Knight Foundation support for nonprofit news startups shifts focus to growth, sustainability

The Knight Foundation has released a detailed new report today arguing that well-run nonprofit news sites can weather their growing pains and operate at break-even or better.

The report itself has a wealth of statistics on 18 selected sites, all operating for at least three years, but I found the subtext even more interesting.

To those venturing to launch nonprofit sites, the good news is that the turn from start-up funding to new and diversified sources of revenue can be done.

To potential foundation funders, the message is that these sites do important work and have a realistic chance to be in business and expanding in three to five years after initial grants have run out.

Though the sites were chosen as examples of good practice, they together showed revenue growth of 30 percent over the three-year period, 2010-2012.  And for 2012, 14 of the 18 operated at break-even or better.

Mayur Patel, Knight vice president for strategy and assessment, told me in a phone interview that the foundation’s own support of the sector has changed recently from new launches to a focus on developing existing sites. That is significant since Knight is the biggest foundation supporting journalism and a thought leader for others — though it has also long worked to expand the base of foundations interested in the future of news.

Knight was a substantial funder of startups like Minnpost, Voice of San Diego and ProPublica.  It escaped my notice, but in the last 18 months it gave $1.9 million to ProPublica to “expand its industry-leading work in data-driven news applications” and $1.5 million to Texas Tribune for several projects including “a how-to curriculum” for other news sites.

Patel said he anticipates the foundation will do “an additional round of funding” next year with similar goals. Knight, he said, will be making grants to additional sites “that have shown momentum” and “smaller scale support of particular practices.”

While there may be few sites that can build to the scale of ProPublica, Texas Tribune or Center for Investigative Reporting (all $5-million-a-year-plus operations), Patel said “we are not too far (with the Texas Tribune model) from imagining what could replicated in other states if the capital is there.”  (And smaller states might not need as big an organization).

This report, like one Knight did two years ago, and a Pew Research Center report earlier this year identifies two main elements of success. Sites that are flourishing are now drawing contributions from individuals and smaller local foundations, have made producing events a profit center and get some revenue from advertising and sponsorships.

Diverse sources of revenue is one characteristic of nonprofit news sites that are surviving. (Knight Foundation)

 

The other common thread is that they use some staff positions for development and other business functions or, in the case of smaller sites, devote a share of the time of staffers to those activities. Sites focused solely on  journalism — like the defunct Chicago News Collective and its successor the Chicago News Cooperative — tend to run out of steam after a few years.

The first section of the report, directed both to nonprofit practitioners and funders, is about “Social Value Creation.” That reflects how much the foundation world is accustomed to measures of impact for the service and advocacy groups it typically supports.  As Charles Lewis and Hilary Niles of American University explored in a paper earlier this year, those kinds of measures do not come naturally to the hard-charging investigative reporters and editors who populate the nonprofit sites.

But the report echoes Lewis and Niles in saying that the organizations need to understand their audience and document both traffic and engagement as well as documenting the impact of their reporting.

A concluding section lays out a daunting list of eight recommended practices such as:

  • Attack your assumptions always.
  • Provide services, don’t just publish.
  • Bolster the brand by building partnerships.
  • Move to where your audience is.

The last of these essentially says that the sites need to be responsive to social media and available on mobile devices like smart phones. The technology and product design to get that done is proving challenging for much larger legacy organizations, in my view, and may be out of reach for all but the biggest of the nonprofits. But Knight seems to be directing some of its effort to shareable models smaller organizations can simply adopt.

This latest report nails down the basics of a survival manual for news nonprofits, though the sector is still young enough that other issues will emerge over the next several years.  I also think the big picture is rounded out  by an earlier study by J-Lab’s Jan Schaffer (also Knight supported), who argues that many small sites thrive on the volunteered time of a dedicated core group and can last indefinitely without significant revenue if that enthusiasm holds up.

I have heard grumblings in recent weeks that Pew and Knight may be over-focused on studies of the nonprofits, being nonprofits themselves, and overestimate their potential impact. But I did not find that in talking with Patel.

The nonprofit sites, together, “are not nearly as big as (they) need to be,” he said. “When you look at the amount of money still coming out of legacy media businesses, no way it replaces that.”

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