has become a tricky one for all nonprofits, not just those in journalism. Trump’s draconian budget cuts for Medicaid, food aid, scientific research, climate change adaptation and cultural organizations have stressed almost all foundation grantees, and will continue to do so for at least some years ahead. A few foundations have stepped up their giving, but almost none on a scale commensurate with the explosion of needs.

In and around journalism, the federal defunding of public broadcasting has substantially exacerbated this effect, and swamped the relatively small public policy gains in places like California, Illinois and New York. I, for one, am concerned about the fact that 14 deep red states continue to supply almost $150 million annually to public broadcasting—there may be another shoe to drop here, especially when further cutbacks might not be confined to such states. Pennsylvania cut support for public broadcasting in 2021 and North Carolina is considering doing so now, even with Democratic governors in both places.

We will get to better news, I promise, but first one last point about institutional funders and their legacy in nonprofit journalism. I hope the time has also come to acknowledge that the emphasis some of them placed, starting more than a decade ago, on materially growing earned income as a source of significant support for nearly all nonprofit newsrooms has proved a blind alley for most. (Note that I don’t count membership revenue as earned income; it’s better categorized as philanthropy.) I’m all for garnering material earned income (net of expenses) where you can, for instance from events, and I know there are exceptional newsrooms who do so, but it seems increasingly clear they will remain exceptional.

Major donors: where the money is

The better news begins with major donors, who, as more and more people are realizing, are the heart of contemporary American philanthropy. New wealth continues to be generated at an amazing pace, most recently in artificial intelligence and perhaps even enduringly in crypto currency. Not all of this is sympathetic to nonprofit journalism, but some of it is, and I believe more will be.

 

 

At the same time, awareness of the business decline of legacy journalism is growing, as is an understanding of the critical place nonprofit newsrooms must play in helping to fill the resulting gap. Press Forward, to be fair, deserves some share of credit here. The end of newspaper joint operating agreements, and then of newspaper competition in towns like Detroit and Las Vegas, and the forthcoming culling of smaller public radio and especially television stations, portend real losses—but also create opportunities to educate many more of our fellow citizens about why we need their help.

The fundraising efforts of nonprofit journalism targeted at potential major donors, taken as a whole, are also becoming more sophisticated and better resourced. Together, these factors are creating better results for some of the leading newsrooms. I know these results are uneven, but I think they offer grounds for a bit of optimism.

Membership, yes; paywall, maybe

For similar reasons—greater awareness and heightened professionalism—membership revenues also offer a significant bright spot in many places. While the outpouring many public broadcasters saw last month is almost certainly not sustainable, it should be encouraging to newsrooms overall.

One special situation of great interest is playing out in Baltimore, where the nonprofit Banner forges ahead with its paywall strategy, even as others, such as the Salt Lake Tribune, seek to move in the opposite direction. While the Banner is growing (to more than 65,000 subscribers so far), it also continues to lose money, and faces a finite runway. The viability of a local paywall of this sort—even if dependent on a newsroom as large as the Banner’s 80-plus—would be a big development in the field. It certainly bears careful watching.

A last point, which applies with ever-greater force, I think, no matter where a nonprofit newsroom’s revenues are coming from. Probably the most important thing we have learned in the nearly two decades of digital nonprofit journalism’s emergence is that the keys to sustaining—and sustainably growing— revenue are demonstrated impact from the work and demonstrated appeal to relevant audiences. Impact can and should be defined differently for different organizations, and audiences will vary in every way imaginable, including by size, place, channel and medium. But these two objectives remain indispensable. Pursue revenues with gusto, but never forget why people who you want to give you their money will be inclined to do so.

Second Rough Draft will be on vacation next week. See you in September.

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