Funders and publishers explore the question: What does 'sustainability' really mean?

In December, The Patterson Foundation and the Investigative News Network invited representatives from national foundations that have been supporting independent and non-profit journalism to participate in a February conversation about financial sustainability for journalism’s startups.

The idea for this meeting grew out of a relatively new connection between Kevin Davis, INN executive director, and me in my role as New Media Journalism Initiative manager for The Patterson Foundation.

I was working on TPF’s behalf to launch an experimental, high-intensity business mentoring program for community news publishers called Super Camp. Kevin was incubating an idea for a similar program for INN members.

Quickly realizing that we were circling the same idea, we began to share their thoughts about how such a program could work, and what else might be possible to help independent news sites not just survive but thrive. Combining knowledge of both the investigative news and community news startup space helped us see the possibilities – along with a whole range of questions that needed to be explored.

In that spirit, Kevin and I organized a sustainability workshop in Sarasota, Fla., Feb. 9-10. The goal: Bring together funders and entrepreneurial publishers to focus intensely on the question of business sustainability.

The idea of bringing funders and those who receive foundation funding together was a pretty monumental one. It isn't often that these two groups meet to talk about common issues; their intersections tend to come during a grant cycle.

At TPF, we view a major piece of our work as building connective tissue so that we can look at problems in new ways. This gathering in Sarasota would be, we hoped, a major step in that direction in the conversation about enabling independent journalism to sustain itself

To deepen the conversation and provide perspective, Kevin and I prepared a survey on sustainability, financial and operational issues and asked publishers from both the INN and Block by Block networks to provide us with insight into their work. Some 54 publishers completed the survey, providing us with a snapshot of the financial challenges and opportunities they face. I'll write more about what we found in the survey later this week.

That’s the background.

Here's what happened when we met in Sarasota.

I want start by letting you know who was in the room.

From the funder world, we had representatives from six funders:

• Clark Bell. Director of Journalism Programs, The McCormick Foundation

• Sue Hale, Media Consultant, Ethics and Excellence in Journalism Foundation

• Ben Shute, Jr., Program Director, Democratic Practice, from Rockefeller Brothers Fund

• Ben Wirz, Director, Business Consulting, and Chris Sopher, consultant, of The Knight Foundation

• Harlan Mandel, Deputy Managing Director, Media Development Loan Fund

• Janet Coats from The Patterson Foundation

Kevin Davis, Brant Houston, Board Chair, and Irma Simpson, consultant, were in attendance from INN.

We invited six publishers to participate in the discussion – three from INN, three from the Block by Block network. The three Block by Block publishers all are participants in the ongoing sustainability Super Camp:

• Laura Frank, I-News Network

• Scott Lewis, Voice of San Diego

• Trevor Aaronson, Florida Center for Investigative Reporting

• Susan Mernit, Oakland Local

• Debbie Galant, Baristanet

• Emily Lowrey, Magic City Post

Finally, we invited the architects of the Super Camp program – Rusty Coats, program designer, and Vikki Porter, executive director of the Knight Digital Media Center.

Our conversations began on the evening of Feb. 9 and continued through late afternoon on Feb. 10.

What we talked about

Let’s not bury the lede:

We didn’t come away from Sarasota with a master plan for solving the financial questions around sustaining independent journalism. Nobody wrote a check.

But we did come away with some ideas about models that might be worth building on or exploring anew. And we definitely opened a first chapter in thinking about the hard questions of the role that foundation and charitable funding play in independent journalism; the expectations funders have of publishers, and vice versa; and the possibilities of building a better, more collaborative network of those who both care about the problem and are willing to work to relieve it.

We’ll let Laura Frank set the stage. She asked:

“With so many publishers at a crossroads, how do we build the infrastructure to help them sustain their work and grow?”

That’s the nub of the question we kept circling back to, and it contains that pesky word: Sustain.

It was clear pretty early in our conversations that there is not a common definition of what we mean by “sustain.’’ You might think that the definition has to do with whether you are the one doing the sustaining or the one being sustained.

But in truth, we found both funders and publishers grappling for clarity around some of the same sticky points in this concept. It is an important idea to get clear; from it, all kinds of expectations flow about financial models, business approaches and results.

As Sue Hale framed the question at the beginning of the day Friday: Do we need to think about establishing how far a funder will go – and is that defined by time limits or a focus on results?

Here’s a taste of the themes that wound through the conversation about what sustainability means:

• The accepted non-profit formula for sustainability is a ratio of 30 percent charitable funding versus 70 percent earned income.

• But over what horizon? So many funders are awarding grants that go for only three years, with a requirement for or expectation of sustainability at the end of that window. That is probably not a realistic window, and a reflection of foundation impatience with the lack of a definitive financial model.

• Focusing exclusively on the need for more revenue is probably the wrong emphasis. Instead, thinking about building business capacity is key – how can you create and build an organization that has staying power, the ability to pivot to take advantage of new opportunities?

• The idea of helping people with business skills is an important one, but it needs to be balanced with not starving off funding before those skills can start to take root and have impact. That means taking a more results-oriented focus, rather than a timeline focus.

• If the definition is to be results and not time, what does that look like?

• The idea of momentum gained, well, momentum in the room. Ben Wirz elaborated by sharing a way of thinking about momentum across three planes: Building Audience, Building Engagement, Building Revenue. If you are showing progress on two of those three planes, then it is possible to focus more strategically on how to enhance the third.

• The question of diversifying revenue has grown increasingly complex. Thinking about revenue in terms of either/or, developing earned revenue versus foundation funding is setting up false choices. Non-profit is a tax status, not a business model, and thinking about diversified revenue streams is important for both for-profit and non-profit models.

• National foundations cannot be the only charitable players in the game. Local money should be a target, but that often involves an education effort. How can we better think about ways to activate local funders that include community foundations, individual donors and sponsors? Knight Digital Media Center will be working with community foundations on this; what else should be considered?

What might help

We spent some time delving into the Super Camp model, with Vikki Porter giving us the skinny on how the project evolved and what we’re learning from it so far:

• Super Camp is the natural progression from the Knight Digital Media Center’s Entrepreneurial Bootcamps and Leadership programs.

• It is built on the ideas of business literacy and practical tactics incubated in the Entrepreneurial Bootcamps. The 12 Super Campers, drawn from the Block by Block network of community publishers, met for three days in Chicago after the Block by Block Community News Summit in September 2011, where they developed a customized business plan and a 100-day tactical plan. We provided business coaches to work with them in developing their plans.

• Then we took it one step further: Rather than expecting participants to implement what they learned in a one-week onsite session at KDMC, we provided the publishers with a personal business coach – a mentor – who helped them implement their business strategy in their markets. This includes regular phone sessions, small group conference calls with peer publishers and coaching site visits to the publishers in their markets.

Vikki explained that we’re pleased with the progress we’ve seen in the first 100 days, as most of the publishers have either met the goals they set for themselves or realized their plans actually needed a reset. Super Campers Susan Mernit and Debbie Galant shared how the experience has transformed their thinking about their businesses – in Susan’s case, helping her to develop and execute on a plan to infuse cash into Oakland Local, and in Debbie’s case, helping her to develop a more sophisticated business mentality to mature her already successful enterprise.

Super Camp is one model that we can explore; I said The Patterson Foundation is looking for partners to help build on what we’ve learned.

But we also talked about other needs and possible responses, including:

• The need for mezzanine funding – the kind of targeted funding that helps sites that have reached a certain level of success reach for the next opportunity.

• The need to provide more advanced coaching and skills development for publishers who have experienced a certain level of success, but need to figure out how to fully exploit the opportunities and revenue streams they’ve developed.

• The need to better understand the revenue model questions particular to purely investigative journalism – how to monetize the public good component of investigative journalism.

• Finding ways to access capital. While many for-profit sites are truly small businesses, the lack of inventory and dependable cash flow makes it virtually impossible for them to take advantage of small business development programs.

• Opportunities to explore micro-loans or other financing options and how we could pair those options with business development training.

• Finding more ways to pool resources and achieve administrative efficiencies and savings. For example, INN has saved tens of thousands of dollars for its members in media insurance.

• The need to recognize overhead as a legitimate expense. Unlike universities who have a history of loading grants with overhead expenses, grantees in the nonprofit news space leverage their entire cost structure to fulfill their mandate, and grantors should be encouraged to allow grantees greater flexibility.

Concluding thoughts and next steps

We think this conversation was a good first step. Perhaps the most important thing we accomplished was simply putting funders and publishers in a room together for an open conversation. Helping to understand expectations, barriers, and pressures on each side is valuable in enabling us to talk more productively to each other.

Toward the end of our time together, we honed in on the fact that while there isn’t a single “model’’ of an independent news publisher, there are some common concerns and some common goals. Sometimes we tend to focus on the differences – community versus investigative, for-profit versus non-profit – instead of on the ways publishers fit together in serving news and information needs. As Debbie Galant said, we need to look at ways to harness the power of all models, to collaborate on both the business and the journalism sides of the equation. Our communities need that.

As far as next steps, we’ll be continuing the conversations we started on possibly expanding mentoring programs and business development work. We’ll share more information among the funders about what we’re working on and how our efforts intersect or could intersect. We’ll continue to keep everyone updated on what we learn as Super Camp continues and how those lessons might have broader application.

We’ll keep talking – one to one, in small groups, at the next gathering of journalism funders in Oklahoma City in May. And as we find possibilities for working together or building on each other’s work, we’ll keep seeking guidance from INN and the Block by Block network about what might help, what probably won’t, and what needs should be brought to the table.