4 Ways to Fund — and Save — Local Journalism

On April 3, Mandy Jenkins paused from her work as general manager of The Compass Experiment — a partnership between Google and McClatchy to explore new business models for local news — to take a call. She had to be quick, she said. Traffic at Mahoning Matters, a digital community news source in Youngstown, Ohio, that’s the first of three Compass Experiment projects and part of the Google News Initiative’s Local Experiments Project, was spiking.

Two days earlier, Mahoning County — of which Youngstown, a city of some 64,000 with one of the highest poverty rates in the country (36.2%, more than three times the national average) is part — had become the state’s top hot spot for Covid-19. And just a few days before that, Jenkins’ colleague and friend Mahoning Matters business executive Mark Eckert died after contracting the virus.

[pq]The financial side effects of the coronavirus have forced news outlets to furlough or lay off reporters, to merge operations and, in some cases, to shut down entirely[/pq]

Now, Jenkins and her staff of four, all working from home, were under tremendous pressure to cover critical breaking health news. They also had to maintain newly developed community resources for the thousands of additional readers looking to Mahoning Matters for local coronavirus coverage: a running FAQ, lists of closures and cancellations, churches offering virtual services and restaurants open for carryout and delivery. Not only were more readers coming directly to Mahoning Matters’ website, Jenkins says, “Our email list is going through the roof. We are far exceeding our growth projections.”

Little more than a month before Jenkins launched Mahoning Matters in October 2019, Youngstown’s local paper, The Vindicator, folded after 150 years in operation, leaving residents without local coverage. Mahoning Matters is trying to fill that void — but at a time when local news faces what some commentators have called “unthinkable” destruction, “extinction,” and “total annihilation,” as the coronavirus ravages revenue sources such as advertising, events, and sponsorships. Even as the coronavirus pandemic has caused traffic to explode, the financial side effects of the disease have forced news outlets to furlough or lay off reporters, to merge operations and, in some cases, to shut down entirely, the wreckage now tracked at Poynter and through the Tow Center’s COVID-19 Newsletter.

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All this comes at a time when, even before the pandemic, more than 65 million Americans lived in counties with only one local newspaper or, like those in Youngstown, Ohio, none at all, according to a November 2019 Brookings report.

“This may be a moment where we lose local journalism,” warns David Chavern, president and CEO of News Media Alliance, a D.C.-based trade association representing some 2,000 news publishers in the United States and Canada.

As local journalism’s revenues collapsed in the early days of the pandemic, local news readership and subscriptions were surging. Sue Cross, executive director and CEO of the Institute for Nonprofit News (INN), says that in a poll of some of their INN member organizations, local, national, and specialized outlets alike are reporting five- to 10-fold increases in readership. In Missouri, a St. Louis American story about the first Covid-19 death in the region received more than one million pageviews in three days. In the prior month, there had been 167,000 unique visitors to the site. In Pennsylvania, Christopher Baxter, editor-in-chief of Spotlight PA, a collaborative newsroom backed by The Philadelphia Inquirer, Pittsburgh Post­-Gazette, and PennLive/The Patriot-News, among others, says some stories now attract “easily north of 500,000 and 600,000 readers.”

[pq full]“This may be a moment where we lose local journalism” —David Chavern, News Media Alliance[/pq]

“Local news and information provide a first-warning system, but they are also a connective tissue,” says Tim Franklin, senior associate dean at Northwestern University’s Medill journalism school and head of the Medill Local News Initiative. “We’re in self-isolation and quarantine. The ability to have an entity that is looking at your neighbors and local officials and describing to you how they’re doing is vital to mental health, not just physical health.”

The argument that journalism is an essential public service, that access to fact-based information is a human right, vital to civil society and public health, is gaining traction. How can that translate into a more sustainable financial future for journalism, especially at the local level and in the country’s most vulnerable communities?

There is a rich array of proposals in discussion — from antitrust and IRS reform to licensing fees for news content, subsidized vouchers for readers to increased unionization, among many other ideas — including some that deserve serious consideration and yet are beyond the scope of this article. In conversation with more than two dozen journalists, researchers, and industry leaders across a wide range of news models, Nieman Reports examined four broad categories of support — monetization, philanthropy, taxing tech platforms, and public funding.

Monetize the Crisis

On March 24, with U.S. cases topping 50,000, 25,000 of them in New York, the Local Media Association’s Nancy Cawley Lane wrote a post, “How to Survive COVID-19,” on LinkedIn for LMA’s members. The 3,000 members represent newspapers, TV stations, radio stations, and directories. The previous week, across the country, some 36 local newsrooms had announced layoffs, furloughs, or total shutdown.

“Find a sponsor to cover your coronavirus coverage outside of the paywall,” she urged. “Grow your newsletter subscriber list ... Don’t have a newsletter strategy? Now is the time to change that … Offer employees optional unpaid time off while still covering their benefits … If you rely on print distribution, cutbacks are necessary … Collaborate. Now is the time to team up with other media companies in your area.”

Cawley Lane argues that business model changes made now in response to the crisis can sustain outlets into the future. “Companies are implementing their three- to five-year plan in three days. The crisis forced their hand,” she says. And given the interest in pandemic-related news, consumer revenue is likely the biggest opportunity right now. “Journalists need to be having honest conversations with their communities about why they need to pay for news, whether that’s a digital subscription, membership, or contribution,” she says.

According to a 2019 Pew report, only 14% of adults and only 9% of those aged 30-49 say they pay for local news. The INN recently reported that some two-thirds of news organizations had yet to launch a membership program. In late April, LMA issued “Sustainable Solutions for Local Media in the Time of COVID-19,” based on a survey of LMA members, finding that many publishing companies “are now aggressively looking for ways to promote their fundraising at every audience touch point. Paywalls have been lowered, or partially lowered, and that change is being used to drive subscriptions. Like donation drives, subscription drives are in full swing.”

The Nevada News Group, which includes more than a half-dozen local papers, is offering a subscription special and has put out “a call to action” to the community for donations. In less than a week, it raised $3,000. “We’ve also set up a call bank to make phone calls for donations,” CFO Matt Fisher says. “We are using this as an educational opportunity, too. We make sure the person at the other end of the line learns something about what it takes to produce a paper and regular news.”

In early April, the LMA launched the Covid-19 Local News Fund fundraising tool to help news outlets run campaigns for tax-deductible donations through LMA’s 501I(3) foundation. Jed Williams, LMA’s chief strategy officer, reported that within four weeks, news organizations had raised $500,000 from 6,000 individual donations, with some 200 local news outlets participating, 13 of which had raised more than $10,000. Anchorage Daily News, independently owned by the Binkley Co., was the first participant in the Covid-19 Local News Fund to reach $30,000. The Houston Defender, which publishes community news in print and online, launched its fundraiser via text message; within a week, it had raised more than $45,000.

“One way or another, whether for-profit, nonprofit, your small donor or subscriber support is going to end up being essential,” says Nate Payne, editor of the Traverse City (Michigan) Record-Eagle, a morning paper with 20,000 readers.

The LMA is seeing additional monetization strategies such as special advertising programs and microsites that showcase local restaurants and businesses. The bottom line, says Payne, is, “Americans need to begin to realize that the journalism they’ve been used to getting at a deep discount or for free — and from which they derive and democracy derives significant value — is something they’re going to have to invest in.”

Pivot to Philanthropy

In 2009 former Washington Post executive editor and vice president Leonard Downie Jr. and Columbia Journalism School professor Michael Schudson argued in their The Reconstruction of American Journalism report that philanthropists and foundations “should substantially increase their support for news organizations that have demonstrated a substantial commitment to public affairs and accountability reporting.” In the intervening decade, according to a 2019 Media Impact Report, journalism philanthropy has quadrupled, with 17,750 total grants made to 2,369 U.S.-based organizations, totaling $1.7 billion, with $326 million going to investigative reporting. According to the INN, nonprofit newsrooms receive about 40% of their revenues from foundations, about the same amount as the donations from individuals and families.

[pq]As local journalism’s revenues collapsed in the early days of the pandemic, local news readership and subscriptions were surging[/pq]

In California, the Fresno Bee now has 10 reporters paid for by philanthropic funders. The Seattle Times brings in more than $2 million a year for reporting through four funds. The Miami Herald was recently the beneficiary of a $2.5 million endowment to pay for an investigative reporter. And, of course, there are strong single-issue models operating solely on philanthropic funding, including The Marshall Project, ProPublica, and MLK50. “Philanthropy is going to be a key pillar going forward,” says Joseph Lichterman, manager of editorial and digital strategy at the Lenfest Institute, dedicated to preserving local journalism. “The way we describe it is like supporting the symphony or a museum. Civic journalism as a public good.”

Elizabeth Green, co-founder and CEO of Chalkbeat, is a pioneer in creating local, sustainable, and independent news outlets. A nonprofit news organization covering education, Chalkbeat has more than 200 donors and institutions supporting its award-winning coverage, with an average gift of $75,000 contributing to a $12 million budget. “We also have seen that we are recruiting first-time donors to news,” Green says. “Eighty-three percent of our donors are first-time donors.”

Green is also co-founder of the American Journalism Project (AJP), which raised $46 million in 2019, with donations from the Knight Foundation, Arnold Ventures, Emerson Collective, Craig Newmark Philanthropies, the Democracy Fund, and the Facebook Journalism Project, among others. So far, AJP has seeded 11 civic-news organizations, including Berkeleyside in East Bay, CA; Centro de Periodismo Investigativo in San Juan, PR; inewsource in San Diego, CA; Mississippi Today in Ridgeland, MS; NOISE in Omaha, NE; MLK50 in Memphis, TN, and VTDigger in Montpelier, VT. “These newsrooms will be the examples that communities all over the country follow as we build a movement to ultimately sustain the local news landscape for the next generation,” says AJP’s CEO Sarabeth Berman.

In 2019, AJP backed Chicago’s City Bureau, a nonprofit civic journalism lab based on the South Side, with a 3-year, $1.2 million investment designed to help it build a sustainable revenue model. That year City Bureau raised about $1 million from foundations, sponsorships, and individual giving, and earned revenue, mostly from consulting. City Bureau trained 27 reporters and placed 47 stories in the Chicago Reporter, Chicago Defender, Chicago magazine, Black Youth Project, Planning magazine, The Atlantic, and others.

On April 21, City Bureau launched Chicago COVID Resource Finder to provide, via text and other ways, verified information on food, housing, legal aid, and more during the coronavirus pandemic. City Bureau’s co-founder and operations director Harry Backlund says, “The biggest difference between our pre- and post-pandemic work is that we’ve found wide reception for our idea that information is an essential service. With so many people who have critical information needs in the wake of Covid-19, we’ve been able to forge partnerships with local government agencies and other organizations in more creative and nimble ways.” For instance, City Bureau has partnered with the advocacy group Free Press to further develop its Information Aid Network. Using the Documenters program, the effort aims to reach people by phone who “can’t or won’t access digital spaces in light of the increasing digital divide challenges that coronavirus presents in our communities, especially communities of color.” So far, 1,300 people have created Documenters accounts.

Elizabeth Hansen, academic lead for the business models for news program at the Shorenstein Center on Media, Politics, and Public Policy at the Harvard Kennedy School, sees philanthropy expanding to include news. Local news operations are vital community institutions, she says, “but sites have never thought of themselves that way. Fundraising using this logic requires a different way of thinking.”

[pq full]“Philanthropy is going to be a key pillar going forward” —Joseph Lichterman, Lenfest Institute[/pq]

Hansen points to WAMU, a public radio station based in Washington, D.C., with about a million listeners, as a case in point. Over the last five years, the station has turned its focus to local news, almost doubling WAMU’s news staff and reviving the local news site, DCist. Membership has grown by 33% and audience by 41%, including doubling the percentage of African American and Hispanic listeners, according to general manager JJ Yore. In 2019, major gifts totaled $16.5 of $35.6 million total revenue; sponsorships brought in another $15 million. With Covid-19, Yore says, “sponsorship is in free fall. But the station’s fundraising revenue has been a surprising bright spot over the last month.” WAMU’s one-day on-air campaign in early April raised a record-breaking $688,000.

Philanthropic support also presents some challenges. Some argue that philanthropy is best suited for seed capital or to supplement specific reporting projects rather than general operations, given the long lead times involved in cultivating donors. Philanthropic support can come with the risk of influencing coverage, something recognized by Downie Jr. and Schudson, who advocated for “an impermeable wall” between foundation interests and newsrooms.

Philanthropic giving often is not inclusive. Only 8 to 9% of all grant-making goes to communities of color, according to the Foundation Center, a nonprofit that maintains a database of grantmakers. In early April, Borealis Philanthropy awarded $2.3 million to 16 news organizations serving communities of color across the country. “When we emerge out of this crisis, [inclusivity] must be a top priority,” says the LMA’s Cawley Lane.

Tax the Platforms

Many in the U.S. are watching Australia, where the government in April mandated that Google and Facebook share advertising revenue with media outlets. France and the U.K. are looking to the tech companies, too, for bigger contributions to media.

As the pandemic continues, more calls are being made. The Irish journalists’ union called for a 6% tax on search engines and social media companies, with the funds going to help the media industry. In addition to calling for more stimulus funds for daily newspapers, Seattle Times publisher Frank Blethen has called for a fee on the ad revenue of major internet platforms.

Both Google and Facebook have introduced Covid-19 emergency funds and made additional donations; other platforms have focused funding on factchecking and local news. Many newsrooms and journalism organizations welcome these gifts, even as there is widespread unease over accepting funding that comes from corporations the media needs to scrutinize. “They’re keeping many organizations alive,” says Mary Ellen Klas, the Miami Herald’s Tallahassee bureau chief. “It is such pennies from what they are making off of us. … I look at it as guilt money. Many in the industry see it that way, but we are so desperate.”

Back in 2019 Craig Aaron, president and CEO of Free Press, urged a tax targeting online ads on platforms, including Facebook and Google, that would raise $2 billion to fund diverse, local, independent, and noncommercial journalism. The money in what he called a First Amendment Fund would help news outlets in underserved communities and support new approaches.

Aaron compares the First Amendment Fund to a carbon tax, a government fee paid by companies per ton of greenhouse gases emitted. Sweden and British Columbia have embraced such a tax, but the idea has yet to gain acceptance at the federal level in the U.S. Just as carbon is causing the climate crisis, dis- and misinformation are causing an information crisis, Aaron argues. The idea: Impose a government fee on activities that create socially harmful impacts, so the producer, such as Facebook, pays an amount equivalent to the harm caused.

Aaron’s carbon tax analogy suggests another model: the Land and Water Conservation Fund (LWCF), which requires oil and gas corporations to fund land and water conservation in exchange for the profitable extraction of fossil fuels from the Outer Continental Shelf, a resource critical to public health. The LWCF has spent more than $4.4 billion on some 44,000 projects. If such a tax were implemented, Aaron says, mechanisms like those used at the Corporation for Public Broadcasting (CPB) could be adapted to ensure quality of information, transparency, and accountability. Aaron, Downie Jr., Schudson, and Report for America’s Steven Waldman all have argued that the CPB should be renamed and reframed as the Corporation for Public Media and focus on local news reporting. Critics say a platform tax doesn’t begin to address the damage done by private companies that break or pollute public information ecosystems.

Aaron notes that in mid-March, the Maryland state Senate passed a bill that would tax tech platforms to help fund education. “We’d like to build in journalism, too,” he says. “We’ve seen more momentum in the last six weeks than we’ve seen in the last 10 years. The emergency is so apparent, and people are looking for solutions. In some ways the rest of the world is ahead of the U.S., but everyone is wrestling with this.”

Fund Journalism Publicly

The U.S. spends vastly less on public funding for media than many other countries. Yet a 2017 poll found that three out of four people in the United States, including two out of every three Republicans, support maintaining or increasing federal support for public television.

The United States spends approximately $1.34 per capita to fund public media, says Aaron at the Free Press, most of which goes to the CPB. CPB’s annual allotment of around $450 million supports local public television and radio stations, the affiliates that often carry NPR and PBS programming.

In Europe, the U.K. spends more than $80 per capita, according to Aaron, and Denmark more than $100. In response to the pandemic, Denmark and Sweden announced that they will allocate significant emergency funds for independent news media, while the Canadian government has moved toward subsidizing journalism, with Prime Minister Justin Trudeau publicly thanking journalists for their work.

[pq]As the pandemic continues, more calls are being made for tech companies to share advertising revenue with media outlets[/pq]

Denmark is a particularly interesting case. There, the government covers 75% of salaries, up to $3,288 per month, for three months for employees who would otherwise be let go. In 2013, it broadened its system of press subsidies, giving online media equal access to funding alongside print and or electronic news media. In 2018, the country’s center-right government reduced funding for public service broadcasting to increase funding for private media, primarily to benefit online and local media.

Globally, models of state media support include tax breaks, direct financial payments, and public-service advertising, among other methods. Report for America and Free Press propose some $1 billion in direct spending on public-service advertising in local outlets, especially those that are free or serving disproportionately vulnerable communities. In an April 21 letter to congressional leaders, the chairs of the Congressional Asian Pacific American Caucus, the Congressional Black Caucus, the Congressional Hispanic Caucus, and the co-chair of the Congressional Native American Caucus cited the disproportionate number of Covid-19 deaths in their communities “and the clear need for timely, and culturally relevant news that can help save lives … [T]he reality is that African American, Latino, Asian Pacific American, and Native American communities need more news and information to stay healthy and safe in the ever-changing Covid-19 environment, not less.”

“The problem of news deserts is not as pronounced in many [European] countries” as it is in the U.S.,” says Victor Pickard, a Free Press board member, associate professor of communication at the Annenberg School for Communication at the University of Pennsylvania, and author of “Democracy Without Journalism?,” an exploration of and call for a publicly-owned, democratically-governed media system. “My general sense is that in many of these countries they have signaled that they will provide government assistance to compensate for the journalism that’s being especially devastated by the new economic conditions ushered in by the pandemic. Although, these market failures were already very much occurring pre-pandemic; the virus is merely an accelerant.”

Could a similar approach work in the U.S.?

In a March 30 letter to President Trump, Speaker of the House Nancy Pelosi, and Senate Majority Leader Mitch McConnell, News Media Alliance’s David Chavern and H. Dean Ridings, CEO of America’s Newspapers, argued that “independent journalism and government action have an inherent and necessary tension, and we should look for solutions that maintain a separation of interests. But we also all have a mutual need to sustain local news publishing so that it can collectively get us through this crisis ... and the next one.”

In an effort to ensure that journalists could keep working despite stay-at-home orders, Chavern launched a campaign in the first weeks of the Covid-19 crisis to push state governors to publicly declare journalism as essential work. As of early May, some 44 states have done so. This is a timely designation as newsrooms apply for emergency support through “forgivable loans” of up to a million dollars for small businesses. On April 24, President Trump signed a $484 billion spending package, the fourth since March, totaling some $3 trillion. For publishers with fewer than 1,000 employees, this means money for payroll, rent, and utilities — if their applications are successful. The Seattle Times, Tampa Bay Times, and Newsday were among those on the receiving end.

Pickard argues that few freedoms in the U.S. are as treasured as freedom of the press, and government support for journalism is often perceived as being antithetical to a free press. This belief system, says Pickard, stems from “the misconception that state tyranny is the primary impediment to actualizing democratic ideals rather than the private tyranny of concentrated corporate power.” But this longstanding conception of the press, he says, is shortsighted.

[pq]Respect for democratic rules and procedures can no longer be taken for granted[/pq]

News organizations are struggling in Europe, too — autocratic leaders have cracked down on the press, tech platforms have crushed traditional advertising models, and now Covid-19 is accelerating those struggles. But around the world there are examples of media funded by government but independent from it. In the U.K., the BBC runs on license fees paid by everyone who watches television. In Germany, every household pays a monthly fee — totaling in 2018 some $8.6 billion annually from 45 million homes — in support of public media.

Says Josef Trappel, professor of media policy and media economics at the Department of Communication Research at the University of Salzburg, Austria, and co-author of the 2018 “Comparative Media Policy, Regulation and Governance in Europe,” “Experience has shown over many decades that … subsidies are unlikely to compromise journalistic work as long as their providers respect democratic rules and procedures.”

Respect for democratic rules and procedures, however, can no longer be taken for granted.

In Europe, public access to factual information often is discussed within a human rights frame, critical to the ability to cast an informed vote and, therefore, critical to democracy. Pickard says public media encourage higher levels of news consumption; shrink the “knowledge gap” between the economically advantaged and disadvantaged; correlate with an increase in voting and democratic engagement; and better serve communities of color, women, and other groups and regions often underserved by media. People exposed to public media also have more social trust compared to those who consume sensationalized news.

In her research on local news funding, The Miami Herald’s Klas also found strong evidence that when journalism dries up, so, too, does voter turnout and civic engagement. In a column for Nieman Reports, Klas cites Rasmus Kleis Nielsen’s 2015 book “Local Journalism: The Decline of Newspapers and the Rise of Digital Media,” which details empirical research suggesting that “even with its deficiencies, local journalism helps reduce government corruption, increases the responsiveness of elected officials to their constituents, and encourages public participation in local politics.”

Some public funding initiatives have started to appear in the U.S. In 2018, the New Jersey legislature passed the Civic Info Bill, creating the Civic Information Consortium, a nonprofit charged with revitalizing local news. Initially approved for $5 million and then reduced to $2 million, the idea was first proposed by Free Press with the goal of funding news for underserved, low-income communities of color.

To be eligible for a grant, applicants must collaborate with one of five higher-education partners and with a community organization or civic institution. This consortium will have a staff and a board of directors “dedicated to transparency and accountability.” The consortium will attract grants and donations “to supplement and replenish the state’s initial investment and further its groundbreaking work in New Jersey.” “The $2 million is in the budget,” says Aaron, “but now there’s a huge financial crisis,” and it has not yet been released. Meanwhile, Colorado and Ohio are considering similar approaches. State-level projects, Aaron says, could serve as models for Free Press’s proposed national First Amendment Fund.

Pickard acknowledges that it might take time to effect substantial policy change beyond immediate stimulus aid. But, he adds, “young people today are much less in thrall to the market fundamentalism that has misguided American core systems for so long, from healthcare to media. There is no reason to be doctrinaire about what model works. These models can be overlapping and we need to embrace whatever experiments might sustain journalism. At the end of the day, we need a systemic fix.”

Until then, Mahoning Matters’ Jenkins is busy working toward building a local operation in Youngstown, Ohio that is community-centered and financially self-sustaining, "through experimentation with a variety of revenue models,” including email newsletter sponsorships and a Community Leaders Program, where local businesses underwrite content sections under an annual sponsorship.

“Lots of options hold promise for us,” Jenkins says, “and it will be a mix of approaches, tested and calibrated for our market, that will ultimately be what makes us self-sustaining.”

An earlier version of this story incorrectly specified that the $2 million a year The Seattle Times brings in through four funds is for investigative reporting. It is for several types of reporting.