Philanthropic Model

The Philanthropic Model for Local News Publishers

You’ve heard of the membership model, the advertising model, and the subscription model for local news publishing, but what do you know about the philanthropic model? Within the world of digital media, the philanthropic model is one that’s still emerging. As we move into 2021, this is something you might be hearing a lot more about.

Under the philanthropic model for local news publishing, publishers pursue non-profit status rather than operating as for-profit enterprises. That comes with its own upsides and downsides, to be sure. However, among those publishers who have adopted this approach, there is a sense that the philanthropic model fosters a greater sense of engagement and community.

While just about any digital publication could theoretically shift to this approach, we’re seeing the philanthropic model being used most frequently among local news publishers. Local news organizations that work to educate and inform the people in their communities are increasingly looking at turning to non-profit status.

The most obvious example of this might be public radio. Beyond that, you’ll also see non-profit journalism coming from the American Journalism Project, ProPublica, and local news startups like The Texas Tribune. Report for America and Table Stakes also point toward a new path forward for local journalism. If the business challenges that faced some digital news outlets in 2020 remain in 2021, there’s a good chance we may see more publications exploring the philanthropic model.

Many hospitals and universities have been operating as non-profits for years, so it would make sense that a certain percentage of news organizations would adopt this approach, as well. The Salt Lake City Tribune made headlines when it began the process of converting from for-profit status into a tax-exempt organization.

Publishers that pivot to the philanthropic model usually need professional guidance and tax advice as they embark on the process. Transitioning from for-profit to non-profit status requires the involvement of the IRS. While the rules surrounding non-profit status for local news organizations are frequently changing, broadly speaking, publishers are not allowed to seek non-profit ownership status simply to help subsidize a publication that’s operating in the red.

Running a local news operation under the philanthropic model may also require shifting around existing staff and employment structures, as well as existing revenue streams, like online advertising or sponsored content. Non-profit news outlets do need to come up with long-term approaches for generating revenue, however what we’ve seen is that publishers going this route are much more likely to find success soliciting donations and grant funding from outside organizations. Depending on how the model works out, publishers might need to find a way to clearly separate donors from news coverage to avoid the look of any impropriety.

If you believe that your publication supports the public good—as so many local news outlets do—and you’re interested in learning more about this approach, get in contact with our team of digital publishing consultants. We can guide you through the process of selecting a publishing model that fits your unique goals and business requirements.