Jake Batsell

An earlier version of this chapter was published as “Earning Their Keep: Revenue Strategies From The Texas Tribune and Other Nonprofit News Startups,”^[1] Knight Foundation, April 2015. The author has updated the current version with new information while editing for content and focus. It is republished here with permission and gratitude to the Knight Foundation.

The rise of digital media in the new millennium has triggered an irreversible plunge in print advertising revenues. Consequently, the newspaper industry is shedding jobs. By mid-2016, the American newspaper workforce alone had lost about 20,000 jobs^[2] over the previous 20 years, and most in the industry expect that trend will continue. With ad-supported mass media mired in what seems to be a permanent cycle of disruption, a growing number of journalists have shifted their career path toward nonprofit news, a realm that traditionally has depended on more altruistic forms of funding such as memberships and philanthropic donations.

The Institute for Nonprofit News,^[3] founded in 2009 by 27 investigative news organizations, had grown to more than 120 members by mid-2017. And in the aftermath of the 2016 U.S. presidential election, the nonprofit news sector—a category that includes public radio and television stations, established investigative newsrooms, and newer startups covering a specialized topic or region—saw an unprecedented surge in donations^[4] from readers and foundations hungry for independent watchdog journalism. In March 2017, The Center for Investigative Reporting, the Center for Public Integrity and ProPublica each received $3 million in grants from the Democracy Fund and First Look Media, prompting Inside Philanthropy to proclaim in a blog post headline: “It’s Official: Donald Trump is the Best Thing That’s Ever Happened to Nonprofit Journalism.”^[5]

Seven-figure grants can pay for plenty of accountability journalism, but news nonprofits can’t pin their long-term survival on big checks from foundations. The term “nonprofit” generally means that an organization exists to fulfill some sort of social purpose, not to make money for corporate owners. But the bills still need to be paid. If you talk business strategy with any of the civic-minded entrepreneurs who run news nonprofits, you’ll quickly hear a common theme: “nonprofit” is not, by itself, a business model—it’s simply a tax status. Yes, once they clear a lengthy review by the Internal Revenue Service,^[6] nonprofit news organizations benefit from 501(c)(3) status, which exempts them from certain taxes and enables them to collect charitable donations. Still, tax-exempt status brings no automatic guarantee of financial success. To stay afloat, today’s news nonprofits must constantly seek revenue from a diverse array of sources including corporate sponsorships, events, subscriptions, and crowdfunding while also cultivating new members and philanthropic donations.

This chapter will explore revenue strategies that have worked for nonprofit news outlets in the digital age. We’ll begin with an in-depth look at The Texas Tribune, which over the past decade has gained a reputation as a national model for nonprofit news. Later in the chapter, we’ll explore best practices in revenue strategies as pursued in recent years by the Tribune and many of its peers in nonprofit news.^[7]

Earning Their Keep: The Texas Tribune

The Texas Tribune launched on November 3, 2009, with seventeen employees and the mission “to promote civic engagement and discourse on public policy, politics, government, and other matters of statewide concern.” It has since grown to fifty-three employees and now has more full-time statehouse beat reporters than any other U.S. news organization.^[8] The Tribune has collected a heap of national and regional awards, including a 2017 Peabody Award^[9] shared with fellow nonprofit ProPublica for a collaborative investigation revealing Houston’s vulnerability to a Katrina-caliber hurricane. It also has raised more than $40 million through a combination of donations, memberships, corporate sponsorships, events, and other sources of revenue. It all adds up to a diversified business model that funds the work of a growing and respected newsroom.

What lessons can be gleaned from The Texas Tribune’s journey? How much of the Tribune’s experience is unique, and to what degree can its revenue-generating prowess be replicated by other news outlets? For a year, these questions guided my work as a visiting research fellow^[10] funded by the John S. and James L. Knight Foundation.

While based in the Tribune’s Austin newsroom from August 2013 to July 2014, I investigated best practices in the business of nonprofit news. I sat in on staff and board meetings, conducted interviews with employees, and also visited some of the Tribune’s nonprofit news peers around the country. The fellowship afforded me unusual access to directly observe the Tribune as it evolved beyond its startup roots and adopted business strategies designed to build an enduring organization. Meanwhile, my travels to other news nonprofits enabled me to compare and contrast the Tribune’s revenue strategies with those of its peers.

If there are generalizable lessons to be learned from the Tribune’s experience, they do not add up to a rigid recipe but rather a handful of strategic concepts that other news startups might consider. This much is clear: Among the past decade’s wave of nonprofit news startups, The Texas Tribune stands out as the most aggressively entrepreneurial.

The sheer scale of what the Tribune has achieved in Texas may not be replicable to other settings. But other nonprofit news outlets may wish to emulate some of the tactics that have propelled the site’s success. Among the most replicable concepts are revenue diversity, entrepreneurial creativity, and a shared sense of editorial and business mission.

The Birth of The Texas Tribune

The story of The Texas Tribune began in late 2006, when software investor John Thornton began researching how his Austin-based venture capital firm might profit by acquiring stakes in financially troubled newspapers. As Thornton dug into the news industry’s changing economics, he became convinced that public-interest journalism—which had been subsidized for decades by a now-vanishing system of mass media advertising—could not survive as a stand-alone product. His interest in journalism shifted from a potential business opportunity to a philanthropic pursuit.

Observing the diminished presence of mainstream media outlets covering the state Capitol, Thornton donated the first $1 million to start a nonpartisan news source. During the spring of 2009, he formed an official corporation and quickly applied to the IRS for tax-exempt status, which was granted within months and, crucially, enabled the Tribune to raise funds as a public charity. (Other aspiring news nonprofits during this era were not as fortunate when seeking tax-exempt status from the IRS, which was baffled about how to handle these new entities. Some startups who began under these shaky regulatory grounds waited in vain for nonprofit status, ultimately either dying in infancy or partnering with an already established nonprofit organization that could act as a fiscal sponsor.^[11] The lesson, once again: nonprofit is a tax status, not a business model.)

To lead the new venture, Thornton enlisted his friend Evan Smith—who, as the longtime editor of Texas Monthly magazine, brought deep connections within the state’s political, business and media circles. The pair teamed up with another veteran political journalist, Texas Weekly editor Ross Ramsey, and the three co-founders assembled a talented crew of young reporters and developers during the summer of 2009.

The Tribune then embarked on a remarkable fundraising spree to bolster the initial $1 million from Thornton. Boosted by the journalistic credibility of Smith, Ramsey, and a cast of rising stars poached from legacy newsrooms, the fledgling nonprofit landed a flurry of five- and six-figure sums from an array of wealthy donors and foundations (including $250,000 from the Knight Foundation).^[12] It also signed up more than 1,400 members who contributed at least $50 each, and around sixty corporate sponsors who pitched in at least $2,500 apiece. By the end of 2009, the Tribune had raised roughly $4 million.

Proving the Concept During the “Runway” Phase

The initial $4 million fundraising haul provided vital early breathing room for what Thornton called a two-year “runway” phase—a period during which the Tribune would need to prove the value of its journalism while figuring out its long-term business strategy.

Somewhat unexpectedly, the site’s early traffic magnet was its series of searchable databases, which allowed readers to easily snoop through government employees’ salaries, contributions to political campaigns, and state prison inmates’ convictions and sentences. The databases were controversial to some readers, who considered them an invasion of privacy even though they contained public information. But the databases were undeniably popular—at one point during the site’s first year, they were drawing three times as many pageviews as traditional news stories. And each curious click created more digital impressions for corporate sponsors’ messages.

Offline, the Tribune launched a series of events that expanded the site’s visibility. Tanya Erlach, hired from The New Yorker to serve as the Tribune’s full-time director of events, developed a morning event series featuring on-the-record interviews with high-profile political figures. The events—hosted by Smith, a skilled questioner with his own PBS interview show—drew a strong following among political insiders, attracting crowds of as many as 200 to 300 people to a downtown ballroom directly across from the Tribune’s offices. And these events, underwritten by corporate sponsors, were free to attend regardless of whether one was a Tribune member.

From the start, Thornton sought to wean the Tribune from philanthropic support as soon as possible. In an early brochure distributed to potential supporters in 2010, a chart labeled “The Texas Tribune’s path to self-sufficiency” predicted that within three to four years, the site would no longer require major gifts from donors and foundations. Instead, according to the chart, three equal revenue streams would sustain the Tribune: memberships, specialty publications, and corporate sponsors and events. However, even as the Tribune’s journalism gained prominence across the state, it soon became clear that those revenue categories were not developing quickly enough to keep the Tribune afloat.

Accelerating Business Capacity

During the latter half of 2010, the Tribune made a series of adjustments designed to ratchet up revenue. Thornton agreed to donate another $1 million—but this time, in the form of a matching grant that would kick in whenever the Tribune landed major donations of $5,000 or more. As executive editor Ross Ramsey recalled, “You’ve got to raise a million to get a million. The most important part was raising the million.”

Smith brought in a new director of business development, his former Texas Monthly colleague April Hinkle, who as the magazine’s publisher had more than two decades of experience selling advertising to the state’s corporate crowd. “He said, ‘I want your for-profit brain for my nonprofit,” Hinkle recalled. One of her first moves was to expand corporate sponsorships beyond the basic $2,500 level offered during the Tribune’s launch phase. Originally, Tribune sponsorships offered little more than a tax write-off and a rotating logo box on the site’s homepage, but Hinkle began to develop more comprehensive programs that included event sponsorships, more visible logo placements and other customized elements for a higher price. Hinkle said her singular mission upon joining the nonprofit was “using all Tribune assets I could possibly get my hands on to create custom programs.”

Around this same time, the Tribune also sought to boost membership revenue by introducing an “editor’s circle” program focused on securing multi-year pledges. The circle program, which requires a three-year commitment of up to $5,000 annually, created a stable pipeline of support. “It was really genius in a box in terms of revenue growth,” said Maggie Gilburg, the Tribune’s former director of development. And on the news side, the site struck a syndication deal with The New York Times to provide eight stories a week for the iconic newspaper’s Texas editions.

These were all promising revenue developments, but by the end of 2010 the Tribune remained heavily dependent on philanthropic support. Nearly two-thirds of the Tribune’s $2.25 million in overall revenue that year came from individual donors and foundations, according to internal figures.^[13] Earned revenue—an industry term referring to self-generated income such as corporate sponsorships and events—remained a much smaller part of the mix.

Building Entrepreneurial Momentum

Two factors in 2011 helped the Tribune build more entrepreneurial momentum. During the spring, the site for the first time covered a state legislative session, which in Texas convenes only once every two years. Hinkle’s revamped sponsorship packages offered businesses and institutions a new, more targeted option to get their messages in front of a politically savvy audience during the urgency of a session. Corporate sponsorships more than doubled from $306,000 in 2010 to $637,000 in 2011, according to internal figures.

Perhaps even more significantly, in September the site hosted its first annual Texas Tribune Festival, a weekend-long bonanza for policy wonks that drew more than 1,300 attendees to the University of Texas campus. The festival—organized by events director Erlach, who previously ran a similar festival for The New Yorker—featured big-name keynote interviews and panel discussions, along with networking at cocktail receptions and trendy food trucks. Ticket sales helped cover costs, but festival sponsorships accounted for the biggest windfall. The festival, combined with more than 40 additional events throughout the year, pushed annual event revenues to $702,000, more than tripling the total from the previous year. The festival grew even bigger in 2012, offering forty-five sessions and 150 speakers on topics including health, race, and criminal justice. Attendance climbed to nearly 1,700, and sponsorships for the three-day festival approached $400,000. “It’s just a real you-have-to-be-there vibe that we’ve been able to create,” Erlach told me at the time. The growth of the festival pushed total yearly event revenue to almost $900,000.

Also in 2012, the Tribune tallied enough major philanthropic donations to fully redeem Thornton’s $1 million matching pledge. But earned revenue was beginning to drive the business model. That year, for the first time, revenue from corporate sponsorships and events (together, roughly $1.9 million) surpassed major donations and grants ($1.8 million). Memberships rose to $510,000, nearly equaling the total raised during the previous two years combined. After adding in syndication, subscriptions, and other revenue sources, the Tribune hauled in more than $4.5 million overall.

The trend continued in 2013, as sponsorships and events each topped $1.1 million. The Tribune Festival, a growing juggernaut, swelled to nearly 2,500 attendees and produced more than $700,000^[14] by itself. By the end of its fourth full year, the Tribune raked in a total of $5.1 million from a balanced assortment of revenue streams: 45 percent from sponsorships and events, 34 percent from philanthropic sources, 13 percent from memberships, and 8 percent from syndication, subscriptions, crowdfunding, and other sources.

It was a dramatically different financial formula from its first full year, when foundations and wealthy donors supplied nearly two-thirds of the Tribune’s annual revenue. And by the end of 2016, the Tribune’s annual revenue had swelled to $6.9 million from roughly the same combination of sources: 45 percent from sponsorships and events, 40 percent from philanthropic donors, 11 percent from memberships, and 4 percent from syndication, subscriptions, and other sources. While philanthropy provided the initial boost and continues to be crucial, the Tribune gradually has figured out ways to earn more of its keep.

New Challenges—and More Scrutiny

The corporate sponsors^[15] fueling the Tribune’s transformed business model—companies, lobbying firms, universities, advocacy groups—all have their own agendas at stake in the world of state government. While these sponsorships have accelerated the Tribune’s revenue growth, they also have triggered scrutiny from media watchdogs.

In February 2014, Austin-based political author Jim Moore, a former journalist, published a series of blog posts denouncing the Tribune’s financial model as fundamentally “corrupted.” “What believers hoped was going to be a watchdog has turned into a lapdog by taking big dollars from lobbyists and corporations,” Moore argued.^[16] Commercial media, of course, have long battled similar perceptions that their news coverage was beholden to advertisers’ interests. But as veteran Texas journalist and professor Bill Minutaglio would later observe,^[17] Moore’s four-part attack—entitled “The Trouble With the Trib”—underscored “how fine a line the brave new world of nonprofit journalism has to tread in the search for viable business models.”

The Tribune always has listed all financial contributors on its site, but the criticism from Moore and others accelerated a series of changes^[18] that editors had already been considering to improve transparency. Corporate sponsors would now be listed not only by name, but also by the specific amount of their sponsorships—a higher degree of disclosure than practiced by most, if not all, of the Tribune’s nonprofit peers. In addition, disclosures would be appended to any story that mentioned people or institutions who had given the Tribune more than $1,000. Also, event descriptions would include language to reinforce that sponsors “do not have any role in selecting topics, panels or panelists.”

A point often overlooked when discussing the ethics of fundraising for nonprofit news is that, collectively, an expanding roster of corporate sponsors dilutes the ability of any single financial backer to wield undue influence. In one instance I watched unfold in the newsroom during the spring of 2014, Ramsey, the site’s co-founder and executive editor, agreed to moderate a corporate forum in Dallas in exchange for an honorarium to the Tribune. The week before the event, organizers sent the Tribune a list of 10 pre-scripted questions for panelists. Ramsey objected, making clear that he would moderate only if he had discretion over the questions. “They wanted a paid performance, and we don’t do that,” Ramsey said. The company found another moderator, and the Tribune lost the honorarium. Both sides moved on. It’s just one example, but it highlights how diverse revenue streams and journalistic integrity can help protect a news organization from the whims of any particular financial supporter.

In recent years, Tribune has sought to widen its audience while also doing everything it can to monetize the diehard politicos who already read it every day. The Tribune has developed strategies to extract more revenue from its most loyal followers, raising the subscription price for its insider political newsletter and offering VIP experiences at the Texas Tribune festival. It hired its first chief audience officer^[19] and created a sister op-ed site, TribTalk,^[20] whose content consists of volunteer submissions and clearly labeled “paid placement” posts authored by corporate sponsors.

The sheer scale of what The Texas Tribune has achieved may not be replicable in the world of nonprofit news, at least at the regional and local level. The Tribune has uniquely benefited from a generous founding investor who combines a venture capitalist’s business acumen with a personal passion for public-interest journalism; a charismatic CEO with a well-honed public presence; and, of course, the “everything’s bigger in Texas” effect. Texas is a vast, pro-business state whose 27 million residents also share a distinct sense of cultural identity. In other areas of the country, even the most dedicated founders of local digital news outlets have ultimately succumbed to “founder fatigue” — in May 2015, after nine years of running the community news site DavidsonNews.net in North Carolina, editor David Boraks announced the site’s closure in a farewell column: “We’re in debt, we’re exhausted, and it’s time to go.”

Still, fellow news nonprofits may wish to emulate some of the tactics that have propelled the Tribune’s success. Below, I have outlined key elements of the Tribune’s business model that are most likely to be mirrored elsewhere:

• Persistent focus on revenue diversity. From the outset, Thornton sought to establish multiple streams of revenue, a strategy he jokingly called “revenue promiscuity“^[21] during the Tribune’s early days. It’s worth noting, though, that the Tribune’s eventual mix of revenue sources took a different path from the initial vision of drawing equal support from only three revenue streams—memberships, specialty publications, and corporate sponsors and events. As it turns out, sponsorships are generating more money than the Tribune’s founders anticipated, while memberships and specialty publications have been slower to develop. Philanthropy continues to play a crucial role, and new sources of revenue (crowdfunding, for example) have emerged. The percentages constantly will change, but the Tribune’s experience emphasizes the importance of constantly seeking a diverse mix of revenue sources.
• Entrepreneurial creativity and customization. The Tribune has been relentless in unearthing new ways to pay for its journalism. Over the years, its revenue experiments have included a sponsored “TweetWire” widget on the homepage that features curated Twitter posts by elected officials, newsletter sponsorships, podcast introductions on the weekly “TribCast,” and even sponsored breaking news alerts. April Hinkle, the Tribune’s chief revenue officer, said she considers the Tribune’s media kit^[22] to be more of a conversation starter than a take-it-or-leave-it menu. She works with prospective sponsors to develop customized packages—sometimes including event sponsorships—that suit the sponsor’s needs. “Every single thing really becomes custom,” Hinkle said. “I don’t think we would be as successful today if we weren’t willing to be flexible … People invest in what they need, and not what we want them to buy.”
• A shared sense of editorial and business mission. The Tribune’s organizational culture fosters collaboration between the editorial and business staffs, in contrast to the church-versus-state model historically followed by legacy media. Reporters and editors host and moderate panels during events, especially the annual festival, and are encouraged (but not required) to promote membership drives on their own social media accounts. Business-side employees sit in on weekly news meetings for a better understanding of what the newsroom is up to. When the Tribune launched its sister op-ed site, TribTalk,^[23] in 2014, staffers from several departments—news, art, tech and business—worked together for months to design a site that would clearly distinguish between volunteer guest columns and “paid placement” advertorials. Over time, the newsroom and business side have developed a mutual sense of trust underpinned by the Tribune’s nonprofit mission. “My first year here, I tiptoed through the newsroom,” Hinkle said. “But I think we’ve kind of grown together.”

Best Practices in Revenue Strategies For Nonprofit News

Four principal revenue streams dominate today’s landscape of nonprofit news: corporate sponsorships, events, philanthropy, and memberships.^[24] The proportional weight of these revenue sources varies widely, depending on a news organization’s particular scope, mission, and local circumstances.

“There’s no one-size-fits-all approach when it comes to the right sources of revenue,” the Poynter Institute wrote^[25] in 2016 after spending a year visiting nonprofit news outlets around the country. “Test out different approaches and consider what opportunities are unique to your mission, audience and location.”

Sponsorships and Underwriting

One way to subsidize nonprofit journalism is by courting corporate and institutional sponsors who are looking to reach a more influential audience than a general-interest publication can offer. The Texas Tribune is widely regarded as a standout performer in this area—in 2016, the Tribune generated more than $3 million through corporate underwriting and sponsored events—but many other news nonprofits are pursuing similar strategies. The next section will consider specific revenue strategies for events, but here are some general sponsorship principles as practiced by the Tribune and several of its peers.

• Know your audience and sell its value. Nonprofit, mission-driven news organizations are uniquely positioned to connect sponsors with an educated and engaged audience. But to convert audience attention into sponsorship revenue, potential sponsors need evidence to be convinced that a site’s readership is worth their money.

In May 2012, The Texas Tribune conducted its first audience identification survey,^[26] which drew 872 responses in two days. The site found out that 91 percent of its readers are college graduates, 96 percent voted in the last election and 52 percent have a household income of more than $100,000. That’s a smart, affluent audience that appeals to potential sponsors and advertisers, so the Tribune trumpeted the survey’s results in its media kit.

“It’s a very specific kind of audience, definite intellectuals,” said Hilarie Houghton, executive communications consultant for BlueCross BlueShield of Texas, which through mid-2017 had spent nearly $800,000^[27] on Tribune sponsorships, including events like the Texas Tribune Festival.

VTDigger.org, a political news site in Vermont, conducted a similar audience survey that quickly attracted more sponsors. By the end of 2013, corporate underwriting had risen to more than 40 percent^[28] of VTDigger.org’s annual revenue. “It’s made a huge difference for us, because we’re able to show sponsors that our readers are very civically engaged,” said founder and editor Anne Galloway, noting that the survey found her site’s readers “are involved in their communities on many different levels—they’re churchgoers, they’re volunteers at schools, they’re very politically active. More than 95 percent of them vote every year.”

• Provide ways for sponsors to make fuller arguments. In Southern California, nonprofit organizations wanting to reach the Voice of San Diego’s^[29] civic-minded audience have long raised doubts that a banner ad could effectively get their point across. “It wasn’t enough space for them to really explain and educate people about their mission,” said Mary Walter-Brown, Voice of San Diego’s publisher and chief operating officer.

So in 2014, San Diego’s pioneering online news startup quietly debuted a native advertising program^[30] aimed at fellow nonprofits. The program, called Partner Voices,^[31] publishes article-length “partner promos” that are either paid for by the nonprofits themselves, or on their behalf by a corporate sponsor. Voice of San Diego’s editorial staff has no role in producing the promos, which carry a monthly fee of $1,500 and are clearly labeled as sponsored content.

Voice of San Diego is one of several nonprofit news outlets to recently join the wider media world’s adoption of sponsored content,^[32] also called native advertising. Display ads are confined by the boundaries of the box, but sponsored content allows advertisers more room to make their case—an intriguing option for policy-minded organizations whose arguments and causes are difficult to boil down to a snappy slogan.

Making fuller arguments to an influential audience is a key selling point for The Texas Tribune’s op-ed site, TribTalk, which launched in 2014 and offers “paid placement”^[33] slots to corporate sponsors. The Tribune charges $2,750 for a three-day run on the TribTalk.org homepage, although permalinks for sponsored content stay up indefinitely. April Hinkle, the Tribune’s chief revenue officer, said she pitches TribTalk’s paid placement as an opportunity “for thought-leading organizations to be able to post and lead a discussion” beyond what banner ads can provide.

When tapping into new revenue sources like native advertising, it is crucial for nonprofit news outlets to clearly explain how such initiatives support their mission, according to Kevin Davis, formerly the executive director of the Institute for Nonprofit News.^[34] “Make very clear what type of organization you are and why you’re doing this, because there is a different level of scrutiny for nonprofits,” Davis said. “Go to the ends of the earth to say, ‘We are a nonprofit, we are mission-driven, and this is an authentic way of furthering the mission—not just making money.’”

Events

Live events have emerged as an increasingly popular revenue stream for both nonprofit and for-profit news outlets. Since 2013, events have generated more than $1 million^[35] per year for The Texas Tribune while also building community and creating a library of video news content for its site. Here are some of the common event practices^[36] followed by the Tribune and many of its peers.

Seek out corporate sponsors.

You don’t have to sell tickets to make money from events. In fact, nearly all Tribune events are free, other than its three-day festival.^[37] Pitch events to corporate sponsors as a way to get their name in front of an influential audience. Underwriters, advertisers or donors who already support your site are a logical place to start, because your organizations already have a relationship. And think early, because corporate budgets tend to be planned months in advance. Keep in mind, however, that sponsors may be more interested in sponsoring a series than a single event. “It’s much harder to go to someone and say, ‘This is a one-off,’” said Tanya Erlach, the Tribune’s founding director of events. “Their brand lives on if it’s over and over again.”

When determining sponsorship rates, Hinkle recommends first sketching out a tentative P&L (profit and loss) report that factors in the event’s costs, likely attendance, and potential revenue. If, like the Tribune, you promote the event in advance and publish video or audio afterward, be sure to factor that into the calculations. Hinkle said the Tribune’s event sponsorships range from $3,000 for a single event to six-figure amounts for a series of events that include custom topics. And before you book a pricey hotel ballroom, explore a partnership with a local university, museum, or nonprofit organization that might be willing to provide space.

Build in a networking element.

Any successful event needs a compelling program, of course. But networking might be an even bigger draw. And for sponsors, Hinkle said, having the opportunity to invite clients and VIPs is an added plus. “You just have to make it so they have to be there—this is a can’t-miss, it’s a must-attend on their calendar,” she said. Also, make every effort to gather attendees’ contact information, whether through RSVPs or a simple box at the check-in table to drop off business cards. “If you can get an email address from somebody that’s already showed up, that’s your repeat customer,” Erlach said.

Consider virtual events, too.

NJ Spotlight,^[38] a political news nonprofit in New Jersey, generates most of its earned revenue through a series of in-person roundtable events.^[39] But the site collected an extra $20,000^[40] in 2013 by hosting three sponsored webinars^[41] on topics including offshore wind power, electricity and health care. Kevin Harold, NJ Spotlight’s publisher, said the webinar format works best for a sponsor looking to make its case on a complex state policy issue that “begs a platform to get into the granular nature of it.”

A reporter or editor moderates each webinar, which lasts about an hour. Sponsors present a slideshow, then answer questions posed by the moderator or the virtual, real-time audience. The pitch to sponsors, Harold said, goes something like this: “You have a content-rich story to tell. We have an independent flag. We will challenge you on things that you say, but we’ll give you a platform to say them.”

Don’t be afraid to monetize the fun factor.

For the past decade, pioneering nonprofit news site MinnPost^[42] has hosted an annual variety show called MinnRoast,^[43] during which the state’s politicians and journalists “gently skewer” one another through songs, skits and stand-up comedy. In 2014, when I attended MinnRoast^[44] at a historic theatre in downtown Minneapolis, the event raised roughly $160,000. Joel Kramer, MinnPost’s CEO and editor, noted that the Twin Cities region is saturated with serious events run by civic-minded organizations such as Minnesota Public Radio, the Citizens League and the University of Minnesota’s Humphrey School of Public Affairs. From a strategic standpoint, Kramer said, MinnPost thought a fun-themed event had a better chance to attract sponsors and ticket sales than more straight-laced affairs. “You’ve got to find a spot that’s empty, that’s open,” he said. “And nobody was doing it. … Most events in town are very serious. They talk about the mission, you know, they all have a silent auction. I go to many of them, and I believe in the causes, and we donate money. But they’re a bit on the somber side. So we wanted to distinguish ourselves in that way.”

Memberships

Membership drives for nonprofit media have evolved far beyond volunteers taking pledges over rotary phones. Some public radio and TV stations still host on-air telethons, but today’s nonprofit news outlets seek pledges through multi-channel membership drives that include websites, social media, e-mail, and in-person events. Memberships remain an important part of the revenue mix for nonprofit media. Running an effective membership program is a complex, never-ending endeavor, but here are some core strategies that have helped produce success.

Define “the ask.”

Are you asking people to join primarily based on benefits they will receive, or is their membership simply a vote of confidence in your mission? The Tribune offers modest benefits ranging from monthly newsletter updates to invitations to VIP events, but its membership strategy^[45] mostly focuses on selling the value of the Tribune’s public-service journalism. “It’s really a philosophical ask: Please support our mission at the level that’s most comfortable for you,” Gilburg said.

Investigate West, a nonprofit news site based in Seattle, entices supporters to upgrade their basic, $10-per-month memberships by offering tiered benefits^[46] including invitations to house parties with staffers for members who join the $25-per-month “Deadline Club.”

Plan ahead.

The Texas Tribune begins preparations for membership drives^[47] months ahead of time. After settling on a campaign theme, messaging is catered to five modes of delivery: email, social media, direct mail, the site itself, and membership events. (Email tends to be most effective, because people on distribution lists have shown some form of previous support or interest.) The Tribune seeks buy-in from the entire organization, inviting employees to membership happy hours and circulating pre-written social media statuses that staffers can share.

While membership programs are a year-round commitment, the action heats up considerably as the calendar year comes to a close. “For nonprofit fundraisers, the entire fundraising calendar revolves around year-end campaigns and planning starts in the summer, if not sooner,” advises^[48] nonprofit news consultant Jason Alcorn. For example, the Maine Center for Public Interest Reporting begins formal preparations for its end-of-year fundraising drive in August, according to publisher Naomi Schalit.^[49] By October, board members are jotting down personalized notes on appeal letters, which go out in late October and early November to allow time for follow-up before the year concludes.

Push for automatic or multi-year pledges.

One-time donations are lovely and appreciated, but recurring donations are a golden goose. In 2015, monthly giving to nonprofits grew at a faster rate than one-time donations, a trend that Alcorn called^[50] “great for nonprofits that can now plan around a predictable, stable revenue stream.” The Tribune’s membership program^[51] defaults to recurring payments (annual or monthly) rather than one-time donations. Its “editor’s circle” program, which asks supporters to pledge up to $5,000 annually for three years, also has proven to be a substantial revenue source.

Evaluate the returns.

Cultivating and maintaining a membership base is a monumental task. For some nonprofit news organizations, the costs to staff, promote and maintain a membership program may not be worth the effort. It’s important to weigh the expenses against the returns. “If you hire a person for X, and they bring in less than X, then it’s not worth it,” Gilburg said. One solution? Pooling resources. In late 2016 and early 2017, with funding from the Democracy Fund, five nonprofit newsrooms banded together to form the News Revenue Hub pilot^[52] to manage their end-of-year membership drives together, led by the Voice of San Diego. The five newsrooms raised nearly $300,000 in addition to tens of thousands more in future commitments. The pilot was so successful that Voice of San Diego announced it would spin off^[53] the Hub into a separate venture aimed at coaching and guiding news nonprofits through the membership process. “If all newsrooms do their part to address the crisis creatively, we can share lessons learned and build a new system that is more sustainable in the long term and more accessible and accountable to the people it’s meant to serve,” wrote Scott Lewis, Voice of San Diego’s CEO.

Philanthropic Giving

Even as the nonprofit news sector finds creative ways to generate more of its own revenue, “the fact is, there’s not a business model—definitely for nonprofits—without donations,” said Brant Houston, board chair emeritus of the Institute for Nonprofit News. A 2017 data analysis^[54] published by Columbia Journalism Review found that 10 foundations collectively donated $500 million to journalism nonprofits from 2009 to 2016. The Knight Foundation ($142 million) was by far the leading institutional donor for nonprofit news, followed by the Ford Foundation ($74 million) and the Bill and Melinda Gates Foundation ($64 million).

Foundation funding requires carefully cultivating and maintaining relationships, meeting the guidelines of specific grant programs, and many other interrelated factors.^[55] When it comes to seeking major gifts from individual donors, here are a few commonly followed practices:

Cultivate your community’s network of business leaders.

This is especially important in the initial phases. The Tribune’s initial $4 million fundraising campaign included a bipartisan list of high-profile donors, which brought the Tribune credibility while also funding its early operations. Joel Kramer, co-founder of MinnPost, said aspiring news entrepreneurs often focus entirely on the journalism, underestimating how important it is to recruit local business leaders to back their venture. “You do need connections in the community—and I’m talking now about business, revenue-side connections, not journalism connections,” Kramer said.

Persuade existing members to give more.

Once your news organization has established a track record, your next major donor may come from your own membership roster. The Tribune makes a habit of identifying existing members who may be willing to move up to a major donation. “We’re developing a donor base, and we’ll move those people down the line,” Gilburg said. “From their earliest contribution, the connection deepens.”

Use donations to develop long-term sustainability.

Philanthropic donations probably always will constitute at least some part of the revenue mix for nonprofit news. But ideally, each grant or donation can help a news organization build business capacity that makes it more self-reliant. “As we got grant money in, we never saw that as a long-term proposition,” said Anne Galloway, founder of VTDigger. “We saw it as, essentially, like venture capital—a way to get a certain distance with our project to attract a certain number of readers so we could get to a point that we could launch a strong membership campaign and attract enough underwriting to reach a level of sustainability.” A grand experiment along these lines is now unfolding in Philadelphia, where newspaper owner Gerry Lenfest gave $20 million in 2016^[56] to create a hybrid nonprofit/for-profit structure called the Institute for Journalism in New Media. Lenfest also donated the city’s two main newspapers, the Inquirer and Daily News, to the new nonprofit institute, along with the $20 million in seed money. The goal behind the new structure is to stabilize the papers’ finances (for now, anyway) while executives develop strategies for long-term sustainability.

Supplementary Revenue Streams

In addition to the four central sources of funding for nonprofit news discussed above, a number of supplementary revenue streams also offer promise. Here are three areas where news nonprofits are generating some extra dollars:

Crowdfunding

When looking to fund specific projects or staff positions, it’s worth considering a crowdfunding campaign. During the fall of 2013, the Tribune’s inaugural Kickstarter campaign^[57]—for equipment to stream live video coverage of the 2014 Texas governor’s race—tallied $65,310, plus a matching pledge of $10,000 from the Knight Foundation and another $10,500 in checks. Rodney Gibbs, the Tribune’s chief innovation officer, said the campaign succeeded largely because it had a clear, focused call to action that was amplified on social media by employees and supporters. The Tribune turned to crowdfunding again in 2014 and 2015 to raise money for special investigative projects^[58] and in 2017 to hire a new “community reporter”^[59] to forge relationships with readers across the state.

The more novel the idea, the more likely it is to capture crowdfunders’ attention. In 2014, fellow nonprofit San Francisco Public Press launched a Kickstarter campaign that more than tripled its original goal of $10,000^[60] to expand its citywide network of bicycles to distribute the print edition of its newspaper.

For some digital news startups, crowdfunding has served as the initial spark for a more enduring, membership-driven business model, particularly in international settings. The Hong Kong Free Press^[61] and Spain’s El Español^[62] both were created in 2015 as a result of successful crowdfunding campaigns that drew tens of thousands of supporters. And De Correspondent,^[63] an investigative news site based in Amsterdam, launched in 2013 with a record-setting Kickstarter campaign, tallying $1.7 million in thirty days.^[64] De Correspondent now boasts more than 50,000 members^[65] who pay 6 Euros (roughly $7) per month to directly support a style of news that publisher and co-founder Ernst-Jan Pfauth calls “an antidote to the daily news grind.” The site’s business model is completely ad-free, which Pfauth says is liberating:^[66] “Instead of viewing members as target groups for advertising, we can focus on serving our readers’ interests. Instead of starting ad-heavy sections like travel and career, we can make editorial judgments based solely on the importance of a subject. Rather than hunting for page views, we hunt for great stories.”

De Correspondent is a for-profit venture—it caps profits at 5 percent, reinvesting the remaining 95 percent back into its journalism—but its ability to convert an initial crowdfunding campaign into a thriving community of members^[67] has drawn considerable interest from the nonprofit world. The site, which plans to expand into the United States in 2018, is working with New York University journalism professor Jay Rosen on a public research project^[68] to develop and share best practices for news membership models. “The Correspondent knows things that local, nonprofit and specialized news sites in the U.S. can benefit from as they turn to readers to support them,” Rosen wrote^[69] in Nieman Journalism Lab. One of these lessons, international editor Maaike Goslinga told me, is that building trust with members can serve as its own “currency” to support journalism. “I’m not saying that De Correspondent has all the truths or that everyone should have our model,” Goslinga said. “But we can sense that a lot of people read us because they trust us.” The crowdfunded model, Goslinga said, builds trust with readers because “you are free from the pressure of corporate donors—and that means that you, as the journalist, have the complete freedom to write whatever you want, because we’re not dependent on clicks.”^[70]

That degree of journalistic independence appeals to Kevin Smit, a 20-year-old Dutch college student studying biotechnology. Smit signed up for a monthly De Correspondent membership in June 2017 after following the site on Facebook for more than a year. “It’s real journalism, like it’s supposed to be,” Smit told me, recalling several of the site’s investigations, including an in-depth video analyzing the debt of the Dutch government. Smit said De Correspondent’s business model is, in fact, a major reason he has grown to trust the site. “How they’re formed through crowdfunding means that you don’t have one interest—you don’t have that lobby, or this company supporting you,” he said. “It’s people paying 6 Euros a month for the articles.”

Syndication and Partnerships with Newsrooms and Universities

For four years, The Texas Tribune shared content with The New York Times as part of a syndication deal that brought in several hundred thousand dollars. That collaboration with the Times ended in 2014,^[71] but the Tribune also has other syndication clients, including a textbook publisher. (The site’s daily news content is offered for free to news organizations throughout Texas.)

The California-based Center for Investigative Reporting charges a yearly flat fee for the rights to republish its stories and videos. But when it comes to particular projects, syndication fees are determined according to a sliding scale based on audience size, platforms used (print, TV, online) and whether a syndication partner contributed editorial resources. “We have to kind of tailor it to the partner,” said Meghann Farnsworth, CIR’s former director of distribution and engagement.

For news nonprofits with limited audiences, partnerships with commercial newsrooms can broaden the reach of their reporting while also generating revenue. Investigative Post, a nonprofit in western New York state, produces stories for Buffalo TV station WGRZ-TV in exchange for an annual fee ranging between $50,000 and $100,000, according to a 2017 report^[72] published by the American Press Institute. As Nieman Journalism Lab^[73] explains, partnerships like these “benefit both sides: The commercial publishers get expert reporting in specific areas that they don’t have time to devote resources to in their own newsrooms, while the nonprofits get extended reach for their work (and, hopefully, money, too).”

Creative partnerships with public media organizations and universities also can help save money for news nonprofits. In San Diego, inewsource, an investigative news nonprofit, shares office space and resources with the KPBS newsroom on the campus of San Diego State University. In exchange, inewsource provides KPBS with news content but remains independent. “We operate as a self-standing investigative unit,” editor Lorie Hearn told me in 2014. Such arrangements can invite scrutiny, however — in 2015, after inewsource published a series of investigative stories about a local attorney, a group affiliated with the attorney filed a lawsuit challenging the lease agreement between inewsource, KPBS and the university. The suit was dismissed,^[74] but the episode highlighted the risk that a school can assume when allowing a news organization to operate on campus. Unflattering coverage of the host university can trigger tensions as well: In 2014, The Lens, a news nonprofit in New Orleans, lost its offices^[75] at Loyola University after publishing a story critical of Loyola’s president.

Conclusion: Operating as a Mission-Driven Business

During the year I spent at The Texas Tribune, I found that in many ways it functions much like any metropolitan newsroom: Reporters spar on the phone with state agencies over public records requests, interns hustle to churn out quick daily stories, editors bug reporters about deadlines while shuffling between meetings.

But perhaps more than any other nonprofit news startup, the Tribune aggressively and unapologetically operates at all levels as a mission-driven business.^[76] News, art, and tech staffers are mindful that their livelihoods depend on successful events and membership drives, so they actively promote the Tribune in person and on social media. Business staffers tout the Tribune’s editorial content when making their pitch to potential sponsors, donors, and members. It’s a bold, self-promotional mindset that sometimes borders on overconfidence, but it stems from an understanding throughout the organization that, ultimately, the Tribune needs more revenue to stay in business and carry out its public-interest mission.

This shared sense of purpose is important, because digital news startups need proactive financial strategies if they hope to survive. Another nonprofit news startup, the Chicago News Cooperative, shut down operations in 2012—partly because it failed to develop business capacity that could sustain its excellent journalism. “I think that was one of my mistakes, was not to invest in business management,” editor and founder James O’Shea told me^[77] in an interview, candidly admitting that he had overspent on journalism. “We’ve come to a point in journalism where the business side and the editorial side are much more ‘one’ than they used to be,” O’Shea continued. “Journalists have kind of got to get with it and understand that, and begin practicing that and exercising their judgment in a way that really makes sure that if it’s going to be done, it’s done right and it’s done under sound journalistic principles.”

The same year O’Shea shut down his newsroom in Chicago, another high-profile experiment in nonprofit journalism — The Bay Citizen in San Francisco — merged with the Center for Investigative Reporting^[78] after failing to build a sustainable business model despite an initial $5 million in startup funding from investment banker Warren Hellman.

For decades during the era of legacy media, the traditional church/state separation between editorial and business departments allowed journalists to insulate themselves from the financial realities of their profession. Today’s news nonprofits cannot afford to subscribe to that worldview. They must, of course, behave transparently and ethically to maintain trust with the public. But by operating as mission-driven businesses, news nonprofits can enjoy the benefits of philanthropic support while simultaneously building out a diverse array of self-sufficient revenue streams that will ensure their long-term survival.

Bibliography and Additional Resources

• 4 Lessons from the Launch of the News Revenue Hub^[79]
• How News Partnerships Work: Commercial and Nonprofit Newsrooms Can Work Together to Benefit and Change Journalism^[80]
• Lone Star Trailblazer: Will The Texas Tribune Transform Texas Journalism?^[81]
• NewsBiz: Tracking Best Practices in the Business of Digital News^[82]
• Texas Tribune Fellowship blog archives^[83]
• Sustainable Strategies: Lessons From a Year at The Texas Tribune^[84]
• Rethinking Philanthropy to Support Local News^[85]
• 25 Ideas Nonprofit Newsrooms Can’t Afford to Ignore^[86]
• Institute for Nonprofit News Community Journalism Executive Training (CJET) online courses^[87]
• Finding a Foothold: How Nonprofit News Ventures Seek Sustainability^[88]
• Gaining Ground: How Nonprofit News Ventures Seek Sustainability^[89]
• The Pleasure and Pain of Going Nonprofit^[90]
• The Best Strategies for Generating Revenue Through Events^[91]
• Nonprofit Journalism: A Growing but Fragile Part of the U.S. News System^[92]

Jake Batsell is an associate professor at Southern Methodist University’s Division of Journalism in Dallas, where he teaches digital journalism and media entrepreneurship. His book, “Engaged Journalism: Connecting with Digitally Empowered News Audiences” (Columbia University Press, 2015) was one of three national finalists for the Tankard Book Award administered by the Association for Education in Journalism and Mass Communication. Reach him on Twitter at  @jbatsell. 

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