Katherine Fink

You’ve probably heard the adage about not putting all your eggs in one basket. It’s an especially meaningful one for newspapers. For decades, they relied heavily on advertising revenue. That arrangement stopped working about 20 years ago, as audiences moved online and advertisers followed. News media outlets moved online as well, but they found themselves in a losing battle for advertising dollars against new digital competitors such as Craigslist, Facebook and Google. One-third of U.S. newspapers have closed in the past two decades, most of them local. As their income from ads and subscriptions has dwindled, some news organizations that used to rely mainly on ad revenue, such as The Salt Lake Tribune and Philadelphia Inquirer, have become nonprofits – opening the door to other sources of revenue. And interest in launching news organizations as nonprofits has been growing. Meanwhile, some for-profit media outlets have begun to obtain some philanthropic support and ask for donations from readers and subscribers. I’m a journalism studies researcher and a former journalist myself. To better understand how news leaders were thinking about their future in this ever-evolving landscape, I researched the fundraising approaches of local nonprofit news outlets across the U.S. I interviewed 23 local news leaders about their fundraising strategies and their views on the best way to balance their sources of funding in the long term. What I found is that nonprofit news media outlets are finding it necessary to pursue multiple streams of revenue, including from foundations, in the search for sustainable business models. But the ideal revenue mix may look different for each organization. Foundations are footing half the bill Foundations, especially the Knight Foundation, have become major supporters of nonprofit news media in recent years. According to the Institute for Nonprofit News, foundations provided about half of all revenue for nonprofit news media in 2023. Another 29% came from individual donations. And 17% came from ads and other sources of earned, rather than donated, revenue. Money raised through grants from foundations can arrive in larger amounts and be more predictable than advertising revenue. But it often comes with strings attached. For example, in exchange for a grant, a media outlet might be pressured to adjust its editorial priorities or adopt specific technologies. The nonprofit news leaders I interviewed also said foundations tend to be more interested in starting new organizations than sustaining media outlets that are already up and running. Some foundations are now making that point clearer than ever by telling the nonprofit news organizations they have supported not to depend too much on them anymore. The Knight Foundation and other funders have informed potential applicants they must demonstrate they are pursuing revenue diversity as a condition for getting a grant. In other words, nonprofit media shouldn’t put all of their eggs in the foundation basket, either. Branching out The local news leaders I interviewed said they didn’t necessarily see having a variety of revenue sources as a path to sustainability. And adding new revenue streams comes with costs, such as hiring membership directors or advertising salespeople. Local news leaders said it’s hard to know whether making those investments will pay off. Still, under pressure to rely less on foundations and more on other types of revenue, they’ve been branching out in recent years. According to the Institute for Nonprofit News, foundations provided 57% of nonprofit news revenue in 2018; in 2024, that share had declined to 51%. But it’s not clear how much more revenue could come from other sources. Donations from readers tend to be provided in small amounts, so news organizations need a lot of them. And individuals donate to news organizations for a variety of reasons, so news organizations need to hire fundraisers who can craft a variety of messages. Getting large numbers of readers to donate is hard, however, because audiences for local news tend to be small. Nonprofit news organizations can also accept advertising. However, advertising is a taxable form of revenue, unlike donations. The IRS has also warned organizations that they can lose their tax-exempt status if they accept too much income that is “unrelated” to their nonprofit missions, including advertising. Pooling donor funds Ultimately, the nonprofit news leaders I interviewed say every type of revenue has its drawbacks. And the more complicated their revenue mix becomes, the more complicated their approach to fundraising has to be. Local news organizations already operating on shoestring budgets don’t have the capacity to complicate their fundraising, even though they say they agree with the general principle of revenue diversity. The nonprofit news leaders did have encouraging things to say about a newer fundraising trend: pooled donor funds. With pooled donor funds, multiple donors contribute to a single charity that serves as an intermediary that disburses that donated money to a particular kind of nonprofit. For the media, examples include the Institute for Nonprofit News’ NewsMatch and Press Forward, a coalition of 20 foundations. Pooled donor funds can be considered a form of revenue diversity, since they combine contributions from multiple sources and are used to persuade individual readers to “match” donations from the pooled funds with their own contributions. That can potentially insulate news organizations from major changes as grants from individual foundations come and go. Researching the role of ‘earned revenue’ I plan to publish the results of another study soon. It’s about the role that “earned revenue,” meaning advertising, sponsorships and other entrepreneurial sources of money, is playing in the funding of nonprofit news media. The Institute for Nonprofit News has called it “perhaps the most underutilized revenue stream for nonprofit news.” But the nonprofit news leaders I interviewed had mixed feelings about earned revenue. In part, that was because of ambiguous guidance about how much of it news organizations may accept without jeopardizing their tax-exempt status. Given President Donald Trump’s recent threats against other nonprofits, including universities and hospitals, news organizations may be even more reluctant to test those limits. Katherine Fink, Associate Professor of Media, Communications, and Visual Arts, Pace University.This article is republished from The Conversation under a Creative Commons license. Read the original article.

Katherine Fink

Los líderes de los medios de comunicación sin fines de lucro están luchando por dejar de apoyarse en las bases que dicen que deberían ramificarse más