Behind a Boost for Civic News, a Venture Philanthropy Approach

Last year, Elizabeth Green on Chalkbeat and John Thornton of the Texas Tribune launched the American Journalism Project (AJP), a venture philanthropy organization focused on supporting “mission-driven” local news outlets. Since then, the project has raised $46 million from a who’s who of prominent journalism funders, including the Knight Foundation, Craig Newmark Philanthropies, Democracy Fund, the Facebook Journalism Project and a handful of individuals.

The project recently announced several grants in its first round of grantmaking. The total payout stands at $8.5 million, with 11 nonprofit local civic news organizations (CNOs) receiving an average grant of $800,000. This amount, which will comprise between 15 and 30 percent of an organization’s 2020 budget, will give CNOs the resources to grow their business, technology and fundraising capacity.

“What distinguishes these CNOs is strong, entrepreneurial leadership and community buy-in. They are eager to take on the challenge of creative new business models for local news, but what’s been missing until now is the philanthropic capital to support them,” said Green, who also serves as board chair of the AJP.

The grants deliver on Green and Thornton’s promise to apply the principles of venture philanthropy to local news ecosystems facing dwindling revenues, looming “vulture capitalists” and the threat of more layoffs.

Venture Philanthropy: The Basics

When Green and Thornton announced the AJP in late 2018, they joined a crowded field of civic-minded funders looking to throw a lifeline to struggling local news outlets. Their approach was unique in that it sought to apply the principles of venture philanthropy to the field of journalism. By borrowing key ideas from the business investing world, venture philanthropy aims to reinvent how nonprofits are financed and built. Venture philanthropy has been deployed across the larger funding landscape over the past 20 years, often focusing on a specific issue area or geographic locale and helping nonprofits scale.

One of venture philanthropy’s basic tenets is providing capital in the form of general support. This is unique, as a large majority of foundations continue to make grants primarily earmarked for project-based support. Unrestricted support—also known as “build capital” in the venture philanthropy lexicon—is more valuable, as it helps nonprofit develop their overall organizational capacity.

Another linchpin of the venture philanthropy approach is offering management assistance, much as the VCs in Silicon Valley use their skills and networks to help entrepreneurs execute their ideas. This approach can mitigate risks for donors, because they know that a skilled intermediary is playing a hands-on role in helping grantees succeed.

Thornton knows a thing or two about both venture capital and scaling a news organization. He was a VC in Austin for 20 years before co-founding the Texas Tribune in 2009. He raised $4 million, with $1 million coming from his own bank account, to get the Tribune off the ground back in 2009. The Tribune now has close to 1.5 million unique website viewers per month. “On and off over the last decade, I have been obsessing to a lesser and greater degree to how you make capital formation happen to make public journalism happen,” he said

Providing “Important Early Support”

The project’s first round of funding maps closely with the principles of venture philanthropy. Local news outfits can’t lay the groundwork for sustainability if they don’t invest in their core infrastructure. In short, they need money to make money. And so the project’s $8.5 million will help CNOs build out organizational capacity. “The grants will fund an organization’s first dedicated revenue positions, or grow an existing revenue team,” said Jason Alcorn, the vice president of operations for AJP. “Most will fund at least two new full-time positions for 24 months dedicated to revenue and fundraising. Three are going to early-stage organizations where we saw an opportunity to step in with important early support.”

The project will also provide ongoing management assistance for 24 to 36 months to drive recipients’ focus on revenue and sustainability. The project’s founders hope that its approach will eventually bring more funders into the fold. Green previously explained that grants will also come tied to a “venture philanthropy partner” with “experience building media businesses, experience in building philanthropy, experience in building the product team.” The goal here is to help organizations develop diverse and repeatable sources of revenue, such as second-wave philanthropic grants, memberships, events and premium paid information services.

“Sustained Philanthropy is the Key Ingredient”

Earlier this year, Thornton and Green provided some clues about what the project was looking for in prospective grantees. Thornton told the Poynter Institute’s Rick Edmonds that recipient organizations would have a mission “entirely driven by public purpose” with “journalistic credibility,” and will have published quality work and “have at least one business-side person already onboard.” Thornton also said that initial grants will focus on “revenue-raising and tech capacity.”

Green, meanwhile, in speaking to Impact Media Funders’ Nina Sachdev, expressed an interest in “diverse and inclusive leadership, highly invested community support (of all forms, not just major philanthropy), governance structures that are democratic and diverse, and a total commitment to editorial independence and transparency.” Nor was the project ruling out organizations located in major urban hubs. “Unfortunately,” she said, “in the search for local news deserts, there aren’t many communities that will be ruled out. Even New York City, our fair media capital, suffers from the local news crisis.”

The grantees include Berkeleyside (East Bay, California); Centro de Periodismo Investigativo (San Juan, Puerto Rico); City Bureau (Chicago, Illinois); The Connecticut Mirror (Hartford, Connecticut); inewsource (San Diego, California); Mississippi Today (Ridgeland, Mississippi); MLK50: Justice Through Journalism (Memphis, Tennessee); NOISE (Omaha, Nebraska); Underscore (Portland Oregon); WyoFile (Lander, Wyoming); and VTDigger (Montpelier, Vermont).

Commenting on the list, NeimanLab’s Christine Schmidt wrote, “If you’re around here often, you’ve probably already heard of most of them; most have been around for a decade or more.” That said, the list doesn’t include any deep-pocketed usual suspects located on either coast. This may change in future grant cycles, but for the time being, the project has shown a refreshing preference for smaller outfits like the year-old NOISE, North Omaha Information Support Everyone, a grassroots news network working to fill the news coverage gap in North Omaha.

The AJP is just getting warmed up. This is the first of several grants in AJP’s first round, and the project hopes to support 25 to 35 civic news organizations in total with the $46 million it has raised so far, thereby creating a cycle of investors, recipients and coaches to “snowball the money’s impact,” writes Schmidt.

“While the commercial local news business gets nothing but worse, the number of nonprofit local news organizations has exploded over the last decade. And like it or not, sustained philanthropy is the key ingredient,” Thornton said. “As philanthropists, we must act urgently to give these organizations, which are fundamentally civic rather than commercial in nature, the time, talent and tools they need to be financially sustainable.”

AJP also announced it is joining the Racial Equity in Journalism Fund, a new commitment among funders that aims to strengthen the capacity of news outlets led by people of color.

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