#SXSW: A recap of our panel on philanthropy and journalism

For the last few days, it seems that all of the conversation in my social media streams is accompanied by #SXSW.

For the uninitiated, that stands for South by Southwest, the annual music, film and interactive conference held in Austin. Calling SXSW a conference is kind of like calling Woodstock a concert – it is a full immersion experience, with more discussion sessions, meet ups and technology demonstrations wedged into five days than you could find anywhere else in a solid year.

This was my first trip to SXSW, and I was only there for about 36 hours, so my experience was necessarily truncated. There was so much information I wanted to feast on – I was especially sorry that I didn’t get to attend any of the sessions on Government and Global Issues – some of the discussions about the 2012 elections looked fascinating to a political and media junkie like me.

Instead, I spent my time with the journalism and online content tribe, listening to folks talk about metrics and alternative storytelling approaches in a digital world. And of course, I got to share a microphone with my friend Nicole Hollway, general manager of the St. Louis Beacon, in our panel discussion “Philanthropy is Not the Future of Journalism.’’

Nicole and I picked this topic almost a year ago, after last year’s SXSW. If anything, it has become more relevant in the intervening time. We come at the subject from two different places. As the general manager of the Beacon, Nicole is focused intensely on diversifying revenue streams and executing on a business plan that keeps the Beacon vibrant and financially sustaining. In my work with The Patterson Foundation, I’ve focused on the search for practical ways to help independent news publishers with the revenue equation.

Coming at the question from different places, Nicole and I meet on common ground: Philanthropic funding has a place in building’s journalism future, but it cannot be viewed as the primary source of money. That math just doesn’t work.

We had some key points we wanted to make in our talk at SXSW, and I’m going to rely on the Twitter stream about our panel to tell you what resonated with our audience:

Many of the new journalism startups have a lot in common from a content and community perspective with public media, but the financial model is not readily transferrable.  In the last few years, public media has gone from being viewed as this quaint little donation model in comparison to for-profit media companies to being seen as a powerful financial engine for funding independent news. But public media’s combination of sponsorships and member donations has been built over decades, and it draws on the very deep well of connection and trust developed with the audience over that time. It’s not something startups can trigger easily or without a serious community cultivation plan.

There is no such thing as free money. I’ve heard independent publishers talk about the pros and cons of a for-profit vs. non-profit approach, framing one of the cons of working with advertisers the potential to lose editorial control. “Advertisers want input into our journalism. They want some measure of control,’’ the thinking goes. Nicole and I offer up this counter: Anyone who gives you money expects something from that exchange. Funders sometimes ask for you to pursue a certain topic or type of journalism that can take you off-mission from both an audience and a business perspective.

Even if you secure foundation funding, it won’t ever be enough to pay for all of your journalism. Because of the seismic shift in journalism, foundations have focused a lot of funding power into the space, and they haven’t always stuck to the funding ratios they might apply to other philanthropic efforts. But that is starting to change as we get deeper into journalism’s innovation age. Expect funders to start asking to see a more significant balance of earned revenue in your business portfolio – the general rule of thumb for foundations on any enterprise, not just journalism, is that somewhere in the neighborhood of 60 to 70 percent of your funds should come outside of foundation grants for your work to be considered sustainable.

Non-profit is a tax status, not a business model. This is not an original thought with us; the first time I heard the phrase was from Mark Potts, but it is one I repeat often. The same financial realities apply whether you are for-profit or non-profit; so do many of the strategies and tactics publishers need to execute on for sustainability. Picking a tax status is just a step in developing a business plan that is tailored to your community, your audience, your best opportunities for financial support and your content strategy. It’s not the end game.

If your interested in seeing more from the Twitter stream of our session, you can check it out by using the hashtag #sxNotFuture.