Nonprofits Need Pragmatism For A Future

This article appeared originally on NetNewsCheck, September 10, 2015 6:18 AM EDT

“Kevin Davis has seen the background struggles tearing at nonprofit newsrooms across the country as they weigh journalistic idealism against revenue needs. He argues that nonprofits must remember that they are businesses, too, and pursue fiscal sustainability as they develop their editorial content to meet their mission.”

There is a strangely quiet, but significant battle going on in boardrooms across the country over the future of nonprofit news. Amid much back-room debate, it’s becoming clear that it will take business acumen coupled with a strong-sense of mission to meet the increasing need for more meaningful local and regional news and information.

On one side, there are the idealistic journalists who want to leverage philanthropic investment to keep their journalism free of the undue influence of commercial and political interests. On the other are pragmatists who believe that everything is market-driven (even philanthropy) and who want to “future proof” nonprofit news by diversifying revenues.

Instead of both schools of thought co-existing to strengthen the 180-plus nonprofit newsrooms around the country, we see many board members at odds with each other and even their executive directors as they dig in for what they see as a fight over the future of their organization and the nonprofit movement at large.

Many of the idealists believe that the commercial news media is more concerned with profitability than its responsibilities as the Fourth Estate to be a voice to the voiceless and to hold the powers-that-be accountable. Their ideal is that nonprofit journalism — especially investigative nonprofit news — should be free from the corrupting influence of commercialism in order to serve the public good.

Believing in the undeniable and inherent benefits of their journalism, they resist the need to market their stories, document the educational benefits of their work (as the IRS wishes) or apply metrics to measure the impact of their work for fear of commercialization, commoditization and marginalization.

Pragmatists, on the other hand, appear to put more emphasis on the communities they serve, and understanding the impact that their work has on those communities. They are less worried about the form of the work, and put greater emphasis on the function.

Pragmatists also tend to hold the view that revenue diversification is the key to long-term stability. As a result, they are willing to try multiple revenue streams, even ostensibly commercial ones such as advertising, syndication and subscription (although often positioned as membership).

And they are not alone in this: many foundations — including the highly-influential Knight Foundation — assert pressure on their grantees to diversify (and therefore reduce dependence on) both their philanthropy and earned revenue streams.

It should be noted that with very few exceptions, the majority of nonprofit newsrooms were started by idealists at a time when commercial media organizations, after years of profitability and growth, started cutting their way to “profitability.” Many founders took buyout money and parlayed it into starting nonprofit news organizations with the belief that there were numerous foundations and philanthropists ready to give them more money with no strings attached.

Five years ago, many of the foundations giving support to journalism were interested in starting multiple projects to see what works and what doesn’t. Furthermore, many of the initial grants were large and unfettered (i.e., general support) in order to give these fledgling organizations as much runway as possible. At that time, grantees happily took those grants and did what they said they were going to do with them: they spent the vast bulk of their funding on journalism.

But foundations were quick to warn that they are not well equipped for sustained funding, that there are many areas that need philanthropic investment and, as a result, nonprofit newsrooms should not count on that money for long. Furthermore, those organizations that were able to demonstrate success in moving away from foundation dependence were given additional grants to spread the word and act as archetypes of best-practices within the sector.

The data bears this out. A recent study by the Southern Investigative Reporting Fund showed that while the amount of funding for this sector has in large part been steady, the number of grants and dollar amounts going to the top 10 grantees is increasing, while the number of grants and amount of funding to the 170-plus remaining nonprofits is flat or decreasing.

For numerous well-documented but predictable reasons, the number of foundations supporting journalism have reduced in number but have been joined by a new set of foundations that have made significant media investments. These new entrants are less interested in funding journalism as a cause, but are keenly aware of the role journalism can play in helping them achieve their stated social goals, their theory of change.

This puts the idealists in a quandary. If they take the much-needed funds from agenda-driven foundations, how can they avoid the appearance of undue influence and maintain editorial integrity? The more successful and revenue-diverse organizations such as ProPublica and Texas Tribune have done an excellent job at this, yet are not without their doubters and critics.

What nonprofit newsrooms also began to realize is that despite maintaining transparency and editorial independence, many of the foundations that had been supporting journalism were started by affluent people with their own baggage and specific agendas that rubbed off on their grantees. Regardless of how the foundation or news organization staff conducted themselves, it was the benefactor behind the foundation — and what he or she stood for or did — that exerted influence on the public’s perception nonprofit news organizations’ agendas (if they knew about them at all).

In truth, the results on all sides have been mixed. For every success story like Texas Tribune, Voice of San Diego or MinnPost, there are five organizations that are either barely getting by operating on a shoestring or have gone dormant waiting to rise again if and when additional support can be secured.

What is clear, however, is that there are too many nonprofit newsrooms already in the U.S. for the amount of foundation support available, and that number is growing all the time. While it is perfectly normal for many, if not most, startups to fail in the first three years, nonprofit news organizations must understand that they are all businesses as well as news organizations, and they must find ways to become sustainable while maintaining a focus on the mission.

As the former executive director and CEO of the Investigative News Network (now renamed the Institute for Nonprofit News), I had the unique opportunity and experience to work with more than 100 independent nonprofit news organizations around the country, along with some for-profit domestic and international media outlets, too. What I experienced there (and what I see happening elsewhere) is continued tension between the constant need to fund content production with the need to invest in the business and outreach functions.

Taking an all-or-nothing approach to either side can also be detrimental to an organization. Despite the sometimes-aggressive move towards revenue independence from continuing foundation support, most nonprofit newsrooms (even the most celebrated) will continue to require some level of philanthropy for the foreseeable future.

The better news organizations lucky enough to sit in commercially viable markets have greater opportunity to leverage some combination of commercial revenues from their relationships with distribution partners and direct support from the audience. Things are not so clear for those organizations serving communities that have less revenue viability, such as some ethnic communities, the working poor and the undocumented.

While conversations about the right path may continue to heat up in board rooms across the country, it is clear to me that it will require thinking from all sides — pragmatist, idealist, commercial and not-for-profit — to more effectively address the information needs of our communities and our country.