A frequently misunderstood aspect of nonprofits is that fundraising is a tin-cup substitute for a smart business plan. That misunderstanding gained traction in some circles a couple of weeks ago when Geoff Dougherty, editor of the Chi-Town Daily News, announced that he and his staff were leaving to start a new, for-profit publication with the backing of unnamed "angel" investors. In his post, Dougherty said CTDN needed $1 million to $2 million per year to "do a great job of covering a city as sprawling and complex as Chicago," but could raise no more than $300,000 per year.
Electing to operate as a nonprofit, whether producing journalism or another type of public service, dictates that a robust fundraising effort must be part of the business plan. The plan must generate enough revenue to achieve the organization's mission while also guarding against overdependence on any single source of support.
Few understand this reality better than the folks who run ProPublica, the New York-based startup that has been given a $30 million, three-year lease on life by Herb and Marion Sandler. Faced with the prospect of filling a $10 million-a-year budget gap, ProPublica has hired two of the biggest guns in the fundraising world with help from a $1 million Knight Foundation grant.
One is New York-based Community Counselling Service Co., which will advise "how best to conceptualize, structure and execute fundraising from institutions and individuals capable of making larger gifts, as well as laying the groundwork for hiring our own director of development next year," ProPublica GM Dick Tofel said in an email interview.
The other is Watershed Co. , a specialist in online fundraising, which will "look for us at the potential for small gifts in large numbers," Tofel said.
Both CCS and Watershed come to ProPublica with lists of well-known clients, and they have experience that can help move ProPublica -- and ultimately, other journalism nonprofits -- into a new sphere of fundraising professionalism and partnerships.
Among CCS's clients is Habitat for Humanity.While Habitat may be best known for building low-income housing, it also has gained renown within the nonprofit world for working closely with the communities it serves and for successfully involving deep-pocketed corporate partners in its mission. Building houses and writing investigative news stories are decidedly different activities, but CCS no doubt will examine how it can apply the experience of its other clients to ProPublica.
Watershed is headed by Madeline Stanionis, who has been a leader in applying technology to fundraising. For example, in a Feb. 26 article in the Chronicle of Philanthropy, Stanionis talks about the growing potential for philanthropic micropayments made over mobile phones now that carriers are taking less of a cut. In the article, Stanionis relates the success that one of her clients, the Humane Society of the United States, found by using text messages to solicit year-end gifts. Such experience could translate well to online journalism, as more publishers connect with readers through phones rather than computers.
For smaller startups, a strategic fundraising plan may be less elaborate than what ProPublica can afford, but creating one is no less vital to the organization's long-term viability, according to Voice of San Diego's Andrew Donohue. There's more foundation money available for journalism start-ups than ever before, Donohue told me in an email. But he added: "We've learned that this isn't money you should rely on for your long-term. It's start-up money to get you going. You've got to be absolutely obsessed with finding as many revenue streams as possible to sustain and diversify you for the future."
VOSD is working on developing some as-yet-undisclosed "nontraditional" sources of revenue, Donohue said. "This seems to be the stage that the early nonprofit news organizations are reaching right now: We've proven we can do the journalism and attract the early money. Now we've got to be preparing to wean ourselves off of foundation money or diversify from our original donors."
Exactly where will ProPublica go with all the high-dollar advice it's getting? It's too early to say. But whatever it does is likely to be emulated by other journalists who have chosen the nonprofit model and are willing to put some creative energy behind their business plans.