What plagues nonprofit media outlets

Nonprofit newsrooms have been on the rise in recent years. In just the USA alone, their number has doubled in five years, according to a 2022 report by the Institute of Nonprofit News. In that too, local nonprofit media outlets have been particularly thriving. 

The reason primarily is that nonprofit newsrooms can exercise more independence than for-profit publishers. Funding from philanthropies can make you less vulnerable to powerful influences as well as extenuating circumstances like the Covid-19 pandemic. Armed with new ideas, many local nonprofit media outlets have been able to focus on essential problems in their areas and put stories that matter on the map. 

However, this sector also faces multiple issues, from funding to regulation. At the International Journalism Festival in Perugia in April 2023, journalists from different investigative and consulting organisations discussed the issues and trends in nonprofit journalism. The Fix summarises key points from the session.

Funding issues

One of the biggest issues that time and again has proven to be a hindrance for nonprofit journalism is money. Nonprofit newsrooms are generally funded by charities, big tech companies and philanthropic institutions. That is where the problems begin. 

First of all, when a project gets funded by a large company, it bears the risk of losing its independence. Second, if there’s one funder that covers a considerable amount of media outlets in the sector, there’s always the possibility that it can exercise a certain amount of influence on the freedom of speech enjoyed by these outlets and consequently, the overall media ecosystem. Julia Vernersson, managing director of Hostwriter, an open network that helps journalists collaborate across borders, shared the example of a big tech giant: “Google has been the massive funder in the European media, and we should be grateful but also [it] could be a reason for less criticism against Google.”

To reduce reliance on a singular source of money then, the solution perhaps is to find various revenue streams and try different business models. “It’s about seeing there are enough actors from every place, having funding from different [sources], so everybody has someone to control. Not you having only private or government donors or only tech funding, but a mix of it”, Vernersson explained.

An example of such a model is the German nonprofit independent media CORRECTIV, an investigative journalism outlet that uses a tree-pillar model for income: donations from individuals, funding from foundations, and income from workshops, book sales, etc. According to the outlet’s annual report, its revenue in 2021 was well-distributed between these sources; funding from foundations accounted for 42.34% of the income, reader revenue was at 42.34%, public sector funding at 9.18% and other income at 8.5%. These numbers clearly indicate that CORRECTIV is not dependent on funding from any one source of revenue.  

A diverse financial support system ensures that the independence of media isn’t endangered. Elisa Simantke, co-founder and editorial director of Investigative Europe, an organisation that is all about in-depth investigative reporting, said: “It’s our responsibility to diversify funding. We should try to develop other revenue streams. Being a nonprofit doesn’t mean having any idea of a business model. The broader you spread, the less you are endangered by a certain influence…” 

Complicated legal frameworks

Nonprofit outlets’ well-being depends on the country they operate in. It depends on how rich the country is, which government is at the helm and what is the legal framework for such media outlets. For instance, being a nonprofit outlet in Hungary can be quite difficult. The government can easily create an unpleasant environment for nonprofits and interfere with their editorial independence. Most newsrooms in the country are under the control of the government which tends to fund only the “loyal” outlets.  Meanwhile, it is also turning off other sources of funding for the media, leading to a situation where pro-government newsrooms have all of the benefits and nonprofit media finds it difficult to be financially independent of the authorities.

Another factor on the regulatory side can also be the extent to which the legal frameworks are harmonised across a particular continent. Usually, legal infrastructure for nonprofit media is quite varied across countries in their respective continents. A good example here is Europe. “There is no equivalence in the legal environment across Europe for nonprofit media, and that makes being nonprofit costly and in some places risky to incorporate. You can put yourself at risk by setting up a charitable or nonprofit newsroom,” said Sameer Padania, the director of Macroscope Consultancy.    

To counter this, different media institutions have been trying to bring changes in laws in their countries. For example, the Forum Nonprofit Journalism, a media initiative in Germany, is demanding reform in the nonprofit law and recognition of nonprofit status by tax offices. The initiative believes that such a move will benefit journalism and local newsrooms that aren’t well-funded at the moment. 

In that context, there may be some lessons that can be drawn from the US where nonprofit media has survived and thrived for decades. For instance, a nonprofit organisation in the US can gain tax-exempt status, which means that the income collected by such an organisation isn’t taxed by the authorities, as long as the organisation isn’t profiting from the sponsorship income beyond a prescribed threshold.

A healthy legal system will always be a defining factor for the nonprofit sector. With nonprofit media outlets now gaining prominence like never before, there is a definite need for countries to revisit their regulatory frameworks. There is also a need for different initiatives and media outlets to push for and drive that change, so that independent journalism can find space to prosper.

Source of the cover photo: International Journalism Festival, Creative Commons Attribution-NoDerivatives 4.0 International License (CC BY-ND 4.0)

---