For years, the local news industry has searched for a sustainable business model while navigating shrinking legacy revenues, rising costs and growing uncertainty. A new report, Meeting the Revenue Challenge: Philanthropy’s Role in Local News Growth, examines how nonprofit local news organizations are attempting to build long-term durability through diversified revenue strategies and stronger community relationships.
Caroline Porter and Mark Fuerst, two of the leaders behind the research, say the path to sustainability is less about discovering entirely new revenue streams and more about understanding how successful organizations are combining proven funding models with strategic business investments.
Fuerst said one of the clearest findings from the study was that sustainability comes from “a number of clearly distinguishable building blocks of revenue.” Looking closely at nonprofit startups, he explained that organizations “over time become heavily dependent upon retaining a group of local funders,” while gradually trying to reduce reliance on larger national foundations.
Porter noted that many of the organizations studied faced a critical transition early in their development. “The people who start these organizations are often journalists themselves,” she said, but over time they must learn to operate “not just as perhaps reporters or editors, but really truly as publishers.””
Why business leadership matters
One of the report’s central themes is the growing importance of business leadership inside nonprofit news organizations. Porter said many successful founders quickly realized that sustainability required more than editorial excellence.
“What we identified with the successful groups that we interviewed and then studied was they had leaders who were quick to identify that they needed to dig in on the business fundamentals,” Porter said, adding that those leaders “were willing to make that shift perhaps sooner.”
Fuerst said that balancing editorial priorities with business investment remains one of the hardest challenges facing nonprofit news organizations. “There’s always tension between those two parts of a news organization,” he said. “Unless you invest in the right quality of people on the business side, your ability to grow is quite limited because it’s a different set of skills that help the business grow than provide the high-quality product.”
The report found that organizations reaching stronger financial footing often benefited from what Fuerst described as “a catalytic investment,” typically significant multi-year funding aimed at strengthening business operations rather than expanding editorial capacity.
“Our take is that money went to building the business instead of building the product,” Fuerst said. Organizations receiving those investments “could jump their base revenue up by as much as a million dollars a year.”
Porter believes many journalists are becoming more comfortable embracing the business realities tied to sustainability. Reflecting on the long-standing separation between editorial and business operations, she said the field increasingly recognizes that understanding audience and revenue needs can ultimately strengthen journalism itself.
“When you can pay attention to the business side, you also benefit in learning more about what your community needs and wants,” Porter said. “Ultimately, you can serve your mission even better.”
The evolving role of philanthropy
The report also highlights how philanthropy continues to play a major role in nonprofit local news, even for organizations that have operated for years.
“It is part of the revenue pie,” Porter said. However, the report draws an important distinction between national philanthropy and local philanthropy. According to Porter, organizations that developed stronger local funding relationships often created “the durability, the stability year over year that allowed them to invest more in the business [and] invest more in editorial product.”
Fuerst admitted he was “slightly surprised to see the degree to which larger philanthropic dollars still remain very important to the groups that have been around for a decade or more.” Still, he emphasized that many organizations are trying to gradually shift toward more localized donor support.
The process takes time. Porter said the organizations studied generally needed about five years to establish meaningful stability. “Product-market fit is obviously trial and error,” she said. “These relationships, especially at the local level, are built over time with trust.”
That local trust-building emerged repeatedly throughout the research as a defining factor separating organizations that plateau from those that continue growing.
Finding optimism amid uncertainty
Despite the financial pressures facing the industry, both Porter and Fuerst see signs that local communities still value journalism enough to support it.
Porter encouraged publishers to think strategically about collaboration and community integration. “I’d take a look at the ecosystem around you,” she said, urging organizations to identify “an opportunity to partner, whether that’s a community organization or another news outlet.”
She also stressed the importance of building stronger local relationships. “The more that local news organizations are embedded in their communities, they’ll be in a better position to build out that diversified revenue pie,” Porter said.
Fuerst said the research demonstrated that audiences still have a desire for local news, even if sustainable models remain difficult to achieve. “What I saw was a thirst on the part of a portion of the public to have local news and a willingness to put up the money to create organizations from $2 million to $5 million in size,” he said.
While he remains concerned about serving lower-population and underserved communities, Fuerst believes the report offers evidence that sustainability is possible under the right conditions. “I think we saw that you can do it,” he said. “It’ll take you a while if you have the backing and you can put the newsroom together and the building blocks we were talking about.”
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MichaelTompkins
It has been my experience in over 40 years of operating small town, hyper local newspaper clusters, ideal publishers often came out of editorial and that was by design. When possible I would develop successful local editors into publishers by having them pick up advertising account lists to get them experience on the business side. The end result was generally the best possible publisher for a local news franchise ... an individual who both had learned or was in the process of learning our business formula for success but who also understood and truly cared about the news product and, as a result understood and cared about circulation as well. My experience with publishers who came up purely through the advertising side was they did not generally have the same degree of interest in the actual news product or circulation beyond hitting numbers on the revenue side. One of my very best small town daily newspaper operators who ran the highest profit margins in the company fit this model perfectly and in his long career he still never left the building without a camera bag in his car ... ever stopped being a newsman even when he became a revenue producer.
Monday, May 11 Report this