Katz’s 3 axioms of foundation funding for journalism

21 September 2009

Last week, I shared a drink at Union Square with Michael Stoll, the project director for San Francisco’s nonprofit Public Press; he’d reached out to me after the Free Press online chat on “What’s the Future of Foundations and Journalism?” – and I’m glad he did.

One of the things we talked about was the significance of Geoff Dougherty’s recent announcement that the Chi-Town Daily News, Chicago’s Knight Foundation-funded experiment in nonprofit journalism, would be shutting down. The Chi-Town Daily was one of the first to receive Knight funding, and also one of the larger operations, so there’s been a lot of chatter about the shop’s closure over the past couple of weeks (here are 2 good ones from Jim Barnett’s NonProfit Road, and a video from Dave Cohn). I don’t know Geoff, and I’m not familiar with Chi-Town’s inner workings, but at the risk of misreading the tea leaves, herewith my Three Axioms of Foundation Funding for Journalism.

Axiom 1: Foundation funding might get you started, but it won’t keep you going.

According to various blog reports, despite efforts to broaden its financial base, the Chi-Town Daily News just wasn’t able to pull the money together to replace Knight Foundation funding – and Knight apparently was not about to re-up its support. This is probably obvious to anyone who’s ever dealt with a foundation but bears repeating, especially for journos just getting into this game: the foundation big boys will not stay with you. I think the Knight Foundation, for one, has been absolutely explicit about their interests in funding startups: they want to seed the field with lots of experiments, help the pioneers to get started, and see what happens. They’ll give you a leg up, but built right into your business plan has to be the assumption that the day will come – sooner than later – when they will say, no more.

Axiom 2: Not only can you not rely on long-term foundation support as your core fundraising strategy (that’s Axiom 1), but you shouldn’t, either.

Here’s why: getting foundation support is not a frictionless exercise. It takes an investment of time, attention, and money before that bet pays off. And if all that time, money and attention distracts you from the even more important work of building deep, broad and tight relationships with your community, then guess what: you lose. When even the biggest of the big commercial news operations are starting to pour beaucoup dollars into NPR-style membership programs (here’s MediaShift’s Craig Silverman writing about how the Guardian, the Times, and the Globe and Mail, to name 3, are doing exactly that) then you better be, too. Your community is the heart and soul of your long-term fundraising strength – and no foundation will ever be able to take their place. In fact, it’s more likely that as you build your community financial support, foundations will follow behind – but the reverse doesn’t work unless you’re thinking about how to build that community right from the start. (I know, how to do that isn’t easy, and I’ll have more to say about that in a separate post.)

Again, I don’t claim to know all the deets, but it sure looks to me like the Chi-Town Daily News folks never quite got around to figuring out how to do this.

There’s another reason to at the very least balance out your search for foundation bucks with as many small dollar gifts as you can get: as with most ecosystems, diversity in sources of fundraising revenue (or any revenue, for that matter) is a very, very good thing. For at least one reason: if you’re doing your job, eventually you’ll piss off everyone of your contributors – and the last thing you need is to lose that One Big Donor.

So my point: don’t drink the kool-aid. Do the heavy lifting to build ties to your community. If you can’t do it yourself (although at this point, if that’s the case, you might want to think about your career choices), then go find yourself a community organizer and a good fundraiser and get them to do it.

Axiom 3: yes, Virginia, there is a place for foundations in building healthy, sustainable nonprofit journalism organizations, but it’s probably not what you think.

Not all foundations are the same. That’s both a virtue of private philanthropy, in that different foundations can bite off different pieces of the nonprofit pie and do a good job of understanding and then supporting that niche. It’s also a hugely frustrating disadvantage: it can be a herculean effort to pull funders together to behave in a more or less coordinated fashion. It does happen, though – and there’s no doubt in my mind that this is absolutely essential if foundations are going to make smart and efficient investments in nonprofit journalism right now.

This is also why I don’t particularly think it’s the Knight Foundation’s job (right now, anyway) – as the big kahuna in the journalism funding scene – to shift its strategic focus away from seeding the field with good experiments toward longer term sustainability (I know, that’s what they say they’re doing, but other than the $1 million grant to ProPublica to hire a development consultant, I’m not yet seeing it).

But there are foundations who I think can and should play that role – targeting their grantmaking to nonprofit journalism specifically for sustainability and capacity building: community foundations. If the Knight Foundation’s money helps pay for the journalism, then the community foundations should focus their money on building fundraising capacity – in other words, building sustainability right into the very first dollar a nonprofit startup receives. Community foundations make these kinds of grants a lot – they know what they look like, how they work, how to measure success, how to advise NGOs on what to do and where to find technical resources and staff talent. What’s more, it puts at least a partial an arms length between the community foundation and the nonprofit journalists – which could come in very handy if and when some enterprising reporter starts dinging a big donor to the local foundation.

What would I get those funders to pay for? Development staff, community outreach staff, and list building. I’ll have more to say about this in a follow up post, but here’s my point:

By now, we’re seeing enough of how the first wave of nonprofit journalism funding is working out to recognize that it just won’t work to delay long term sustainability planning til after startup. It’s got to be part of your organizational DNA, right from the beginning. The good news is that there are lots of people out there – foundation program officers, fundraisers who are hankering for something new and cool, and individual donors and subscribers – who get it. So you’re not alone.

I know there’s going to be a lot of talk about foundations and journalism at J-Lab’s upcoming Online News Association pre-conference session on “Fund My Media” (btw, I’ve written about J-Lab’s analysis of this here) – so at the risk of pointing out the obvious, I’m hoping this helps contribute to it.

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3 Responses to “Katz’s 3 axioms of foundation funding for journalism”

  1. Scott Lewis Says:

    Well put. I often say the nonprofit model allows us to pursue a vast array of funding sources. I’ve been thinking of changing that to “requires” or “obligates” us to pursue as much diversity in funding as possible. The challenge, of course, is that diversity of funding comes from a diversity of impact and service. National foundations are vital to helping startups achieve both. I’ll be at said workshop at ONA in San Francisco. I’m sure we’ll have it all figured out after that. Look forward to meeting everyone and seeing old-new friends.

  2. stevenkatz Says:

    Hey Scott, thanks for the comment, look forward to meeting you in a few. I understand (this from Ben Shute during that Free Press online chat) is that some funders are forming an “affinity group” to better coordinate their giving – and of course they’ve already started doing that informally. So hopefully we’re on the learning curve…See you in a SF.

  3. Amanda Says:

    Thanks for this, Steve. I’m not sure it is axiomatic (wuk wuk) that foundations don’t re-up, but the Knight News Challenge grant that Chi-Town received was decidedly not open ended funding. It is a one-off, closed grant. There’s no question of continued funding. You’re right, though, in observing that, in general, it is a lot easier to get funding to start something than to keep it going.

    I come out of a community organizing background and it consistently seems to me that news organizations, especially serious policy news publishers, consistently fail to see their work through an organizing lens.

    I think the role of foundation funding in supporting journalism is going to center on training programs (eg. supporting internships) and outreach that is framed as increasing civic participation, With the occasional investigative fund.


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