An incomplete list of attempts to finance local news:
- For-profit newspapers and TV stations siphoning advertising dollars
- Billionaire benefactors who don’t always play nice and/or play music
- Started-from-scratch scraggly independent outlets started by bought-out or laid-off reporters
- A chain-based model scattered across towns with appealing demographics
- Organizations drawing support solely from foundations and crossing fingers that it lasts
- Chasing virality (though that goes for pretty much the entire news industry)
- Venture philanthropy?
Swallow that bile in your throat — at least for the last item. Local news is swimming in quite the pickle juice, as we’ve documented here before. Two of the brains behind a couple nonprofit, mission-driven, local-centric news organizations think venture philanthropy could help similar outlets get closer to the bullseye of sustainable local news as a public good.
Are billionaires trying to swipe local news again? (Nope.)
The concept is called the American Journalism Project, and there are a few threads in it to unpack.
Let’s start with the people leading it: veteran news organization builders Elizabeth Green of Chalkbeat and John Thornton of The Texas Tribune. Each bootstrapped the early days of their organizations, with Green constructing Chalkbeat out of her education reporting experience (inspired in part by venture philanthropy in the education sector — we’ll define that in a second) and Thornton powering the Tribune with his own funds, earned via his own venture capital work. Each went from 0 to several million dollars in revenue in under 10 years.
But their efforts still lacked a certain scale, impacting only a few cities. The entire local news sector faces dark storm clouds — not just education reporting or Texans. Some of the most encouraging news in the space has come from the nonprofit news sector, with $350 million in annual revenue and 2,200 journalists employed. But fledgling outlets in particular are still missing crucial components — smart business sense via dedicated revenue employees, and the ability to operate with some financial runway, rather than juggling money stresses with investigating the State Agency of Everything and Building So Much Trust and Strong Audiences, all at the same time.
“Everybody in those organizations are doing more than one jobs — they’re doing four to five. If you’re doing four jobs, you’re probably not doing any well,” Thornton said.
As they built out their news organizations, the dream of equipping others — they’re keeping their day jobs — to build local news outlets as public goods persisted. So Green and Thornton came up with the American Journalism Project, a bland name for a venture philanthropy firm, built by and for journalists/journalism funders, aimed at supporting existing and emerging local news outlets.
(The Lenfest Institute has also given a whack at venture philanthropy, with its model of flooding the Philadelphia and Pennsylvania news ecosystem with funds to innovate. AJP will not focus on a specific geographic area.)
After the 2016 election, Green told me, “I asked myself what is the one thing I could do beyond what I’m already doing to stand up for democracy.” As a joke, she’d floated the idea of raising $1 billion to propel mission-driven local news to friends — but then she started to think about it more seriously. “You know when you’re trying to quit an addictive habit, you tell people, and then they hold you accountable?… I was like: My part can be using the skills I’ve used at Chalkbeat to take this clearly good idea and make sure someone accomplishes it. I had this side project of trying to organize people around it, like community organizing.”
Green’s self-described “chain of intentional nagging” eventually led her to Thornton, and the pair realized their visions lined up almost perfectly. They’ve since raised $400,000 in initial funding from the Knight Foundation and Democracy Fund (disclosure: Knight has been a Nieman Lab funder) for the logistics of kicking off. They hope to raise around $50 million in a “first fund” to strengthen 25 to 35 local outlets, with the goal of catalyzing an annual $1 billion — in both direct funds raised and a ripple effect for other investors spread throughout the local news sector.
“We support their goal and expect to be among those foundations and investors contributing to that first fund,” Jennifer Preston, Knight’s vice president of journalism, told me. “In addition to providing capital, they’ll also provide the guidance, discipline, and expertise that many of these organizations need to succeed.”
“I think this exact idea, the formation with the venture philanthropy take is new, but within it there are different pieces that have been tried by others,” Teresa Gorman, Democracy Fund’s local news associate, said. “The idea that nonprofit news needs to be more business savvy isn’t a new one. The idea that more local foundations and local philanthropy needs to support news and information is not a new one. What’s exciting is that it brings a few of those ideas together…that also respects what scale looks like on the local level.”
So, the next thread:
What exactly is venture philanthropy?
In a typical venture capital firm, the partners evaluate promising startups for investment and mentoring potential, getting involved on the company’s board and connecting advisers and resources. But they’re not doing this out of the kindness of their hearts: They also expect a payout (or at least a decent shot at one) in return.
Meanwhile, in a typical foundation, program officers determine what grants to give to what organizations, but with much less direct involvement (beyond expecting metrics on the grant’s impacts). They don’t expect monetary ROI aside from the public benefit the investment generates.
Venture philanthropy falls in between the two: The firm draws in capital from mission-minded individuals or groups and invests in promising social enterprises while also heavily coaching them along the way — and not necessarily expecting a financial ROI. (Again, the Lenfest Institute has also been practicing this.)
“Some people would say, ‘You [at Knight] fund all these nonprofit news organizations like News Revenue Hub — why wouldn’t you just make investments directly? Why would you make an investment in this fund?” Preston said. “The reason for that is that they’re not just raising a fund. They’re going to run it like a VC firm — identify the best leaders and the best sites for success. They’re not just going to give money but help ensure the success of sites.”
In both her Medium post introducing AJP and our conversation, Green seemed to grimace whenever mentioning the apparently dirty words of venture philanthropy. She’d seen the concept in action in the charter school space as an education reporter, but Green kept thinking: Why was no one trying it in journalism?
“In the education world I cover, at the point I entered the beat in 2006, if you were creating your own organization to solve a market failure in education, you were one of 20 people you knew taking on that similar journey,” Green said. “Why is that in the education sector there are so many people doing this and in my world there aren’t? One of the differences that I realized is that in the education sector, there was an intentional effort to create a social enterprise. And one of the main vehicles was venture philanthropy firms.”
Thornton, a practiced VC himself, had already put venture philanthropy thinking into practice at The Texas Tribune. “On and off over the last decade, I have been obsessing to a lesser and greater degree to how you make capital formation happen to make public journalism happen,” he said.
So here’s the third nut:
How will the American Journalism Project work, and where can you get in on that $1 billion?
Three parts to remember: Investment, intensive support, and evangelism.
- Starting now through mid-2019, AJP is recruiting venture philanthropists — foundations, families, individuals worried about the political climate and the plight of local news — into the firm. Thornton said many of the people they talk to are so consumed by national news that they need to be reminded of the significance of local reporting — or they’re people who understand the crisis of local news but feel overwhelmed by the need to scale. “Journalism philanthropy is only a generation old. In geological time this is happening fast,” he said.
- As it collects the initial capital, AJP will also start distributing it through grants. “That means identifying these smart, high-capacity leaders to represent the information needs of the country and [who] look like the country,” Green said. “We have to identify those people in organizations and identify the right size of a gift that will position them for growth.”
Those grants will also come tied to a venture philanthropy partner: “The partners, as at a VC firm, would have experience building media businesses, experience in building philanthropy, experience in building the product team for example,” Green added. “Not only could the social entrepreneurs have access to this really smart person who’s helping them figure out their strategy — the partners will also have the job of connecting the organization and their leadership to resources in the field that can help them.”
- Third, the firm will launch multiple cycles of investment and support, based off the growth from the primary stage funds. The goal is to grow a culture of philanthropic support toward journalism, which journalism has already been noodling — but newer donors still need some convincing.
“Ten years ago when we started the Tribune, we got patted on the head and people said, ‘This is cute,'” Thornton said. At the same time, Green “started to talk to different philanthropists and journalists [about raising $1 billion for local news] and would say, ‘So you should go do it!’ They’d say, ‘Okay, Elizabeth’ and pat me on the head.”
Maybe now people will stop patting their heads and start patting their own wallets.