Are news nonprofits doomed to reliance on big gifts? A study in fundraising — and sustainability

By Jim Barnett

I’ve been studying journalism nonprofits one way or another for about five years now, and I confess that in all that time, I’ve looked at their business models really as being slightly different iterations of the same species. But now, I’m not so sure.

As part of my graduate studies in nonprofit management at George Washington University, this fall I took a closer look at the finances of a dozen journalism nonprofits, keeping in mind the most pressing question for many: How can they diversify revenues and achieve some level of sustainability?

I acknowledge up front that my method was not perfect — I’ll explain at the end — but I think I’ve discovered what may be two critical distinctions within the group I studied.

First, the six nonprofits that served geographically defined communities — whether they be cities, states or regions — generally did a better job of diversifying their revenue sources than did those that attempted to speak to a national audience.

Second, among these “regionals,” there appeared to be some correlation between bigger budgets and greater diversity in revenues sources. This pattern suggested to me that there is a happy dynamic at work here — a virtuous cycle in which diversity of revenue helps create institutional heft that in turn attracts additional philanthropy in the form of major individual gifts and foundation grants. Keep reading »

Seeking fundraising help from the pros: Where ProPublica is turning

By Jim Barnett

A frequently misunderstood aspect of nonprofits is the idea that fundraising is somehow a tin-cup substitute for a smart business plan. That misunderstanding gained traction in some circles a couple of weeks ago when Geoff Dougherty, editor of the Chi-Town Daily News, announced that he and his staff were leaving to start a new, for-profit publication with the backing of unnamed “angel” investors. In his post, Dougherty said CTDN needed $1 million to $2 million per year to “do a great job of covering a city as sprawling and complex as Chicago,” but could raise no more than $300,000 per year.

Electing to operate as a nonprofit, whether producing journalism or another type of public service, dictates that a robust fundraising effort must be part of the business plan. The plan must generate enough revenue to achieve the organization’s mission while also guarding against overdependence on any single source of support.

Few understand this reality better than the folks who run ProPublica, the New York-based startup that has been given a $30 million, three-year lease on life by Herb and Marion Sandler. Faced with the need to meet its $10 million annual budget for the long haul, ProPublica has hired two of the biggest guns in the fundraising world with help from a $1 million Knight Foundation grant.

One is New York-based Community Counselling Service Co., which will advise “how best to conceptualize, structure and execute fundraising from institutions and individuals capable of making larger gifts, as well as laying the groundwork for hiring our own director of development next year,” ProPublica GM Dick Tofel said in an email interview.

The other is Watershed Co., a specialist in online fundraising, which will “look for us at the potential for small gifts in large numbers,” Tofel said.

Both CCS and Watershed come to ProPublica with lists of well-known clients, and they have experience that can help move ProPublica — and ultimately, other journalism nonprofits — into a new sphere of fundraising professionalism and partnerships.

Among CCS’s clients is Habitat for Humanity. While Habitat may be best known for building low-income housing, it also has gained renown within the nonprofit world for working closely with the communities it serves and for successfully involving deep-pocketed corporate partners in its mission. Building houses and writing investigative news stories are decidedly different activities, but CCS no doubt will examine how it can apply the experience of its other clients to ProPublica. Keep reading »