Journalism’s nonprofit surge

journalism’s-nonprofit-surge
Keller and Barsky. (Sasha Maslov)
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"It’s starting to have that start-up feel,” said Bill Keller, stepping into his new office on the 25th floor of 250 West 57th Street. The former New York Times executive editor is now at The Marshall Project, a nonprofit journalism organization that will unleash its firepower on the U.S. criminal justice system when it launches later this year. Candidates had been dropping by for interviews, and judging by the towering stack of resumes on Keller’s desk, there would be a lot more of that to come.

The operation was founded late last year by the reporter-turned-hedge-funder-turned-documentarian Neil Barsky, 56, director of a 2012 film about the late Ed Koch. Keller, 65, whose Times career had pinnacled with an eight-year stint at the top of the masthead followed by a couple of years writing for the opinion section, joined Barsky in February as The Marshall Project’s editor-in-chief and public face—a seasoned newsman whose very appointment endowed the venture with instant prestige and gravitas. That sort of street cred goes a long way when your content depends on good samaritans being willing to fork over mounds of cash.

“For all of my previous time as an editor, fund-raising meant getting in the elevator, riding up to the publisher’s office, and persuading Arthur Sulzberger that if we cut a million dollars out of the newsroom budget, it would be the end of Western civilization as we knew it,” said Keller. “It’s a novel experience to go in and ask people to invest a large sum of their own money in you. Or to go into a foundation and ask people to invest a large sum of other people’s money in you.”

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For Keller, the novelty will no doubt wear off as he becomes more accustomed to what seems like an increasingly viable business model. Nonprofit startups like The Marshall Project, in their own earnest (and modest) way, are sucking up more oxygen in an industry where legacy publications continue to grapple with revenue models upended by the migration of readers to the web, and in which an ever-larger suite of digital newcomers are chasing traffic to fuel their Gremlin-like expansions.

These altruistic outlets, most of them regional or niche in scope, are still a small slice of the media economy, which also includes nonprofit mainstays like NPR and the Associated Press. But their proliferation and heightened visibility in recent years suggests there’s growing confidence in the charitable model, which could prove vital to journalism’s long-term health.

“We’re significantly bigger than we expected to be,” said Evan Smith, co-founder, editor-in-chief and C.E.O. of The Texas Tribune, which has raised roughly $24 million and bulked up its staff from 17 to 50 since launching four-and-a-half years ago as a policy-focused outfit covering the Lone Star state. “Anybody who says the for-profit model is the only way to go is wrong. And anybody who thinks [nonprofits] are not going to be part of the conversation is crazy.” Compare that with how Smith felt when he left his longtime post as Texas Monthly’s editor-in-chief in 2009 and rolled the dice on a gambit that would need millions upon millions of dollars in grants and donations to survive: “We all locked arms like Thelma and Louise and drove off a fucking cliff and we’d didn’t know if there’d be anything to break our fall.”

The Tribune and its ilk have benefited from growth in the amount of money foundations are doling out to support U.S. media ventures. Such funding increased 21 percent between 2009 and 2011, during which more than 1,000 foundations authorized more than $1.86 billion in media-related grants, according to a November 2013 report by the Foundation Center, which conducts research on the philanthropy sector. A June 2013 Pew study found that all but nine states have at least one nonprofit news outlet, and that 46 of these launched during the dark days of 2008 and 2009; another 25 launched between 2010 and 2012.

But the Pew study, which surveyed 172 active nonprofit outlets, also called nonprofit journalism a “fragile” part of American media, concluding “that many of these organizations also face substantial challenges to their long-term financial well-being. ... [R]evenue diversity is a work in progress, and in what may be most telling of all, many of the nonprofit news operations surveyed ... don’t have the business-side resources needed to effectively expand their revenue base.” While optimism has been bolstered by the success of bigger outlets like the Tribune and the investigative heavy-hitter ProPublica, which lifted off in 2007 with a whopping $10 million annual budget, revenue is by and large a prudent proposition—just 14 of the 77 outlets that responded to Pew’s revenue questions reported yearly income of more than $1 million in 2011, and 55 said they brought in $500,000 or less.

Budgets like that don’t leave a lot of room for throwing money at the sort of business-side expenditures that could gradually wean a start-up off its diet of foundation and donor money. Indeed, a 2013 study of 18 nonprofit news ventures by the Knight Foundation, a major journalism funder, found that “most are devoting a higher share of their resources to editorial expenses than is likely to be sustainable in the long term. With a few exceptions, they have very limited tech capacity. This may impair their ability to grow and engage their audiences and to adapt to the rapid shifts that characterize the digital environment.” Still, the Knight study also found that combined revenue at these 18 news organizations increased nearly 30 percent over the past three years, with a decrease in foundation reliance between 2010 and 2012. Take the Tribune, for instance, which now gets about a fifth of its revenue from corporate underwriting and another fifth from events, whereas 90 percent of its first-year funding came from major donors, said Smith.

NJ Spotlight, which launched in 2010 after co-founder John Mooney took a buyout from New Jersey’s Star-Ledger, is one of the smaller nonprofit shops that appear to be cracking the code. Their budget that first year was roughly $400,000, three quarters of which came from foundations including Knight and Robert Wood Johnson, and the rest from earned revenue mostly tied to the site’s sponsored events strategy. This year the site is running on close to $1 million, according to Mooney, and the ratio is nearly one-third earned income to two-thirds foundation funding, a shift he attributes to the fact that they “had a business piece right out of the gate.” NJ Spotlight has grown from four full-time employees to a full-time staff of 10, including a development director who was recently hired to “build an individual donor base and coordinate the grant-making process a little better,” said Mooney.

Of course it’s always nice when the journalism itself is a boon for business. In 2013, InsideClimate News won the Pulitzer Prize for national reporting. InsideClimate what? The tiny site was well off the mainstream media radar, and it was one of the first digital news outlets and nonprofits to receive journalism’s top prize. (ProPublica, which won a Pulitzer in 2010 and 2011, was the very first; The Center for Public Integrity, which has been around since 1989, took home a Pulitzer this year.) Suddenly this little-known news outlet was in the national spotlight, which led to new fundraising opportunities while shoring up existing ones.

“We had a couple of conversations going with big funders that, as soon as the Pulitzer hit, those conversations just accelerated very quickly,” said David Sassoon, a Brooklyn-based publisher who founded the site in 2007 with about $150,000 in grant money from the Rockefeller Brothers Fund. Seven years later, InsideClimate News has a budget of close to $1 million, said Sassoon, and is finally in a position to work on diversifying its revenue. Starting July 7, Sassoon will have a development director to help attract individual donors and corporate sponsorships; the site is selling e-books to put some icing on the cake.

“I’m optimistic about this type of journalism going forward because it has to go forward,” said Susan White, InsideClimate News’ editor-in-chief. “Not in the sense that I think everything’s wonderful and the money will just keep rolling in. But I’m optimistic that people like us at different organizations are all thinking the same thing, and we’ll be able to come up with enough solutions to keep going.”

Barsky shares that optimism, perhaps because his own solutions are showing some early promise. He said that The Marshall Project’s roughly $5 million annual budget was “very close to half-committed” for the first two years, including “three major institutional commitments” that he declined to specify because the ink hadn’t dried. Another chunk came from individual donors whose names will be disclosed once the site is up and running. Those include Barsky himself, with a contribution that was “meaningfully less than half of our budget,” he said.

Barsky’s aiming for a fall launch, and the plan is to have a full-time staff of around 25 that will execute in-depth, investigative criminal justice reporting while also curating up-to-the-minute news and producing multimedia features, interactive graphics and video content. Down the road, Barsky plans to explore additional revenue streams, like advertising. It would make The Marshall Project “a hybrid organization where we rely on philanthropy but also monetize what we can monetize,” he said. “My hope is that in years two, three, four, five, a larger and larger percent of our budget is earned revenue.” Like-minded outlets will be rooting for them. “Success breeds success,” said Smith.

This article appeared in the July issue of Capital magazine.