For-profit or nonprofit? That is the question lately in the journalism industry.
Nonprofit news sites have played a vital role in filling news gaps where legacy newspapers have been sold, closed or consolidated. Big-name publications such as The Salt Lake Tribune and Baltimore Sun are even converting their for-profit models, leading the stampede to non-profit status regardless of the need to do so.
But the pandemic has taken its toll on the nonprofit sector, impacting these mission-driven news operations that rely on strong economic conditions for individual donations and community grants. This reality reinforces why the for-profit news model is still vital to creating a sustainable, long-term business that isn’t reliant on grant funding—or a big payday.
The Associated Press reported in early March that one in three nonprofit groups could close in the next two years because financial hardships are causing donations to dry up. Arts and entertainment nonprofits, in particular, are likely to be hardest hit. These cultural outlets mostly include artistic venues, which rely on ticket sales for in-person events. Similarly, many nonprofit news sites became reliant on event revenue before the pandemic, and online-only event alternatives haven’t made up the financial gap.
For-profit news websites, on the other hand, were able to pivot during quarantine measures by taking a page out of the nonprofit playbook. Rather than ask for donations, these sites are seeking “reader contributions” to drive revenue. Some legacy newspapers, such as The Seattle Times, The Fresno Bee and Dallas Morning-News, are also partnering with local nonprofit foundations to establish “labs” funded with community support to cover specific issues such as education and homelessness.
The reaction to these nonprofit-inspired efforts has been overwhelmingly positive, proving that readers are willing to reward strong work regardless of the entity’s tax status. Nonprofits can follow suit by diversifying revenue streams to overcome the anticipated decrease in foundation funding. Some nonprofits are already on this sustainable path, selling advertising and sponsorships typically dominated by more traditional outlets. Such efforts are needed in order to keep up with a more competitive nonprofit landscape.
Reader revenue helps for-profit operations fill gaps in advertising revenue caused by COVID-19. It also helps that advertising clients are returning as economic conditions improve and more vaccines are distributed. These for-profit operations can also uphold the same mission and ethical standards as their nonprofit counterparts.
The difference between these two business models is increasingly blurred as more longtime newspapers convert into nonprofits. There are arguments in favor of both models, but arguments that for-profit models are going the way of the dodo bird are incorrect.
News publishers just need to decide what business approach makes more sense for their market and their own business. Not every community is big enough to sustain nonprofit competition for local donations, and other areas aren’t big enough to support even one not-for-profit news publication.
And in areas where a healthy for-profit news operation already exists, the community stands to lose when nonprofit competition emerges. That is why aspiring publishers should consider every financial model before launching in their respective community. Nonprofit may be trendy now, but will it be five or 10 years from now?
Michael Shapiro is founder and CEO of http://TAPinto.net, a network of 80+ franchised online local news sites in New Jersey, New York, Florida and Texas.