As a former reporter for the St. Louis Beacon, a nonprofit news outlet in Missouri, and the author of two recent journal articles on nonprofit news donors, I eagerly awaited the Pew Research Center’s state of nonprofit journalism report.
Published two years after its last major study on the nonprofit landscape, Monday’s report comes at a critical juncture for news outlets seeking long-term sustainability. As Pew notes, the vast majority of the nonprofits included in this study were formed within the past five years. All but nine states now have a least one nonprofit news outlet.
That’s certainly good news for readers seeking alternatives to for-profit dailies that have seen relentless cutbacks. But while many local daily newspapers are having a hard time filling their newsrooms with reporters, nonprofit news outlets typically cannot even field a softball team — the vast majority have fewer than a dozen full-time employees, with many relying primarily on freelancers.
The nonprofits are typically putting out a much different product than their for-profit competitors — one that focuses far less on crime, sports, entertainment and opinion and far more on politics, education, the arts and local investigative reporting. Daily newspapers are getting smaller but they still put out far more content on a daily basis than nonprofit news sources, which often produce just a few new stories a day.
The most interesting piece of Pew’s new study is not about content but the business side. Let’s start with the good news: Most of the news outlets surveyed reported bringing in more money than they spent in 2011 (the last year for which data is available).
That money, however, doesn’t seem to be going toward hiring more people on the development side. Which brings us to problem No. 1. Many of these news outlets were started by former print editors and reporters who never dealt with fundraising in their previous lives and liked it that way. Journalists, in short, aren’t used to selling themselves or their products. And few outlets are devoting much time to doing that: More than half said that business-side tasks accounted for between 10% and 24% of staff hours.
The larger issue, one that cannot be solved by rearranging staff resources, has to do with diversifying revenue streams.
Nonprofit news outlets overwhelmingly relied on large seed grants from the usual suspects who fund journalism initiatives to get them off the ground. But, as the report notes, “as those grants expire, many organizations do not have the resources or expertise necessary for the business tasks needed to broaden the funding base.”
Nearly two-thirds of the survey respondents (61%) began with a startup grant that accounted for at least one-third of their original funding-and a majority of those grants were for $100,000 or more. But at the time of this report, only 28% of those organizations reported that the funder had agreed to renew that grant to any degree.
Roughly half of respondents reported generating at least 75% of their income from a single revenue stream — mostly often from foundation grants of as much as $250,000. With so much invested in a small community of major donors, another economy calamity or even changing priorities at one or more foundations could spell major trouble across the nonprofit journalism landscape.
Donations from individuals, while commonplace, account for very little of the overall revenue intake. While the majority of outlets said they had developed at least three revenue streams, it’s still largely a case of foundations or bust.
My research focused not on major individual donors or foundations but a group who could be called mom-and-pop donors. These are the invested readers who give anywhere from $5 to $500 or so annually to nonprofits. One of the major takeaways was that those who are invested financially in nonprofits are also invested in many other ways — they spend more time reading news after giving and are more likely to share content and recommend the news source to others.
This is a boon to nonprofit news outlets not only because it helps their bottom line but also because small donors form a base of loyal readers for the future.
Pew’s report is yet another indication that targeting individual donors is crucial for nonprofits. While foundations will hopefully continue to lift up nonprofit news outlets, hundreds (if not thousands) of smaller hands are needed to keep these organizations on sturdy ground.