Radical disruption in the news industry over the past decade has fueled a period of experimentation with new approaches and business models for supporting journalism.  Nonprofit news organizations, principally those focused on local, state and regional news, offer the promise of filling the void left by cutbacks by legacy media organizations to state and local reporting. RELATED LINKS

“Earning Their Keep: Revenue Strategies from The Texas Tribune and Other Nonprofit News Startups” — report by Jake Batsell, 04/08/15

“Gaining Ground: How Nonprofit News Ventures Seek Sustainability” — report, 04/08/15 “Finding a Foothold” — 2013 report “Getting Local” — 2011 report

But how sustainable are the business models emerging from nonprofit news organizations and will they represent a viable long-term component of a healthy local information ecosystem? A report released by Knight Foundation today, “Gaining Ground: How Nonprofit News Ventures Seek Sustainability,” addresses this question and spotlights promising practices among 20 nonprofit news organizations.

The report is the third in a series of studies Knight has produced since 2011. Our studies have gathered comparative data across nonprofit news sites to benchmark their progress on key metrics related to business models and audience engagement. “Gaining Ground” follows up on the 2013 report “Finding a Foothold,” growing the cohort from 18 to 20 organizations and tracking trends over a three-year period (2011-2013).

In conjunction with the report, Knight has published a case study with lessons from The Texas Tribune and other nonprofits authored by Jake Batsell, an assistant professor of journalism at Southern Methodist University who served as a Knight-funded Texas Tribune Fellow. This snapshot provides excellent insights about practices that can replicated, and ones that perhaps cannot be, from an organization recognized as leading the way in this burgeoning field.

“Gaining Ground” shows that as a cohort the nonprofit news sites grew revenue quickly but sustainability remains a distant goal. Between 2011 to 2013, organizations grew revenue on average by 73 percent and average growth in 2013 was 30 percent. About a quarter of the sites experienced flat or declining revenues over the period of the study, suggesting growth has been uneven in this field.

Nonprofit news sites still rely heavily on foundation funding, albeit slightly less so than in the past. Grant funding represented 58 percent of total revenue for the average organization in 2013, down from 63 percent in 2011. In turn, organizations have continued to increase earned revenue over time, which now represents 23 percent of total revenue.  Although progress has been slow, it is encouraging to see steady growth in this area.  We still found relatively little experimentation with earned revenue sources among the cohort and hope sites will continue to pilot new approaches to generating income that leave them less dependent on philanthropic funding.

The findings also emphasize the importance of shifting from a startup to scale-up mentality by planning for growth. Nonprofit news sites that reported setting financial targets and developing business plans grew revenue at a far faster rate than those that didn’t. This type of planning also applies to scaling impact, and the report profiles a handful of organizations piloting new approaches for measuring their impact, which require being intentional from the outset about outcomes they hope to achieve through their reporting.

We would like to acknowledge and thank the nonprofit news organizations who shared their data and insights with Knight to produce this report. Without their commitment to transparency and continuous learning in this field, this report would not be possible.

While this report charts general trends, Knight Foundation continues to fund specific nonprofits news sites through its Local Media Initiative to experiment with ways of increasing their impact and long-term viability. We look forward to publishing lessons from these organizations and encouraging aspects that emerge to continue to bolster this developing field.

Jonathan Sotsky is director of strategy and assessment at Knight Foundation.

Download “Gaining Ground: How Nonprofit News Ventures Seek Sustainability” and “Earning Their Keep: Revenue Strategies From The Texas Tribune and Other Nonprofit News Startups.”