Industry Insight

Fight for Survival Will Push More For-Profit Toward Philanthropy


They were easing into it before coronavirus and an economic crisis happened. Now faced with an unprecedented fight for survival, we can expect newspapers across the country to reposition themselves as a public good and seek philanthropic funding.

Some may go as far as the Philadelphia Inquirer and Salt Lake Tribune, converting ownership structure to formal nonprofit status. Many others will realize that the pitch they’ve started making with digital subscriptions can be expanded to requests for corporate underwriting and community foundation funding.

As the plight of local news has worsened, national foundations focused on journalism have stepped up their funding and convinced new funders to enter the space.

But in rough terms, 90 percent of that effort has been focused on supporting nonprofit journalism organizations, while more than 90 percent of the local journalism that happens in North America comes from for-profit companies.

The Knight Foundation, Democracy Fund, Lenfest Institute and others have funded capacity-building organizations and programs—the digital transformation accelerator Table Stakes initiative, for example—that have helped for-profit local media companies transition to more sustainable business models.

But direct funding of for-profit newsrooms, particularly from local community and place-based foundations, could now be key to survival in a world that turned drastically worse for local media almost overnight.

There are hurdles to clear.

Funders worry about bad actors that have had a hand in consolidating newspaper industry ownership and cutting journalism resources while sucking up profits without any kind of eye to the future. How do they distinguish between “good owners” and those who might take philanthropic support and line their own pockets with it? Publishers who go this route will have to be more transparent about their investment in local journalism and the kinds of profit they’re taking from it.

Some newspaper companies, like the Seattle Times and McClatchy, have set up their own 501(c)3s or sought fiscal sponsorship from a local nonprofit to accept tax-deductible charitable donations. But it would be onerous and impractical for hundreds of newsrooms to do this.

Intermediaries such as Local Media Association (where, full disclosure, I serve as a paid consultant) could serve as a fiscal sponsor for grant programs. It is also developing News Fuel, a platform funded by Google News Initiative that will aim to be a match-making service for news organizations and philanthropic funding opportunities.

There are also certainly limits to foundation funding. Unless Google, Facebook, Amazon or the world’s wealthiest stepped in with billions, the scope would be too big for national funders to make much of a dent in direct funding of for-profit local news organizations. But they could continue to ramp up support of capacity-building organizations.

And local foundations won’t be immune from the impact of an economic downturn. Funding could dry up as they look at the stock market and try to protect their endowments.

But a shift toward framing local journalism as a public good goes far beyond the potential for foundation funding.

In promoting digital subscriptions, newspapers are already honing a message to the public about the role that local journalism plays in protecting democracy and strengthening community.

The same case can be made to local businesses. Advertising can be framed in sponsorship and underwriting terms. Have your brand associated with quality local journalism that builds community, vs. paying for X number of eyeballs. Because the reality is that businesses don’t need local media to simply get eyeballs anyway.

The local bank has a stake in the economic development and planning issues and opportunities that can’t be fully vetted without local journalism. The local hospital has a stake in public health issues that can’t be confronted adequately without local journalism. And so on.

And a few newspapers that already have a paywall and digital subscription program are starting to experiment with upselling readers to membership programs that offer additional perks, or simply offer people who can afford it and understand the value to support local journalism at a higher level.

Matt DeRienzo has worked in journalism as a reporter, editor, publisher, corporate director of news for 25 years, including most recently as vice president of news and digital content at Hearst's Connecticut newspapers, and previously serving as the first full-time executive director of LION Publishers, a national nonprofit that supports the publishers of local independent online news organizations.


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