Are matching donations key to crowdfunding journalism? Beacon is betting on it.
For the last two years of his life, Dan Fletcher and his colleagues have been coming up with ways to convince people to pay for news — no simple task in this era of abundant information.
A wunderkind journalist who made stops at TIME and Bloomberg on his way to Facebook, Fletcher left the social media giant in 2013 to launch Beacon, a startup that helps journalists and news organizations crowdfund their projects.
It hasn't always been easy. After coming out of startup accelerator Y Combinator in 2014, Fletcher and his co-founders began experimenting with different models of fundraising, including a $5 per month subscription plan that "didn't work at all."
In the early days, "we learned a lot about crowdfunding, and then we learned a lot about how to do larger crowdfunding campaigns," Fletcher said.
But after some tinkering, Beacon's game plan began coming into focus. Fletcher and company began to line up more ambitious crowdfunding campaigns with larger goal amounts: When Michael Brown was killed in Ferguson, Missouri, Beacon partnered with The Huffington Post to bankroll a reporter's salary in the embattled suburb for a year. That summer, Beacon saw its biggest success when it pledged to match contributions funding journalism about climate change dollar-for-dollar up to $100,000. So far, the campaign has drawn more than $90,000 in pledges.
The startup realized that matching funds were a huge incentive that could convince readers to donate — and journalists to choose Beacon over alternatives like Kickstarter or Indiegogo. It was a strategic turning point.
"If I was a journalist and I had to choose between where I wanted to fund my project and Beacon would double my money or Kickstarter wouldn't, I'd go to Beacon every time," Fletcher said.
That revelation has spurred Beacon's latest fundraising strategy, which today manifested itself in the form of a $3 million fundraising campaign dedicated to backing stories about immigration. During the past several months, Beacon has raised the matching dollars offline from a variety of individuals and institutions and plans to use the funds to double contributions from readers. Those deep-pocketed investors contribute to Beacon on a no-strings-attached basis, meaning they will not claim to sponsor the work they're funding.
In conjunction with the immigration reporting fund, Beacon has announced a series of projects in partnership with various news organizations, beginning with The Nation magazine and Fatal Encounters, a research team that tracks officer-involved homicides. Readers who contribute to projects managed by those organizations will have their donations matched with dollars from the matching fund.
The logic is straightforward: If readers feel like they're getting double the donation for their money, they're more likely to contribute, Fletcher said.
"You feel like you're getting a deal in some way, right?" Fletcher said. "If I put in $100 to someone I know or a publication I trust and as soon as I pledge, I see that turn into $200, I feel like I'm having more impact. And I think, you know, that is ultimately something readers look for."
The strategic pivot for Beacon comes amid some encouraging signs for the company's growth. Although Fletcher would not say whether the company is profitable, he noted that Beacon, a venture-backed company that takes a 10 percent cut of the money it helps raise, has now paid out more than $1 million to journalists since 2013. The startup recently added a new head of communications and has ideas in the works for running similar matching campaigns.
One potential drawback of Beacon's matching fund initiative is that the startup currently spends man-hours raising the money, meaning it's a labor-intensive process that could be very difficult to replicate at greater scale in the future. But Fletcher is optimistic that a viable model to automate the fundraising process will present itself after additional experimentation.
"It would make sense, eventually, for us to have the ability to create pools of matching funds on the fly," Fletcher said. "I don't think it's something, until we understand this a little bit more, that we're going to roll out in the next week or two. But it's definitely something we're thinking about."