Can Nonprofit News Survive?

 
Only four years old, the nonprofit online news site MinnPost has yet to match its cross-town rival, the venerable Minneapolis Star Tribune , for size, budget or readership. But it sure can bring out big names for a party. 

At MinnPost 's April 1 "MinnRoast" fundraiser, some 900 paying guests heard Minnesota political luminaries, such as Governor Mark Dayton and U.S. senators Al Franken and Amy Klobuchar, tell mildly amusing jokes, some of them at the news site's expense. They applauded as MinnPost staffers, founder Joel Kramer and others performed occasionally awkward song-and-dance numbers. And they opened their wallets to help the organization firm up its balance sheet to the tune of $100,000. 
 
All this rankles veteran Minneapolis columnist and civic curmudgeon Nick Coleman. What bugs him is not that MinnPost can attract so much political star power; it's that in the name of raising money, MinnPost journalists are obligingly rubbing elbows with the politicians and lobbyists they cover. "They're so reliant on the kindness of strangers that they drop the police yellow-tape you should have in journalism," Coleman says. "So at 'MinnRoast' you have this really unseemly mixing of news sources and news people."
  
But Doug Grow, himself a Star Tribune veteran who now covers the state capitol for MinnPost , is having none of it. When former colleagues take him to task for his current employer's fundraising efforts, he reminds them that their newspaper stories are essentially vehicles for advertising from department stores and grocers. "There is no purity," Grow says. "And I'm sorry, but I want to get some sort of paycheck."
  
So do most of the journalists who, in a few short years, have turned MinnPost , The Texas Tribune ,  the Connecticut Mirror , California Watch , and other nonprofit startups into first-thing-in-the-morning stops for state government officials, lobbyists and fellow reporters. In their quest to survive, these online sites are venturing far afield of the traditional (but failing) advertising-supported journalism model. They're offering public-radio style memberships, soliciting corporate sponsorships, cutting syndication deals with for-profit news outlets, holding high-profile public-affairs events, winning the support of foundations and individual donors — and, as in MinnPost 's case, getting creative about fundraisers.  
 
Hopes and fears
  
This entrepreneurial approach to attracting notice and bringing in revenue may be leading some old-line reporters to mutter that the new nonprofits will do anything for money.  But it also has created an undeniable sense of optimism in the nonprofits' newsrooms.
  
Where just a couple of years ago the outlook for serious reporting on public affairs at the state level was beyond grim, as newspapers followed television stations in slashing both their staffs and their coverage, the online sites have begun filling the breach. They've broken big stories, as California Watch did with its much-noticed investigation of seismic hazards near the state's schools ; commanded the news cycle, as the Connecticut Mirror did in the days following Governor Dannel Malloy's $1.6 billion deal with the state's employee unions ; become key stops for anyone seeking analysis of state affairs; and begun positioning themselves not just as sources of news but promoters of civic discourse.
  
"It's showing signs of resilience, signs of having more than just a short-term flavor-of-the-month quality," says Evan Smith, a former editor of Texas Monthly who helped found and now edits The Texas Tribune. "I believe we can do this. I believe you swing for fences and it's possible to succeed."  
 
While it is becoming clear that the nonprofit model holds great journalistic promise, however, its sustainability remains uncertain. "There's no question in my mind that with the right team of journalists and leadership, you can do consistent and high-quality journalism," says Robert Rosenthal, a former New York Times reporter and Philadelphia Inquirer editor who is now executive director of California's Center for Investigative Reporting, which houses California Watch. "How you keep that going financially, though, is still a huge question mark."
  
Funding in fragments
  
The reason for Rosenthal's uncertainty is straightforward. The sites launched with varying levels of financial support from foundations or large donors — about $600,000 a year over three years for the Connecticut Mirror , $3.7 million for California Watch , $850,000 for MinnPost  - but none considers its pipeline to deep pockets secure. MinnPost 's Joel Kramer points out that as more online startups get into the business, the competition for funding from national foundations will intensify. "Local foundations are where most of the action will be for most of the regional sites like ours," he says. "And they want to know that you have a plan for how you will sustain yourselves for after they don't fund you anymore."
  
Inevitably, this has to involve building ties to local or regional sources of funding, argues Eric Newton, assistant to the president of the Knight Foundation, which is one of the key philanthropic players in the nonprofit news world. "Foundations only give away a dollar or two of every 10 dollars given away in the United States," he says. "Most of the money is given away by individuals. News organizations should connect with their communities. They should not think that foundation money will save them."
  
To be sure, the online sites don't have the embedded costs — buildings, printing presses, newsprint, lots of employees — of their print brethren. Nor, however, can they operate on the shoestring that news aggregators or lone-guns-with-a-laptop can manage.
  
For one thing, good reporting means hiring good reporters. Some, like MinnPost , have managed to build their newsrooms by blending young journalists looking to make a name for themselves with veterans in their 50s or 60s who are willing to work for less than they could make elsewhere because they like the startup vibe. "I can afford to do this because of long years at guild newspapers," says Doug Grow. "So between my pension and what I'm paid at MinnPost I'm making what many people would consider a decent living, though it's still less than I was paid at the Star Tribune. "  
 
Although some sites have tended to stick with topical news reporting, others are blending in investigative pieces, data analysis, interactive graphics, video and audio — all of which get expensive quickly, both in direct outlay and in reporters' time. "The constant challenge is depth versus the demands of the web," says Connecticut Mirror statehouse reporter Mark Pazniokas. "Once you launch, no matter what your vision is, the web is a creature that must be fed."  
 
Moreover, as any nonprofit executive knows, raising revenue itself costs money. "Distribution for us is more than a full-time job," says Rosenthal. "Social media is a full-time job. If you're going to manage a membership campaign, that's a job. Working with the foundations is more than a full-time job. If you're going to have individual donors, you need someone to manage that. And if we go to sponsorships, like the NPR model, that doesn't just happen, either." 
 
Paths to viability
  
So the last couple of years have seen a fast-changing drive to build new revenue streams — and to grapple with the challenges that each one presents.  
 
For example, California Watch , like many of the nonprofits, reaches a wider audience than it could generate on its own by offering its stories to newspapers and television stations around the state. Unlike the other nonprofits, though, California Watch charges its partners a fee. In exchange, the site goes to great lengths to localize each story, and often lets media partners know well in advance what its reporters are working on.  
 
This does not come easily. "The culture of journalism has not been a collaborative one; it's been a competitive one," says Louis Freedberg, a longtime reporter for the San Francisco Chronicle who helped start California Watch. "Just telling other outlets the stories you're working on is a difficult thing." The result, though, is that distribution revenues, while still a small part of California Watch 's income, are growing rapidly — and Rosenthal expects them to grow even faster as the site expands its video partnerships with major broadcasters.  
 
Other sites are reporting promising growth, too. MinnPost , in its 2010 annual report , reported running a small surplus for the first time. That good news was built on rapid growth in advertising, sponsorships and donations — although the biggest single source of its income remains foundation support. The Connecticut Mirror , though smaller and less ambitious than its counterparts, also believes it is closing in on sustainability. "We're at a budget of $800,000 a year," says James Cutie, a former venture capitalist who is now chief operating officer of the group that publishes the Mirror . "I've done the math to death, and I'd say between $1.2 million and $1.5 million a year would give us all the funding we need to dot all the i's and cross all the t's."  
 
The Texas touch
  
Perhaps the most entrepreneurial of the nonprofit sites is The Texas Tribune , which according to Evan Smith expects to break even later this year. In the past ten months, it has brought in nearly $1 million in site sponsorships and corporate underwriting, and expects to do another $750,000 before the year is out. The Tribune has created an elite membership circle of wealthy Texans, and is bringing in close to $250,000 a year in memberships overall. And it expects some $600,000 to $700,000 in revenue from public affairs events, everything from weekly chats with lawmakers during the legislative session to a two-day "ideas festival" to a tour of college campuses with policymakers and journalists.  
 
                                                               
Events don't just offer the Tribune an opportunity to collect sponsorship revenue. They also allow the site to position itself as a statewide civic force. "Before there was audio and video and blogging, people got in a room and talked to each other; it used to be that you talked to the people you disagreed with," says Smith. "There needs to be a conversation over every water cooler, dinner table, and gym locker room among people who disagree, and we're doing everything we can to force that conversation to take place."  
 
This kind of approach, Knight's Eric Newton says, will be crucial to the nonprofit sites' success. "If people do not believe news and information matters, if they do not see the impact of journalism, it is difficult to establish and maintain professional media organizations," Newton argues. "Since local media must have local support, the media organizations themselves must take on the responsibility of explaining their impact and advancing news literacy."  
 
Whether they'll be able to do that in the end, and then cement their financial viability, is still anyone's guess. But for the journalists involved, it's nice just being in a position to try. "In the old days — about four years ago — in many newsrooms you were on the survival curve," says California Watch's Louis Freedberg. "Now we're on an innovation curve. The end result might turn out to be the same, but it's a lot more energizing being on the innovation curve."  
 
Stateline.org is a nonpartisan, nonprofit news service of the Pew Center on the States. 

Rob Gurwitt is a freelance writer based in Norwich, Vermont.  
 
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