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For-Profit News Outlets are Exploring Nonprofit Models

by Tory Martin
For-Profit News Outlets are Exploring Nonprofit Models
Front cover of the "11 Trends in Philanthropy for 2022" reportThis article was first published in our 11 Trends in Philanthropy for 2023 report. Explore all 11 trends in the report.

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Journalism’s traditional advertising- and circulation-focused revenue model is crumbling. Even billionaire owner Jeff Bezos’ interest and investment haven’t saved The Washington Post from budget problems (Mullin & Robertson, 2022). As for-profit outlets large and small look for ways to stay afloat, many are turning to philanthropy as a safety net.

The Johnson Center first reported on growth in the nonprofit media landscape in 2019’s 11 Trends in Philanthropy report. That piece, “Nonprofit Media is Experiencing a Growth Spurt — So is Philanthropy’s Response” (Martin, 2019), primarily focused on the rapid proliferation of start-up nonprofit news outlets and the response from individual philanthropists (small-dollar donors and billionaires alike).

“[A]s commitments [to support journalism] increase, philanthropy will need to be careful not to fall into old patterns that could undercut its intentions.”

If anything, that trend has sped up since we first wrote about it, especially among providers of local news. According to the Institute for Nonprofit News (INN, 2022), 65% of the nonprofit news outlets that launched in 2021 had a local focus, compared to 57% the year before. In total, the number of newly-launched outlets from 2017 to 2021 effectively doubled the number launched in the previous five years — 135 new outlets, compared to the 69 outlets that appeared between 2012 and 2016.

This year we’re looking at a different aspect of the news landscape and its increasingly close relationship with philanthropy. In the for-profit news space, legacy brands and 21st-century digital natives alike are moving to explore, adapt, and adopt the nonprofit model. We identified three emerging models that indicate a shift in the future of news media.

The First Emerging Model: Nonprofit Status

Few have taken the dramatic step of giving up their for-profit status completely, although this has happened. In May 2019, The Salt Lake Tribune (established in 1871) became the first legacy paper in the United States to announce its intention to fully convert from a corporation to a 501(c)(3) nonprofit (Mele, 2019). In philanthropy’s backyard, the Chronicle of Philanthropy announced in May 2022 that it will break away from its for-profit parent, Chronicle of Higher Education, Inc., to become an independent nonprofit.

Yet the most activity seems to be in evolving ownership structures.

The Second Emerging Model: Nonprofit Ownership

Many for-profit news outlets are holding on to their for-profit status while moving under the ownership of a nonprofit organization. For instance:

  • The National Review. Even the magazine’s founder and longtime editor William F. Buckley, Jr., acknowledged The National Review never made any money. In 2005, he “divulged that The National Review had lost about $25 million over 50 years, or about $500,000 a year” (Shapiro, 2005). In 2015, the nonprofit National Review Institute took over ownership of The National Review magazine and website. The National Review remains for-profit.
  • The Philadelphia Inquirer. In January 2016, Gerry Lenfest donated The Philadelphia Inquirer to the Philadelphia Foundation along with a $20 million endowment for its support (The Lenfest Institute, 2016). The paper remains a for-profit corporation, but with a complex management structure that ensures its editorial independence from its philanthropic revenue stream (Mele, 2019).
  • DCist, Gothamist, and LAist. In February 2018, nonprofit public media pillars in three large markets — WAMU in Washington, D.C.; WNYC in New York City; and KPCC Southern California — worked in parallel to acquire DCist, Gothamist, and LAist, respectively. These three popular, hyper-local, digitally-native publications had struggled to stay afloat as standalone for-profits (Huang, 2018; WAMU, 2018; WNYC, 2018).
  • The Chicago Sun-Times. In January 2022, public media behemoth Chicago Public Media (which operates WBEZ) leveraged $61 million in philanthropic investment to acquire The Chicago Sun-Times and convert the nearly 75-year-old paper into a nonprofit. “The newsrooms will operate separately,” according to the announcement’s press release, “with their own editors and maintain their editorial independence” (Berger, 2022, para. 12).

The Third Emerging Model: Philanthropic Partnerships to Support For-Profit Journalism

Media outlets looking to bolster their operations without structural change are increasingly turning to foundations.

Foundations are allowed to make grants to for-profit organizations such as news outlets as long as those grants substantially support the foundation’s already tax-exempt mission (IRS, 2022a). Another word for this type of activity could be “program-related investments” (IRS, 2022b).

In September 2017, The New York Times repositioned Deputy Managing Editor Janet Elder to develop a new internal department exploring philanthropic partnerships. In 2020, the Times announced a total of $4 million in grants from the Ford Foundation, Stavros Niarchos Foundation, and the William and Flora Hewlett Foundation to support the three-year Headway Initiative, the paper’s first majorly grant-funded project (Bauder, 2022).

Gannett Co., the largest newspaper publisher in the United States, also appointed a new senior executive position devoted to philanthropic partnerships in 2019 (Mele). The Associated Press’s Lisa Gibbs is building a similar department (Bauder, 2022). The AP’s efforts have recently resulted in more than $8 million in philanthropic commitments to support the outlet’s climate coverage.

The AP, Chronicle of Philanthropy, and The Conversation announced a new partnership and a $3.6 million grant from the Lilly Endowment in September 2020. Their joint work to cover and distribute news about philanthropy is “aimed at advancing the public’s awareness and understanding of the people and organizations trying to solve some of the world’s most pressing problems” (Associated Press, n.d.).

New Opportunities, Old Habits

There’s no question that philanthropic support for journalism is growing. However, as commitments increase, philanthropy will need to be careful not to fall into old patterns that could undercut its intentions.

  • Supporting Local vs. National News. Many funders are entering this space to reverse dramatic losses in local news coverage. Yet, according to INN, “gains in philanthropic support to nonprofit news is most densely concentrated among larger national and global organizations” (2022, para. 3). Foundations make up only 40% of revenue for locally-focused nonprofit outlets, while they account for 59% of revenue for nationally/globally-focused nonprofit newsrooms.
  • General Operating Expenses. In Philanthropic Options for Newspaper Owners: A Practical Guide, Nicco Mele notes that philanthropic structures created to support both The Salt Lake Tribune and The Philadelphia Inquirer are explicitly forbidden from supporting those papers’ operating expenses or covering their deficits (2019, p. 9 & 12). While funders may feel this establishes a necessary barrier between themselves and news content, the policy could leave newsrooms cut off from a critical source of core support.

A free and independent press is widely acknowledged to be a critical pillar of a functioning democracy. Funders seeking to sustain this important work must ensure their methods match this mission.

Tory Martin, M.A.
Tory Martin, M.A.
Director, Communications and Strategic Partnerships
Tory Martin joined the Johnson Center in October 2017 and currently serves as director of communications and strategic partnerships. In this role, she is responsible for connecting the Johnson Center’s work and mission with a growing community of philanthropists and...
References

Associated Press. (n.d.) Media distribution. https://contentservices.ap.org/media-distribution/

Associated Press. (2020, September 24). AP, The Chronicle of Philanthropy and The Conversation join to jumpstart coverage of nonprofit world. https://www.ap.org/press-releases/2020/ap-the-chronicle-of-philanthropy-and-the-conversation-join-to-jumpstart-coverage-of-nonprofit-world

Bauder, D. (2022, February 16). Climate grant illustrates growth in philanthropy-funded news. AP News. https://apnews.com/article/science-business-arts-and-entertainment-journalism-united-states-087d1d5dd7189c529fe5d7a21a1ffb5f

Berger, B. (2022, January 31). Chicago Public Media announces its acquisition of the Chicago Sun-Times. WBEZ. https://www.wbez.org/pressroom/chicago-public-media-announces-its-acquisition-of-the-chicago-suntimes

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Huang, J. (2018, February 23). LAist is coming back — under KPCC management. WKPC. https://www.kpcc.org/2018-02-23/laist-is-coming-back-under-kpcc-management

Institute for Nonprofit News (INN). (2022, July 27). The state of nonprofit news. https://inn.org/research/inn-index/inn-index-2022/

Internal Revenue Service (IRS). (2022a). Grants to noncharitable organizations. https://www.irs.gov/charities-non-profits/private-foundations/grants-to-noncharitable-organizations

Internal Revenue Service (IRS). (2022b). Program-Related Investments. https://www.irs.gov/charities-non-profits/private-foundations/program-related-investments

The Lenfest Institute. (2016, January 12). H.F. Lenfest launches the Institute for Journalism in New Media; Donates The Philadelphia Inquirer, Daily News and philly.com to it and makes a $20 million gift to a new endowment to ensure the future of independent journalism. https://www.lenfestinstitute.org/news/h-f-lenfest-launches-institute-journalism-new-media-donates-philadelphia-inquirer-daily-news-philly-com-makes-20-million-gift-new-endowment-ensure-future/

Martin, T. (2019). Nonprofit Media is Experiencing a Growth Spurt — So is Philanthropy’s Response. 11 Trends in Philanthropy for 2019. Dorothy A. Johnson Center for Philanthropy, Grand Valley State University. https://johnsoncenter.org/blog/nonprofit-media-is-experiencing-a-growth-spurt-so-is-philanthropys-response/

Mele, N. (2019, October 5). Philanthropic options for newspaper owners: A practical guide. John S. and James L. Knight Foundation. https://kf-site-production.s3.amazonaws.com/media_elements/files/000/000/434/original/Philanthropic_Options_for_Newspaper_Owners_final.pdf

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New York Times. (2020, December 1). The New York Times announces philanthropic support for the Headway Initiative. https://www.nytco.com/press/the-new-york-times-announces-philanthropic-support-for-the-headway-initiative/

New York Times. (2017, September 1). A new role for Janet Elder. https://www.nytco.com/press/a-new-role-for-janet-elder/

Shapiro, G. (2005, December 9). An encounter with conservative publishing. The New York Sun. https://www.nysun.com/article/on-the-town-encounter-with-conservative-publishing

WAMU. (2018, February 23). WAMU acquires local news site DCist. https://wamu.org/around-wamu/wamu-acquires-local-news-site-dcist/

WYNC. (2018, February 23). WNYC, two other public radio stations acquire Gothamist and sister sites. https://www.wnyc.org/story/wnyc-other-public-radio-stations-acquire-gothamist-and-sister-sites/