Back in May 2020, I spoke with Sarabeth Berman, who leads the American Journalism Project (AJP), an ambitious philanthropic initiative committed to helping local news outlets build sustainable business models built on a mix of earned income, public funding and charitable contributions.
Berman had just taken over as the AJP’s day-to-day leader, and to say that she did so under unprecedented circumstances would be an understatement. COVID-19 shuttered local businesses, starving local news outlets of a crucial revenue source, while funders redirected their giving toward organizations focused on public health and emergency response. Yet at the same time, outlets reported record-breaking traffic as concerned citizens sought out shelter-in-place information from trusted local sources.
I recently checked in with Berman, who relayed some welcome news: “We’re seeing more examples where nonprofit news is thriving thanks to philanthropy. The momentum is heading the right direction.” In fact, a few days after we spoke, the AJP announced that a coalition of Indiana organizations and philanthropists raised over $10 million to launch the Indiana Local News Initiative with the goal of providing free local news to the state’s residents. The announcement came on the heels of similar efforts that the AJP spearheaded in Ohio and Houston, and suggests that local funders are playing an integral role in supporting local news ecosystems.
But support for local news rarely materializes out of thin air, especially given all of the other critical issues demanding these funders’ attention. This is where the AJP’s unique value proposition comes into sharper focus. In Indiana, Ohio and Houston, Berman and her team have worked with residents and stakeholders to identify gaps in the local news ecosystem, presented the findings to funders — some of whom had never given a cent to a journalism organization — and made the case that supporting local news could advance their philanthropic goals.
It’s been a pretty compelling pitch, and outlets looking to engage local funders should take note. “Many institutions do not have a media or local news funding stream,” Berman told me. “It takes work to make philanthropy realize why local news is not only essential to the other priorities that they have — whether that’s education, or public health, or climate — but also essential to healthy communities and a thriving democracy.”
A lay of the land
In 2018, Elizabeth Green of Chalkbeat and John Thornton of the Texas Tribune announced the formation of the AJP, which received seed funding from Pierre Omidyar’s Democracy Fund, and Thornton and his wife Erin. In February 2019, it officially launched with $42 million in lead funding commitments from Arnold Ventures, Emerson Collective, Craig Newmark Philanthropies, the Facebook Journalism Project, philanthropist Christopher Buck and the Knight Foundation, which made a five-year, $20 million commitment.
From the outset, the project positioned itself as “the first venture philanthropy organization dedicated to strengthening an ecosystem of civic news organizations that believe local journalism a public good,” a point that Berman reinforced during our chat. “The evidence is clear that the decline of local news is contributing to some of the challenges facing our democracy, including the decline of voter participation, the rise of polarization and lack of government and business accountability,” Berman said, channeling the sentiments of other journalism funders concerned with the wellbeing of the body politic.
“Nonprofit news organizations are coming online all across the country, powered by a mix of philanthropy and earned revenue,” Berman said. “I’m optimistic about nonprofit news, and I think it will increasingly be a primary source of original reporting in many communities.”
To her point, a July 2022 report from the Institute for Nonprofit News (INN) found that the number of newsrooms in INN’s network doubled over the previous four years, exceeding 400 independent news organizations that distribute content through more than 7,100 other media outlets.
INN defines 55% of the news outlets that have launched since 2017 as “local,” and noted that “the growth of local newsrooms has increased year over year.” INN expects this trend to continue. Perhaps most encouragingly, two-thirds of news outlets reported increased revenues from 2018 to 2021, with a median of 25% growth during this timeframe.
Berman said corporate sponsorships are a uniquely promising earned revenue opportunity for local outlets. “We’ve been finding that the strategy of appealing to local businesses around connecting with their communities has been a successful one,” she said. “These are institutions in a community that brands want to be associated with.”
Engaging local philanthropy
The AJP’s playbook consists of two strategies for building nonprofit news across the country: investing in existing organizations and launching new ones. In each instance, the AJP helps the organization build out revenue streams so it can be sustainable over the long term.
When it comes to launching new outlets, the AJP partners with community members to conduct news “ecosystem assessments” that gauge strengths and weaknesses across the region. AJP reps also hold community listening events and roll out surveys to understand what community members want from local news. “What’s so striking is in community after community, we hear individuals saying they want local information, they want unbiased, fact-based information, they want someone asking questions of those in power,” Berman said.
In the run-up to launching the Indiana Local News Initiative, the AJP partnered with 27 “community ambassadors” and solicited feedback from over 1,000 state residents through text messaging and online surveys, interviews and focus groups.
After gathering this information, the AJP then presents feedback to local funders. Berman told me that funders are often shocked by the dismal state of the ecosystem and deeply moved by the community’s stated needs.
“When philanthropy hears that this is the kind of information that the community wants, they feel more comfortable making an investment,” Berman said. AJP reps also target the pitch, telling funders, “‘Look, you say you really care about education, but there is only one reporter covering education in the area.’ Or, ‘There’s millions of dollars being channeled into this government initiative and there are no reporters following it.’”
When it’s framed through this lens, funders understand that local news can help them advance their strategic priorities while rebuilding trust across the body politic. “Research shows that the strongest combatant to misinformation is information people trust,” Berman said. “And so the more trusted local information people have, the better defenses we have against misinformation.”
An outlet can methodically build trust through good old reporting — say, at a statehouse or a town hall meeting. It can also deploy what Berman called “direct and technical tactics to combat disinformation.” She noted that two AJP grantees, the Nevada Independent and Wisconsin Watch, produced “fact-check briefs” during the 2022 election to respond to potential misinformation. Berman said the briefs were among the outlets’ most frequently read deliverables.
While funders can appreciate the “soft” benefits of a vibrant local news ecosystem, the popularity of these fact-checking briefs suggests that tangible outcomes are incredibly important and achievable. “You have to provide a viable solution for what could replace these gaps,” Berman said. “That provides philanthropy a sense that it’s part of the solution.”
As a testament to local philanthropy’s growing interest in supporting local news, Berman noted the AJP doesn’t aggressively market its services. “We’ve been proactive in terms of getting in front of local philanthropy and trying to make people aware that we’re doing this work,” she said. “But the problem of local news is so vast and pervasive that we’ve been largely responsive to interest from philanthropy, where they’ve said, ‘We’re concerned about the state of local news, will you help us?”
“You have to build awareness”
In 2021, the AJP partnered with a coalition of Ohio organizations, including the Cleveland Foundation, to launch the Ohio Local News Initiative, a network of independent, community-led, nonprofit newsrooms. The initiative’s first newsroom, Signal Cleveland, went live in November 2022 with $7.5 million in startup funding. That same year, backed by over $20 million in pledged support, the AJP established another local newsroom, Houston Landing. The site will go live this spring and will not have paywalls or subscription fees.
The funders of the Indiana Local News Initiative represent an impressive cross-section of the state’s philanthropic ecosystem. They include Nina Mason Pulliam Charitable Trust, Herbert Simon Family Foundation, Lumina Foundation, the Robert R. and Gayle T. Meyer Family Fund, and the Joyce Foundation. Individual donors include Myrta Pulliam, John Mutz and journalist Michael Arnolt, who made a $6 million gift to the Media School at Indiana University in 2008.
Looking ahead, the big question facing these nascent outlets is whether, over time, they can implement a self-sustaining business model. As far as the specifics of the model are concerned, last November, Berman told Poytner’s Rick Edmonds that the goal of the Ohio Local News Initiative was to have a third of revenue come from philanthropy, a third from memberships and individual donors, and a third from business sponsors, so outlets are never too reliant on a single stream. The ratio “is a great guardrail,” Berman said, “but that really means to get (the revenue) as diversified as possible.”
While success is far from assured, the AJP’s track record so far provides reason for optimism. Berman and her team looked at organizations that received three-year grants and found that for every dollar it put in, the organization went on to generate $4.50 in new revenues. “Philanthropy should feel confident that if you make smart investments, you’ll get a return,” Berman said.
In other words, it takes money — specifically for capacity-building — to make money. And even though they’re not in it to make a profit, nonprofit outlets that want to keep the lights on need to be attuned to the bottom line. “A vast majority of nonprofit news organizations do not have fundraisers or revenue teams on their staff, and unfortunately, you can’t just let the journalism speak for itself,” Berman said. “You have to build awareness and help philanthropy see their role. You need to tell funders, ‘Look, this is what the gaps are, this is what people want, this is our plan to fill it, and this is how the reporting supports your priorities.’”