/ An inside look at the business of digital content
In the battered news industry, are nonprofits best equipped to survive?April 16, 2020 | By Kasia Kovacs – Independent Journalist @kasiakovacs
Over the past decade, the nonprofit news model has offered some hope while traditional news outlets struggled to keep afloat. Without the need to rely on advertisers and instead making money through fundraising and memberships, nonprofit news outlets have proliferated.
But recently, that hope has flickered. The worldwide Covid-19 pandemic, or coronavirus, triggered a tsunami to batter an already troubled industry. With advertisers losing money and pulling ads from news outlets, media companies are furloughing and laying off workers. And, in some cases, publications are being shut down temporarily or entirely.
How will nonprofit news outlets fare in the face of this pandemic and the economic downturn that follows? Perhaps better than traditional news outlets. New York Times columnist Ben Smith went so far as to advocate letting the for-profit model fail while supporting nonprofits instead. However, even with booming readership and engagement, nonprofits are concerned about how an economic recession will affect donations and fundraising, and ultimately, their future.
The promise of nonprofit news
Traditional news outlets began wrestling with declining revenues long before coronavirus spread throughout the world this winter. Although digital traffic has either increased or leveled off, advertising revenue continues to fall. Pew Research Center’s most recent State of the News Media Report found that ad revenue dropped by 13% from 2017 to 2018, continuing a trend that began in the early 2000s.
Further, the number of newsroom employees in the newspaper sector was essentially cut in half from 2006 to 2018. The number of newsroom jobs dropped by 36,510, according to the Pew report.
But nonprofit news organizations sketched a different picture of the future, offering the news industry a sense of hope. “It may be one way to start to repair the loss of trust in and public engagement with journalism in North America,” wrote University of British Columbia associate professors Alfred Hermida and Mary Lynn Young in Nieman’s predictions for journalism in 2020.
Journalism philanthropy quadrupled over the past decade, according to a 2019 Media Impact Founders report. Today, more than 230 nonprofit media organizations are members of Institute for Nonprofit News (INN), an organization that began with 27 members in 2009. Over two-thirds of INN’s members have launched in the past 12 years. INN’s members also employ about 3,000 staff, including 2,000 journalists, according to the organization’s 2019 Index.
These nonprofit outlets have provided necessary and often resource-heavy journalism that newspapers with dwindling funds might struggle to take on, especially watchdog and investigative reporting. Many nonprofit organizations cater to local audiences or report on niche topics, such as gun control, the environment, or education.
Certainly, many nonprofit news outlets earn some revenue from advertising and corporate sponsorships. However, these organizations rely most heavily on memberships and donations from individuals, families, and foundations. In the past, foundations provided the majority of the funding for nonprofits. However, the 2019 INN Index found that individuals and families contribute now about 40% of nonprofit funding. That same year, foundation funding dropped below 50% for the first time.
Even some for-profit news organizations have integrated strategies from the nonprofit model. The Guardian made an operating profit in 2019 for the first time in two decades after pulling off a financial turnaround strategy. This was, in large part, thanks to donations from more than one million readers.
And, faced with furloughs and possible layoffs, Vox Media is trying its hand at soliciting support from its audience. Emphasizing its wish to eschew the subscription model and keep its journalism freely accessible, particularly at this time, the company is turning to readers for support.
Of course, nonprofit outlets have not been the deus ex machina to single-handedly save the news industry. Journalism scholars have pointed out the shortcomings of a nonprofit business model. These include the risk of catering to elite donors rather than publishing stories for a wider audience. Larger nonprofits also tend to fare better than smaller organizations, which may struggle to raise enough funding.
Enter the pandemic
When coronavirus spread — first to Asia, then Europe, and then the U.S. — it dealt a serious shock to the news industry. Digital traffic to news websites increased significantly, with anxious visitors reading about the growing number of coronavirus cases, troubles with virus testing, and best practices for health and safety.
Despite this boost in page views, advertisers faced with their own losses have hit the brakes on many ad campaigns. They’ve also intentionally reduced the number of ads on digital news websites due to concerns about appearing next to coronavirus news. Buzzfeed News found that advertisers stopped over two million ads from showing up on news sites in the first three weeks of March.
As a result, Gannett is furloughing journalists at local newspapers across the country. Euclid Media Group announced layoffs at its seven publications. Some alt weeklies have shuttered entirely. And with economists predicting a global recession, the long-lasting repercussions of the pandemic look dire.
Nonprofits have faced consequences too, although they haven’t been so catastrophic.
High Country News — an independent magazine based in Colorado has maintained its nonprofit status for decades. Like many other news sites, it has seen a considerable increase in online readership of late.
Although the magazine normally publishes articles on issues relating to the western U.S., HCN assigned a team of about 10 journalists to focus on COVID-19. Stories shared details about the dangers of self-isolating on public lands, how to ethically get outdoors, and how rural doctors face the virus.
“Every story that we’re putting out on COVID-19 has just blown up. There just seems to be a huge appetite for those stories,” said Paige Blank, associate editor at HCN who is now leading the coronavirus coverage at the organization.
The number of users in March rose about 48% compared to the same time last year, and the number of new users also increased by nearly 53%. Plus, visitors are not just reading stories, but also becoming more engaged.
“The tip form has been getting a ton of responses from our readers,” Blank said. “We’re actually able to gauge what people are worried about right now. And we’re using those tips to tailor our coverage for our readers.”
But will revenue follow?
But whether that traffic and engagement can translate to sustainable revenue is unclear. So far, HCN hasn’t seen an uptick in donations in March. The magazine hopes to harness the traffic by launching an online fundraising campaign in late April, said Laurie Milford, development director at HCN.
Still, the magazine delayed a 50th anniversary campaign which it expected to raise $10 million this year. (The campaign gala is now scheduled for June 2021.) Overall, HCN expects to see a 25% reduction in general fund receipts in 2020.
HCN’s predicament is pretty representative of what most nonprofit organizations will be grappling with in the coming months, according to Sue Cross, INN executive director and CEO.
“It’s a mixed picture, she says. However, the situation “appears quite a bit better than the situation for for-profits,” Cross said. “(I’m) hearing of really significant increases in individual donor support. But some others that had a lot of events/sponsorship revenue or advertising income are hurting… For most, their community position and funding are up now, but uncertainty remains about future grant funding.”
Not all bad news
When it comes to for-profit news outlets like the Guardian, which also largely rely on reader donations, reader contributions could potentially act as a sort of cushion, softening the pandemic’s severe financial blow. However, thus far, it’s unclear how much of a difference reader donations will make.
In March, the Guardian received about 2.17 billion page views, far bypassing its previous record of 750 million pageviews last October. And the increased traffic appears to be increasing financial support from its online readers, according to editor-in-chief Katharine Viner. However, mid-March the Guardian announced a projected a loss of £20 million over the next six months from declining advertising and newspaper sales, which has led to furloughs and pay cuts.
Indeed, many news organizations hope that readers will see the value of their coverage during the coronavirus crisis and, despite the economic uncertainty, donate. Case in point: Chalkbeat, a nonprofit that focuses on education news in cities like Chicago and Detroit, gained $1,700 in just one week after an appeal for financial contributions
Chalkbeat has focused its reporting over the past month on how schools are dealing with the pandemic. Traffic tripled in March, according to figures from editor-in-chief Bene Cipolla. Like at HCN, Chalkbeat readers have been involved in spurring content; by the end of March, Chalkbeat had published 20 stories based on the responses to callouts asking for reader questions.
Instead of running its annual spring campaign, the organization is treating the COVID-19 crisis as a campaign unto itself. This means sending out weekly appeals, which resulted in significant donations and 21 new members after one week, according to Kary Perez, senior marketing manager.
In addition, “we have also been approached by lots of people asking us to come to their communities,” said CRO Maria Archangelo. “When they see the kinds of information that we are able to deliver to Detroit and Memphis, they realize what their communities are lacking.”
The future is less certain when it comes to Chalkbeat’s philanthropy partners and major donors, who are dealing with the pandemic consequences on their own terms. Archangelo hopes that donors and funders will realize the importance of Chalkbeat’s coverage once the pandemic has passed, and will continue to provide funding.
For Chalkbeat, HCN, and all other nonprofit news organizations, it’s difficult to calibrate the full impact of COVID-19. But for now, compared to the rest of the news industry, nonprofits seemed to have maintained a level of resilience in the wake of coronavirus’ brutal blow.