Editor’s Note: The following article, and follow-up on the response to it, were originally published in Second Rough Draft on Substack. You can subscribe here.
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There is lots of excellent work being done these days to support nonprofit journalism, from building networks and collaborations to offering shared resources to assembling benchmark data and market research to individualized coaching. Yet this week I come not to praise these efforts but to worry about whether they may be getting a bit out of scale to what I see as the even more pressing need for funding nonprofit news organizations directly.
To put a finer point on it, I am increasingly worried when I observe what I see as the increasing fragility of many nonprofit newsrooms juxtaposed with the robust growth of the intermediaries whose mission is to support them.
In 1955, an observer of finance wrote a book whose subtitle called it “A Good Hard Look at Wall Street.” The title derived from the reply of a visitor to New York who was told to look out to the harbor at all the fancy boats owned by bankers and brokers. It was called “Where Are the Customers’ Yachts?” It is a question we should metaphorically be asking ourselves in the emerging digital news ecosystem.
Here are a few facts that make me worry:
A recent study by the Institute for Nonprofit News (INN) reported that of its 400+ member organizations, two thirds saw revenue growth from 2018 through 2021 (which is also to say that one third flatlined or actually shrank), and that the median growth was 25% over the four year period. Over the same period, INN’s own operating revenues grew 107%; from 2017 through this year, its operating revenue is estimated to have grown 221%. From 2018-2021 the number of INN’s full-time equivalent employees grew from 9 to 15; it employs 20 FTEs currently. The median INN member has 6 employees and $373,000 in revenue; INN’s own operating revenues are 14 times larger.
LION Publishers, a group of both nonprofit and for-profit newsrooms, most of them smaller, reports that half of its members saw revenue growth from the crisis year of 2020 to 2021 (which again means that half did not), with an increase to a median figure of $125,000. LION’s own revenues are expected to have more than quintupled from less than $700,000 in 2019 to about $3.8 million in 2022. That is to say, LION itself is now, by revenue, the size of about 30 of its average members combined. The median LION member has a staff of two; LION itself has 11 staff members, up from three in 2019. Disclosure: I am doing some coaching for LION.
The Knight Foundation, the leading institutional funder of journalism, just made a grant of $4.75 million to INN, the second largest Knight journalism grant in the last three years (the largest was to a university), and a $2.85 million grant to LION.
Let me be clear: a great deal of good work has been and will be done with such money by these and other fast-growing intermediaries, including the News Revenue Hub, Media Impact Funders, the Solutions Journalism Network and many others. But I am not at all convinced that more good might have been done by directing much of institutional foundations’ money instead to the most deserving news nonprofits — both those with proven track records of excellence and convincing plans for the future AND those with exciting ideas, innovative models and promising leadership.*
The temptation of intermediaries
For institutional foundations (those with paid staffs whose job is to give away the money of absent, usually deceased, donors) intermediaries can be especially tempting grantees. Dispensing the money to trade associations, for instance, can be portrayed as gifts to all the members, avoiding the necessity of choosing a few and possibly alienating most. Moreover, it is almost unquestionably true that there are more news organizations deserving of institutional funding than there are currently institutional funds to give them, especially if one seeks to avoid that other temptation of large numbers of grants too small to make a meaningful difference.
I would argue, however, that making these choices, no matter how difficult, is precisely what institutional foundation staff is paid to do. The Knight Foundation, for instance, spent more than $10 million on staff and trustees in 2020 in order to make $71 million in grants. The much larger and more diversified Ford Foundation spent on staff and trustees in the same year about as much as Knight spent on grantees ($71 million again) to make about $805 million in grants. I don’t necessarily have a problem with this. Having assembled an expert staff of capable people, however, hard choices should not only be possible, they should be required. Experts should not outsource the heart of their own work.
In fact, I would have no problem with foundations increasing program staff a bit if they think that’s required to make the necessary choices at the appropriate scale. It would surely be more efficient than subsidizing an ever-expanding web of intermediaries, remembering that every time water is poured out of the philanthropic bucket, some of it necessarily leaks.
The metaphor that worries me most on this topic is not actually Wall Street capital and missing yachts, it’s organized labor and lost jobs. In the last third of the last century, the proportion of the workforce that was unionized fell by more than half, as good jobs disappeared by the millions, spurring a significant part of the alienation that is tearing this country apart even now. At the same time, top union leadership at places like the AFL-CIO held comfortable sinecures, hobnobbed in Washington and convened comfortably in Florida. A visitor looking to Bar Harbour might have asked, “Where are the rank and file’s jobs?” Too few asked that question until it was too late. I hope we can avoid that mistake in the news business.
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Postscript
The column above sparked quite a number of interesting responses.**
Broadly speaking, most reactions fell into two categories — public criticism and private support. I want to tell you about both, but, as this is my newsletter, I’ll start with the support. What’s especially noteworthy was that it was, as I say, mostly private, because some people are afraid of offending the very intermediaries who purport to represent them, as well as the funders deciding to give those intermediaries so much money. Good people talk about the power imbalance in philanthropy, but some of those same people are blind to the fear it engenders.
Some people applauded, softly
One funder wrote, “I expect you are catching some heat for your piece. Please know that there are those of us who appreciate your speaking truth to power. Funders and the industry need to talk about this out loud, not in whispered conversations.” The note concluded, “keep doing what you’re doing!” Another funder’s message: “Hallelujah.”
A nonprofit executive said “we’re all talking about your ballsy column,” and were “admiring you for saying the quiet part out loud.” I appreciated that, even if it was being said quietly, as were more notes, a number from people I have never met. One of those said, “I appreciated the column and I imagine a ton of folks at smaller nonprofits will be loudly shouting ‘amen!’” They continued, “so many grants given to these organizations don’t really trickle down in any noticeable way.” When I asked if this person wanted to leave a comment, the response was “I’d happily post anonymously, but I wouldn’t want to risk injury to my organization for being ‘that ungrateful [person].’” Someone long involved with a leading intermediary expressed the same frustration about “how much money doesn’t trickle down much to publishers.”
Another nonprofit leader wrote that, “I just applauded today’s newsletter. I’ve already gotten two emails about it from colleagues.” They added that “I couldn’t believe so much money was being sent [to the intermediaries] particularly under the guise of serving publishers of color. I thought that last point was shocking and if I’m being honest disingenuous. As one of my colleagues from another newsroom wrote to me this morning, ‘I’m glad Dick is saying the things none of us can say out loud.’” About half of my private correspondents, by the way, were people of color.
Another nonprofit veteran wrote, “it’s great to be the flavor of the month. But in the nonprofit arena, we all know that doesn’t last. So kudos for drawing attention to this. It’s long overdue.” More than one correspondent observed that the work of various intermediaries seems to be increasingly overlapping as they grow. Yet another nonprofit leader said, “Someone needed to say this.” They added, “there are only so many webinars and Slack channels and various other similar things that one can take part in — and many of these organizations are focused on this stuff. Actual funding for local journalism seems to me to be more important.”
And now for the critics
Not everyone was happy, of course. Tweet threads of criticism came from a number of people employed by intermediaries, as well as one from a funder with Facebook, and some people at nonprofit newsrooms concurred. A few of the criticisms were ad hominem,*** but I want to try now to grapple with the substantive disagreements, the vast majority of which were expressed civilly and intelligently. Here are the points I saw made, and some responses:
We need more investment not in nonprofit local newsrooms, but in for-profits.
This is a subject on which reasonable people can disagree. In general, I do disagree. The number of for-profit local newsrooms on an encouraging growth path seems to me vanishingly small. That is why they have so much trouble attracting investment capital, and look instead for help to nonprofit intermediaries (and, in some cases, to conversion to nonprofits).
The newsrooms being helped by the intermediaries are “too small”
Too small for what? Not, I would argue, too small for a few of them to be singled out for transformative grants. One person at a funded intermediary wrote privately to say that funders deserve the criticism here for not making such grants (presumably on top of current grant budgets).
We aren’t intermediaries, we are “service providers”
Sometimes this is true, and things like bulk buying and inexpensive pre-packaged infrastructure certainly qualify. Let me repeat: a lot of the work being done by the intermediaries is important and useful. But an increasing amount of the “services” offered are things I believe many newsrooms are saying they would not choose to purchase if the money could instead be given to them.
The intermediaries help the newsrooms “develop to the point where they can get bigger investments.” They are “teaching to fish” instead of “giving a fish.”
Yes. But the much slower growth of the newsrooms than of the intermediaries suggests (at least to me) that this simply succeeds too rarely to justify the amount of the indirect “investment.” And it’s why so many of the “ultimate beneficiaries” are privately resentful. If the intermediaries think they are better described as “incubators,” what’s their rate of successful incubation? It strikes me as low.
“No one is getting rich from local news” so my reference to the Wall Street question ‘Where are the customers’ yachts?’ was ‘rude.’”
If I left the impression that individuals were unduly profiting here, I am truly sorry. I do not think that. My “yachts” metaphor was meant to apply to organizations, which are, especially compared to their members, getting rich, as the numbers — which no one disputes — make clear. Moreover, I want to say again, as I said at least twice last week, including at the beginning of the column, that much of the work being done by intermediaries is quite valuable. And this wasn’t my first column on what funders might be doing differently, nor, I suspect, will it be my last. In this case, my point was about whether the proper balance is being struck between competing needs. I’m very glad if it sparks more discussion on that question.
* The American Journalism Project, for which I also do work, seems something of an in-between case, as it re-grants much of its money to newsrooms. Similarly, Report for America sends the bulk of its money out to newsrooms directly, in the form of corps member salaries. And NewsMatch promotes small contributions to newsrooms directly, although the nationwide institutional matching grants (as opposed to the locally or otherwise targeted matches) are subject to the separate critique that they are each too small to be impactful.
** Along with an appeal for subscribers in light of the possible collapse of Twitter as an acceptable distribution vehicle, it also spurred a gain of more than 2% in subscriptions, bringing those who subscribe for free to this newsletter to over 2000. Thank you.
*** I was described as “biased” (unspecified) and self-interested (I’m actually a consultant these days, not a grantee, so if anything the piece was arguing against my own narrow interest), the column was described by the head of one intermediary as “pathetic,” and someone working for Facebook (!) criticized the pay I used to receive at a job from which I retired 14 months ago.
Richard Tofel was president of ProPublica from 2013 until September 2021. He is now principal of Gallatin Advisory LLC. You can subscribe to his newsletter, Second Rough Draft, here.