What I Learned from the Nonprofit News Revolution

With the naming of my successor, I am winding down my time at ProPublica, after eight-and-a-half years as president and almost 14 years directing its business operations. As I prepare to head off to consulting and writing, I wanted to share some of the practical things I learned in the course of helping to build a nonprofit newsroom from 25 people to 160, and from an initial target annual budget of $10 million to $36 million today, along the way raising more than $220 million from other than our founders and playing a role in seven Pulitzer prizes. 

This article is not intended to be philosophical or historical—like seemingly everyone else these days, I have a Substack newsletter for that—nor is it intended to be encyclopedic. For instance, while my colleagues and I have put a great deal of effort and thought into DEI issues for years, I don’t think I have much to say today on that critical subject that you haven’t by now read many times elsewhere. Instead, I want to focus on some practical issues of building a nonprofit news organization that receive less attention—and, while admittedly perhaps less intrinsically interesting, are still significant.

Over these years, especially as ProPublica’s profile has grown, I’ve often been asked for advice by others in the field, and I’ve always tried to be responsive and candid. That’s the decent thing, of course, but it’s also been self-interested: we are building a field here, and the stronger it is, the better off everyone in it will be. So I’ve structured this reflection as a set of answers to some of the questions I’ve been asked most frequently.

 

How much money do you need to start?

Other than identifying a mission and an editorial vision, this is probably the most important question a would-be nonprofit news entrepreneur should ask at the outset. If you don’t ask it, you’re making the most basic error in starting a business. Moreover, to answer this question, you need a comprehensive initial expense budget, charting how much you’ll spend on everything from salaries to freelance to office space (if any) to benefits to photos to publishing tools to marketing and beyond.

In my view, it’s a mistake to begin operations without at least 18 months of spending on hand, and two years is even better. This is hard, and quite likely daunting. But I believe it’s the better part of valor. 

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It’s much harder to get people to contribute to a dream than to a reality—you might think of the analogy to why homes that require substantial renovation sell at a considerable discount, even considering the cost of fixing them up, to those in pristine condition. Not everyone can envision what the finished product will look like, what a difference your news organization will make. But one set of prospective donors—the “show me” set—will likely not be motivated until you have been publishing for some time, and the donor cultivation cycle (easily six months) will further slow their eventual contributions. 

So if you can’t raise enough to cover 18 months in advance, you run a real risk of not being able to raise much more before those funds are exhausted. In addition, joining a startup may be a passion play for you, but many prospective employees will think of it more as a risk, and two years of expenses in-hand goes a long way to curbing their anxiety, especially in an industry where uncertain futures abound. (ProPublica had the advantage to begin with three years of funding guaranteed, and we were well aware of our unusual good fortune.)

 

Who donates to nonprofit journalism?

There are, broadly speaking, three types of donors. The first—and the one that most often comes to the minds of outsiders—are institutional foundations. By this I mean not just (or even necessarily) entities organized as private foundations under the tax laws, but places staffed by people whose job is to give away other people’s money, usually the money of the deceased. Until the last 30 or so years, these institutions were the heart of American philanthropy, although, with all of the new fortunes, especially in tech and finance, they are no longer. 

Three key things to bear in mind about institutional foundations (other than their shrinking market share in philanthropy itself) are 1) they are not doing you a favor in giving you their money—it is their job to give it to someone; 2) they tend to be relatively fickle donors, with strategies changing as staff turns over and fashions shift; and 3) while foundations like to think of themselves as having a high tolerance for risk, in practice many rarely invest in completely unproven nonprofits. (There are exceptions to these rules, and bless them.) Bottom line: Institutional foundations are much more likely to be in your second wave of donors than your first. 

The second cohort of donors, and increasingly the one with the greatest potential for giving, is what are euphemistically these days called “high net-worth individuals”—more commonly, rich people. Often they operate through family foundations, sometimes even with paid staff, but the decision makers usually remain those whose money is involved, frequently the same people who made the money. In contrast with institutional foundations, these people tend to be less fickle, provided you can realize the dream you sketched or sustain the level of performance that attracted their support in the first place. They are often willing to take more risk, including coming in earlier. That said, the dynamic here is necessarily different: wealthy people do not need to give their money away, and it’s important not to forget that. Sincere gratitude when they do so is in order. Ideally, and especially over time, more of your support will come from this group than from the first.

Last is a large mass of smaller donors. As we have seen in recent years in politics—especially in the campaigns of Barack Obama, Bernie Sanders, and Donald Trump—this source of funding has enormous potential. In news, public radio also provides some inspiring examples. Smaller donors in large numbers bring many of the advantages of larger wealthy donors without the concentration of risk. Bear in mind, though, that fundraising from large donors, with whom you should have individual relationships, and from smaller donors, where that is impossible, are fundamentally different. The former is an art; the latter is largely a science, so the staff you need to manage the two sources will likely be different.

For nonprofit digital newsrooms, also, a word of caution: smaller donations in large numbers are, at best, a third-wave revenue source, and are unlikely to be meaningful until your content is fairly widely known and distributed. For ProPublica, that took until we had been publishing for more than eight years. By last year, however, it accounted for almost 20 percent of revenues, from more than 40,000 donors.

 

What motivates donations to nonprofit journalism?

It is important in any business to understand what motivates the people from whom your revenue derives. For nonprofit news, I have found that there seem to be four different strands. First are those concerned about the threats to journalism from the modern business crisis of the press, which provided the impetus for creating these organizations in the first place. This is what drives many of us in journalism, and we are not alone. I am frequently struck by how many of our large donors, for instance, were high school newspaper editors. 

Next, and especially in the last five years, come those who may or may not care about journalism per se, but who are deeply worried about threats to our democracy, and see the critical role the press can and must play in safeguarding it. It is this group that Trump drove into our corner by the hundreds of thousands; the threats, obviously, remain.

In addition, from the beginning, there have also been funders who care about particular issues—criminal justice, education, health care, racial or gender equity, environmental concerns, and more—and see the important role for journalism in surfacing and addressing these concerns. A powerful argument can and has been made that, in this sense, almost all philanthropic funders should consider investing in nonprofit journalism. 

Finally, particularly in recent years, a fourth group of potential funders has emerged: those focused on particular local communities, or, in a variant of the journalism-centric donor, those especially worried about the decline of journalism at the local level. Unfortunately so far, to be candid, the latter motivation seems more prevalent than the former—that is, there is more national than local funding of local journalism, although I continue to be hopeful about the growth of local funding, fueled in important part by the continued decline of local newspapers.

 

What about “metrics” for measuring success?

Often, this question arises because a funder, typically a foundation, requires some quantitative way to determine whether their investment is paying off. But you shouldn’t wait for that; you should establish your own metrics of success before anyone else asks for them. And you should make sure they are closely tied to what you are trying to accomplish—to why you got into this in the first place.

That is why I always try to stress that a conversation about metrics should begin as one about mission. As noted earlier, the most important thing for a successful nonprofit of any sort is a clear mission. By that, I mean a simple and direct statement of what you are in business to do—and, by implication if not explicitly, what you are not trying to do. Your mission is not the place for buzzwords or euphemisms. Nor is it the place for compromises, especially not of the “let’s do both” variety. (I like thinking about mission statements probably more than is healthy.)

Once you have a clear mission, the best metrics should follow pretty naturally. For ProPublica, I wrote a long “white paper” about how this worked eight years ago. I wrote it at the request of the Gates Foundation, but mostly because I knew that if we set the guideposts by which we wanted to be measured, we could get ahead of others substituting their own, less well-grounded notions of how we might determine success. Simply put, if you can set the rules of the game, you are much more likely to prevail. That is the spirit in which you need to fix your own preferred metrics.

Make sure not to be too cute about it. Metrics aren’t meaningful unless it’s possible for you to fail to attain them. There is a great temptation in something that can be as squishy as defining successful nonprofit journalism to articulate so many possible criteria for success that some of them are almost always met. The result is to create a Lake Wobegon of journalism, where “all of the children are above average.” You might fool yourself this way, but you won’t fool many others.

 

How fast should you grow your business operations?

In two phrases: as quickly as necessary; and, given that, as slowly as possible.

One of the great advantages of digital journalism is the leverage it provides—that is, what a large proportion of total spending is devoted to news, particularly compared with legacy print publications. Where a print newspaper might have devoted 85 percent of spending to things other than news, a digital operation may fairly readily devote 75 percent of spending to creating and delivering its products and services. This proportion ought to be a key indicator to keep an eye on.

Yes, you need business-support infrastructure and services—fundraising, legal, HR, finance, IT. And it’s very important to continue scaling these efforts as you grow, both to keep up with demand and to make sure you are not foregoing opportunities both to facilitate the journalism itself or to increase your organizational scope. At the same time, however, never forget that business operations are support structures. There is no prize for making them bigger or fancier or more costly; they are a means, not an end.

 

How do you build a successful board?

Nonprofit boards are somewhat paradoxical. Like for-profit and foundation boards, they are mostly recruited by the staff for whom they then serve as bosses. But while corporate and foundation boards are usually lucrative, nonprofit boards are (one hopes) costly to serve on, so retention, instead of being relatively easy, becomes a constant staff effort.

Here, as in so much else, much of what I know I learned from the late Herb Sandler, ProPublica’s founding donor, and the chairman of its Board for the first decade. Herb had two basic rules for directors, and two for Board meetings. Directors, most of all, had to be people other directors would look forward to coming to meetings with; as the flip side to that, they must not be the sort of people who make colleagues want to avoid meetings. No amount of possible support could overcome this consideration for him. 

Having said that, you need to work to set the “give or get” contribution expectation for your board as high as is feasible, and to increase it as you grow. In a very real sense, this expectation will be both an enabler and a functional ceiling on how much you can increase your budget over time.

With respect to meetings, Herb always insisted that every session have at least one meaningful business discussion, both intrinsically interesting (with ample supporting materials distributed in advance) and genuinely important to the company. Beyond that, he felt strongly that each meeting should include an opportunity to hear about the work from front-line staff, ideally people the Board had not met previously. We refer to this part of the meeting internally as the “show and tell,” but don’t let the name deceive you: these sessions are a significant part of the attraction of a nonprofit journalism board, just as I found they were at Dow Jones & Company, publisher of the Wall Street Journal, during the 15 years I worked there when it was a public company.

 

What about earned revenue?

When the nonprofit-journalism revolution began, more than a dozen years ago, not a few observers insisted that the goal had to be to establish significant earned revenues in order to have a shot at sustainability. I never shared this view, which was unfortunately promulgated by a number of influential (i.e., large) funders. We in nonprofit news exist precisely because earned revenues, especially from advertising but even more recently from subscriptions, proved insufficient to sustain much of the legacy press. 

I will never forget one enormously smart observer of the field, a distinguished figure at Harvard, who wasn’t sure about earned revenue, but seemed confident that, without it, sustainability for nonprofit news would prove elusive. I remember chuckling as I looked out their office window: What about Harvard, I asked? It feels sustainable to me after more than 375 years. In fact, looking forward 375 years, my own view is that Harvard is one of the few American institutions I am most confident will persist, notwithstanding limited earned revenue.

This debate has died down quite a bit in recent years . Of course earned revenue is great—and the more of it, the better. At ProPublica, we sell advertising, data and event sponsorships, license audio and film rights, solicit syndication or per-article fees from editorial partners whenever we can, and are always looking for other opportunities. But all of it amounts to less than two percent of revenues. Even those news organizations with the most successful live-event businesses—a very few outlets—are not floating their business boats on the net revenues from those events, which can be quite expensive to produce.

 

How do you balance editorial and funder priorities?

After almost 40 years in and around the news business, I have come to believe strongly that all successful news organizations start with visionary editors. No exceptions. To be sure, funders will frequently have agendas on what deserves more coverage—I even noted above that such funders are an important source of revenue. But it is a significant error to let them supplant your editors’ vision, and never ends well. 

Yes, in the short run, chasing funder fads can be lucrative—but the key phrase there is “short run.” I will always remember a Fortune 500 CEO who sat on the Dow Jones Board of old. He was a taciturn Midwesterner by birth, and rarely spoke at Board or committee meetings. But when he did it was often to say one word, Yoda-like: “Focus.” He was right. Don’t let transitory money distract you.

 

What’s the best way to think about donor transparency?

Nonprofit news is in the transparency business. We ask it of others in our reporting every day, and need to require it of ourselves. A few years ago, a group convened by the American Press Institute, in which I was honored to be a participant, tried to think hard about what this means as a practical matter, and I think the results were pretty good. 

One pet peeve of mine: I think transparency should extend to disclosing Schedule B of nonprofit news tax returns, listing all contributors by amount above a de minimis level. These schedules are required to be filed with the IRS, but most news organizations avail themselves of their right to keep them from public disclosure. I don’t think they should. And if your auditors try to suggest—as I have seen some do—that you might be violating some privacy interest of donors by disclosing this, tell them, nicely, that they don’t seem to understand what business you are in.

Having said that, there are two restrictions many organizations place on acceptable funding that I simply don’t understand. One is to ban corporate contributions. ProPublica gets very few of these, but I have never grasped the logic of why we shouldn’t take them. Where do the people who favor such a ban think the rest of our donors got the money they are giving us? Corporations, in almost every case. That’s true of where almost all wealthy people’s fortunes come from, and it’s just as true of the origin of almost all foundation endowments. A ban on corporate contributions seems to me to seek recourse in some sort of pointless money laundering.

Next is a fairly common aversion to truly anonymous contributions, in which the recipient really does not know the source of the money. (With so much of philanthropy these days flowing through investment companies like Fidelity, Vanguard, and Schwab, this happens quite a lot.) Again, I simply don’t get it. If you don’t know who’s giving you the money, what possible conflict could it pose? Yes, I acknowledge that you could later learn you had received a gift you wish you hadn’t, but then you can always give it back. And, at least for us, over 14 years, we have never had a truly anonymous gift unmasked, either by the donor or anyone else.

I have gone on at some length, and could go on much longer, but, happily for you, I will not. Just one more substantive point: These lessons were shaped by a particular set of experiences, in a particular period of time. Those with other experiences would, of course, draw different lessons, although I hope none to the contrary. One of the things I have found so exciting about being in the news business, especially during the quarter century since the consumer internet began emerging, is how fast it has changed. At the birth of ProPublica, for instance, the fields of commercial social media, news applications and engagement reporting were essentially unknown. Now, all are critical elements of any complete nonprofit newsroom.

More change, and with it new lessons, are ahead. I hope to keep learning.

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Richard J. Tofel is principal of Gallatin Advisory LLC, and author of the newsletter Second Rough Draft.