Fundraising Is Becoming a Bigger Part of the News Business, Bringing Hope and New Challenges

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American journalism, particularly at the local level, is showing some encouraging signs of life after at least two decades of steadily declining revenues, waves of layoffs, early buyouts and other woes—including corporate raiders buying news outlets to wring them of any remaining profit before closing them.

Even as traditional advertising revenues have plunged, alternative models—including nonprofit news-gathering organizations like the Center for Investigative Reporting, which relies heavily on philanthropic support—have stepped into the breach. They aim to provide the type of journalism that fewer and fewer media outlets can afford to do. More local newsrooms are going nonprofit too, seeking stability that ads can no longer provide.

As a result, fundraising is becoming a much larger part of the news business. For many, turning to private donations has been a boon, but nonprofit news outlets face competition from a fast-growing number of for-profit players in the industry seeking money from foundations, major donors, corporations and grassroots campaigns. Fundraisers in the industry point to exciting success stories, but for some, it’s been a struggle to keep up. 

And behind the encouraging developments are hard realities:

• The rise of online news outlets decimated print and local journalism’s traditional reliance on advertising sales.

• The Great Recession and ongoing coronavirus pandemic have further accelerated that trend.

• The United States has lost 2,100 newspapers, a fourth of its total, since 2004, according to a 2020 report by the University of North Carolina’s Hussman School of Journalism and Media. The “expanding news desert,” as the report called it, has fueled a sharp rise in misinformation campaigns—literally a matter of life and death in the pandemic—and is driving sharp partisan divides that threaten civil discourse and lawmakers’ ability to govern effectively.

“When something goes away, something else fills the void, and that might be misinformation,” says Karen Rundlet, who manages the journalism program at the Knight Foundation. “There are fewer good guys and more bad actors.” 

Indeed. In 2017, the Knight Foundation joined the Democracy Fund and the Rita Allen Foundation in giving $1 million to 20 projects with the goal of fighting misinformation. Four years later, in a raging pandemic complicated by a stubborn anti-vaccination movement, misinformation from bad actors in the health crisis has only grown. In response, the Knight Foundation has issued a call for grant proposals, due this month, to award up to $175,000 to projects that fight targeted disinformation in communities of color. It also made a grant to NewsMatch to train people to be better fundraisers for journalism projects. The grants are part of Knight’s 2019 commitment to give $300 million over five years to support the future of local media outlets.

Yet another potential income stream may be entering the mix, with federal legislation introduced in both the House and Senate seeking to provide aid to hard-pressed local news organizations—both for-profit and nonprofit—in the form of tax credits. For example, in July, Sen. Maria Cantwell, a Democrat from Washington, introduced the Local Journalism Sustainability Act that would provide (1) a tax credit of up to $250 for consumers who subscribe to local newspapers or donate to local nonprofit news organizations, (2) a payroll tax credit of up to $25,000 for commercial and nonprofit news outlets to help pay journalists, and (3) a tax credit of up to $5,000 for small businesses to advertise with local news publishers.

A local success story

Increasingly, local for-profit news organizations are partnering with philanthropies to raise money. A good example is the Record-Journal in Meriden, Connecticut, a 154-year-old newspaper headed by Liz White, the fifth-generation publisher of the family-run publication. White participated in a new training program offered by the nonprofit Local Media Association’s Lab for Journalism Funding. The Seattle Times, which has a robust team of journalists supported by charitable contributions, served as the faculty. After the training, White and her colleagues embarked on a five-month “listening tour” involving research and conversations with community leaders, including Maria Campos Harlow, the head of the United Way of Meriden & Wallingford Connecticut, who also serves on the board of the local community foundation. 

The result: The Latino Communities Reporting Lab, which provides fact-based information in English and Spanish to the area’s rapidly growing Hispanic population, now comprising 36% of the area’s residents and 59% of its students. Supported by the Meriden-Wallingford Community Foundation, which serves as a fiscal sponsor able to accept grants, the Record-Journal has so far raised $120,000 in contributions, enough to hire two bilingual journalists and an intern. Since starting in March, they have produced English and Spanish content in print, digital, social media, text and video, drawing a whole new audience. More than 70% of the readers of the new online content, for example, are new to the Record-Journal.

“We are really excited, and this has gained momentum even faster than we anticipated,” says White, the Record-Journal publisher. “It isn’t about saving journalism or a newspaper, it’s about providing a public service through journalism.” As for fundraising, she adds, “I think of it as one piece of the puzzle. If community needs and the foundation and the media company can have aligned goals, this can work.” Seeking additional donations, the Record-Journal has a goal of raising $540,000 annually, which would cover costs including hiring more bilingual journalists and other expenses like marketing, technology and translation.

Expanding networks, bigger budgets

In addition to its Lab For Journalism Funding, the Local Media Association last year launched NewsFuel.org, a website that allows media outlets to search for existing revenue opportunities, including grants, stipends, fellowships and more. At the same time, foundations and other donors can use the site to search for news organizations and journalism projects that need their support. 

“Journalism funded by philanthropy is surging,” says Nancy Lane, the Local Media Association’s chief executive. “Philanthropy is a leader in reinventing business models for news.”

Another outlet, The Conversation, part of a global group of news organizations, opened its nonprofit American branch in 2014. The independent news organization is dedicated to unlocking the knowledge of academic experts for the public good. Articles written by academics are rigorously edited by The Conversation’s team of journalists and distributed free of charge to publications around the world. Since its founding, The Conversation’s staff has expanded from six to 33. And during the pandemic, the number of readers has exploded. Since February 2020, readers grew from 9 million that month to 25 million readers in February of this year.

“We were able to grow revenue through continued fundraising during the pandemic, due to the continued appetite for expert explanatory journalism at a time it was desperately needed,” says chief innovation and development officer Bruce Wilson, adding that some articles go through as many as 30 edits to make them accessible to lay readers. In addition to revenue from college and university members that pay $15,000 to $40,000, depending on their size, The Conversation, which did not seek donations prior to 2018, received $450,000 from individual donors and another $1.6 million from foundations in its most recent fiscal year, which ended on June 30. 

The Conversation, the Associated Press and the Religion News Service—all nonprofit news organizations—received a $4.9 million grant over an 18-month period from the Lilly Endowment to increase coverage of religion for the general public. The Lilly Endowment renewed its support in January with another two-year grant of $4.7 million to The Conversation and AP, while the Religion News Service got a separate grant to continue its coverage. Among other things, the money has allowed the Associated Press to add eight new religion journalists and The Conversation to hire two of its own. Before 2017, the Associated Press had no concerted effort to seek contributions, says Lisa Gibbs, AP’s director of news partnerships, who has hired two new staffers to support fundraising efforts.

“Philanthropic support is driving innovation,” says Gibbs. “The philanthropic focus on outcomes and public interest helps media outlets connect more closely with their communities. There are things we’re able to do with philanthropy that we could never do with regular revenues.” 

At AP, adds Gibbs, “the pandemic heightened appreciation of the importance of journalism in an era of rampant misinformation, a polarizing presidential election and a racial reckoning. An incredible news cycle helped make the case clearer that the decline of local news and the rise of misinformation are related.”

Before the pandemic, the PBS Foundation, the fundraising arm of the Public Broadcasting Service, was raising $25 million to $30 million annually. In fiscal year 2021, which ended on June 30, the foundation raised close to $60 million. The foundation had “the best year ever on top of the best year ever” in 2020, says executive director Brian Reddington. He credits the increased fundraising returns to a “rediscovery of PBS through the pandemic. Audience size increased dramatically” as people stuck at home turned to television with an added appreciation for PBS news and other offerings. 

Similarly, National Public Radio has seen contributions rise in the pandemic. In its fiscal year ending on September 30, NPR raised $32.1 million in 2019 and $35.2 million last year. NPR has been “incredibly lucky to receive incredible support from board members and some foundations, including $1.5 million in emergency grants,” says Leora Hanser, NPR’s chief development officer who is also president of the NPR Foundation, the network’s fundraising arm. Members of the NPR Foundation board, she adds, also doubled their support last year.

“In the pandemic,” says Hanser, “our success at NPR is in large part due to providing independent, fact-based information, including a daily podcast about COVID.”

Still a challenging environment

But other nonprofit news organizations are not faring as well. In 2020, the Center for Investigative Reporting raised $9 million, helped by a loan from the Payroll Protection Program, the $953 billion in federal aid to help businesses keep workers employed in the pandemic. That support will be gone next year, “a source of stress” for Chief Development Officer Kate Looby. She says the center, which is also known as Reveal Reporting Networks, is not seeing a lot of new donors coming in, an issue it must confront.

“We need more money to do the work of the scale needed at this time,” says Looby, noting that about 65% of the news organization’s contributions typically come from foundations and another 25 to 30% from affluent donors. “The problem of declining local news and increased disinformation requires that we nonprofit, fact-based organizations need to be growing and reaching new audiences where they are. We cannot have democracy without a thriving, fact-based press.”

Some nonprofits have recently started new efforts to teach fundraising to for-profit and nonprofit news outlets. Last year, for example, the Lenfest Institute for Journalism, the nonprofit parent organization of the Philadelphia Inquirer created by the late cable television entrepreneur Gerry Lenfest, established the Lenfest News Philanthropy Network. The goal of the network, a membership organization that is free to join, is supporting fundraising across the news industry. Starting with 40 members, the network has quickly grown to nearly 1,000 people working in journalism. The group aims to serve its members in much the same way as the Council for the Advancement and Support of Education caters to fundraisers in higher ed.

“Philanthropy can be the biggest and fastest-growing revenue source for news organizations,” says Annie McCain Madonia, Lenfest’s chief advancement officer. Since the Lenfest Institute for Journalism was established in 2016, she says, it has raised more than $80 million. Annual fund contributions have grown from $1 million in 2016 to $5 million last year. While individual donors account for most contributions, the institute also receives money from local and national foundations that appreciate the need for accurate, fact-based journalism; their grants range from $5,000 to $500,000 annually.

“There is a lot of misinformation out there, which is frustrating and frightening,” Madonia says. “There is a fear of loss—and urgency. Donors want to fill the gap” between a dearth of reliable information and a well-informed populace.