Editor’s note: The current article is part of a series on investigative journalism supported by a grant from the Open Society Foundation.

Investigative journalism is expensive. In-depth investigations can last years with no guarantee of a worthwhile story at the end. After many cash-strapped publishers cut their investigative journalism units, a crop of non-profits have taken their place. None so far have managed to build a sustainable revenue model, not reliant on the largesse of donors. Yet some hope has appeared from an unlikely source – using tax breaks for charitable donations as a form of “public financing.”

Normal business models don’t really work for investigative media. Advertisers stay away, not wanting to be featured next to tales of murder or fraud. The flow of stories is usually too low to convince readers to buy a subscription. Sales of content are possible, but rarely do they cover the full cost of an investigation.

As a result, many in the sector have called for public funding of high quality journalism. The social impact of uncovering crimes and corruption is tremendous, the argument goes, so public financing would be more than justified.

The 2019 Cairncross Review, a United Kingdom government report (it’s worth a read despite the 160 page length), advocated for funding of at least £10 million (€11.2 million) a year for the next four years – focusing on innovative, industry-wide solutions “aimed at aiding the provision of public-interest news.”

Furthermore, the report recommends providing tax relief to news publications, classifying them as charities with various benefits. Other European countries have taken a different, but comparable, route. Hungary and Poland, for example, allow taxpayers to donate 1% of their personal income tax (PIT) to a charity of their choosing.

A look at media raising or hoping to raise funds via such schemes suggests that creating exemptions and facilitating donations could meaningfully improve the financial sustainability of high-quality investigative media.

But it’s still far from a silver bullet. Convincing readers to donate is a huge effort, often requiring additional resources from media. Meanwhile, having the government say who benefits carries its own risks. “Investigative journalists tend to get into conflicts with any government,” says Rob Edwards, co-founder of The Ferret, a non-profit investigative media based in Edinburgh.

Átlatszó — a success story from Hungary

Atlatszo.hu positions itself as a small nonprofit organisation from Hungary. The name reflects the goals the organization it sets itself: “átlatszó” means transparent in Hungarian. Átlatszó produces independent investigative reports, works with whistleblowers, files freedom of information requests and provides legal support for those requests when necessary.

“There is a clear demand for critical voices and we have a strong impact on the Hungarian public sphere,” the organisation affirms in its annual report.

Átlatszó team near their office in Budapest. Photo: Miklós Déri

Átlatszó boasts an impressive track record in crowdfunding and attracting small donations worth a couple of euros each. In 2018 they collected close to 50 million Hungarian forints (around €150,000) in microdonations – almost 43% of the annual budget. But this wasn’t all – thanks to the PIT 1% scheme Átlatszó brought in a further 23 million forints (almost 20% of the budget).

Executive director of Átlatszó Tamás Bodoky explains the main idea of founding the center is to work independently of the political climate, as well as economic or marketing factors.

“We try to make it very clear to the readers that the work of the organisation is based on these contributions. So we ask for micropayments: about 3 euros a month. This is a small amount, but we encourage readers to make these payments on a regular basis,” said Bodoky.

According to research conducted by Átlátszó, the Hungarian media space is overflowing with pro-government propaganda. Readers are starved for critical content and that creates a strong motivation to contribute to organisations such as Átlátszó.

“We try to make it very clear to the readers that the work of the organisation is based on these contributions. So we ask for micropayments: about 3 euros a month. This is a small amount, but we encourage readers to make these payments on a regular basis,”
Tamás Bodoky, the executive director of Átlatszó

The first important task here is to properly communicate your messages to the audience and give them the opportunity to make donations in an easy and convenient way, Bodoky argues.

“In Hungary there’s also an opportunity to support a nonprofit organization by donating 1% of one’s personal income tax,” he added. Importantly, this donation has no financial impact on the people who donate as it comes out of their tax contributions.

But it’s not as easy as simply sending out a newsletter or putting a donate button on the website. Bodoky personally runs social media communications – constantly getting out the message to the community – and Átlatszó’s team devote a big chunk of time to outreach each year in the run up to May when taxes are filed.

Playing the long game — the case of KRIK, Serbia

Belgrade-based Crime and Corruption Reporting Network (KRIK in the original Serbian) was established to improve investigative journalism in the country. The main focus is organized crime and corruption at all levels.

The organisation is mainly funded by private and institutional donors, explains Jelena Vasi?, an investigative reporter and project manager at KRIK. As with many non-profits, grant applications and communication with donors takes up the bulk of her time, but allows for the more or less continuous and systematic development of KRIK itself.

Many of the discussions focus on sustainability. “Donors are very interested in supporting business development and sustainability among non-profit organizations. They now focus not on supporting content production, but on making organizations sustainable,” Vasi? said.

This aligns with the goals of KRIK itself. Given the expectation that at some point donors will deem the region sufficiently stable for media to survive without grant support, Vasi? noted, the outlet has made the shift a part of the organisation’s strategy.

For now, crowdfunding and commercial revenues (mainly from trainings and building journalism-related products like databases) make up a fifth of KRIK’s income. But Vasi? sees this growing further: “We have developed several business ideas, but we need to fundraise money for them.”

The main prize, however, would be to follow in the footsteps of Átlatszó and boost regular microdonations, noted Editor in Chief Stevan Dojcinovic. KRIK would also be keen on asking its supporters personal tax write-offs, but current Serbian legislation does not allow this solution.

This leaves KRIK to crowdfund around specific projects. People tend to respond best when they are asked to support very specific goals, argued Vasi?. KRIK was sued four times by one of the Serbian ministers, the lawsuits clearly aimed at financially exhausting the organization and silence it. “This can be an opportunity to launch a small crowdfunding campaign, saying ‘help us getting enough money to fight in court,’” she explained.

The situation is unlikely to change in the foreseeable future. The latest Reporters Without Borders report paints a grim picture: “Within five years of President Aleksandar Vucic in effect governing the country, Serbia has become a place where practicing journalism is neither safe nor supported by the state.”

Living as an NGO — case of Reporters Foundation, Poland

Having the right legal framework, however, isn’t always a silver. Poland’s Reporters Foundation (Fundacj? Reporterów) was established to unite and support journalists in the Eastern Partnership countries, namely via investigative journalism trainings and giving access to a wide network of fixers. But according to co-founder Wojciech Cie?la, this is virtually impossible outside an NGO based model of existence.

Although Poland has similar legislation to Hungary’s – allowing citizens to donate 1% of their PIT to a charity of their choice – making this work in the Polish reality can be Sisyphean task, as neither individuals nor international foundations see media support in the country as a priority any more.

“The problems of investigative journalism in Poland are money and capacity. Poland is not a priority country for donor support. We applied many times for grants for investigative journalism projects but it’s simply impossible to obtain,” he said.

Source: https://fundacjareporterow.org//srv/thefix-media-wordpress/web/app/uploads/2018/12/DSC_0826.jpg

Anna Gielewska, a member of the Reporters Foundation, says it is difficult to strike a balance between establishing a steady workflow and finding the resources to fund it. As a result, they are closely looking at crowdfunding, including around cross-border projects that allow to raise money outside the country.

However, Gielewska notes this requires more careful planning and targeting. “When it comes to cross border projects, it’s not so easy to run fundraising campaigns in their support. Who would be a target audience in this case? Who will be these people who are willing to donate money? Cross border projects are addressed to very diverse audiences scattered around different countries. I suspect it’s easier to launch crowdfunding campaign within one country,” she explains.

A more effective strategy is to run a crowdfunding campaign with a specific project or a specific story: with goals and purposes clearly stated the donors are better motivated to support the initiative (the same conclusion was reached by the team of Serbian KRIK).

But Gielewska sees significant risks. “Crowdfunding as a phenomenon is based on very polarized emotions. There are some successful projects, founded by internet users. But they are mostly based on some kind of extreme position. For instance, supported by people who want the government to collapse.” Given the organisation’s opposition to any activism, that model just doesn’t work.

At the moment, the foundation receives most of its donor funding for its project Vsquare. It is a platform that unites independent media outlets carrying out cross-border investigations in the Visegrad region (Poland, Czechia, Slovakia and Hungary).

Investigative journalism as a charity

Granting charitable status is another way to ease the pressure of constant funding needs for investigative initiatives. Such a move was considered by the Charity Commission of The United Kingdom. It would bring tax reliefs for local and investigative journalism and reduce the costs for producing investigative stories.

A similar initiative was considered in Canada last year. According to the planned legislation, non-profit journalism organizations can be categorized as “qualified donee”, which is equivalent to recognizing them as the ones with charitable status. For comparison, in the US nonprofit status for news organizations turned into almost $350 million in total annual revenue.

The American Institute for Nonprofit News (INN) provides information about 200 nonprofit newsrooms in the US in total and they get 90% of their revenue from philanthropic support, from both foundations and individuals. At the same time, analyzing the data of American nonprofit newsrooms in the US INN shows that charity cannot be the only revenue-building item for media. Newsrooms need to encourage the development of other models, such as paid membership in order to be less financially fragile.

The 2019 Cairncross Review, mentioned earlier, continues this line of thought. In the report, the author, British journalist Frances Cairncross, offers a variety of ways how to protect quality journalism. Among them — extending the zero-rating of the value-added tax (VAT) to digital newspapers and magazines, creating new mechanisms for philanthropic giving and launching of a new fund focused on innovations in media.

So far, these remain recommendations and there is no assurance that they will be fully accepted. However, the very fact of having such a discussion in the media environment encourages the possibility of change.

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