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Chapter Five

This chapter explains a philosophy of fundraising well-suited to journalists and nonprofit news called “the partnership approach.” We’ll cover making a funding pitch and two things you must have before you launch your organization: a policy regarding ethics and transparency in funding and startup capital.

Approaching funders can seem like a transactional business that journalists are not comfortable with. But it actually can be equated with what a reporter does in approaching sources. People who take a call from a reporter don’t talk because they want to make the reporter happy and help the reporter meet a deadline. Talking to the reporter serves some greater need. The source and the reporter become partners, in a way, in getting news out to the public. They both have different needs, but their needs align.

Fundraising is similar, although not confrontational in the way reporting sometimes can be. We encourage an approach captured very well by Jennifer McRae, a Harvard researcher who writes about the alignment between philanthropists and social change leaders. It is not begging for money, putting your hand out. It is asking for someone to invest in you, but that investment is made around a common value, in which your patron, investor or donor is a partner with you in accomplishing something.

You go in conveying your story and the impact you have or hope to have, but you also need to explore and understand your prospective donors’ values and what they want to accomplish. Your fundraising depends on finding a shared goal, although it may be something you and the donor value for different reasons.

This may sound theoretical, but the partnership approach is an important way for nonprofits to frame their relationships with funders to successfully develop revenue streams. The previous chapter explained the various revenue streams that can pay for your reporting. The initial work you do understanding your audience and your community needs will help you determine what revenue models will work for you. It is important to have more than one revenue stream, and not be overly reliant on the interests of benefactors that may shift over time. But each revenue stream takes time and effort to develop, so rather than chasing every type of revenue, you may have an anchor and some secondary revenue streams. The advice in this section applies to all philanthropic giving, whether from a foundation or an individual of high net worth, and it applies to reader revenue, whether it involves membership or individual donors. The only revenue stream it may not apply to is earned revenue, which may be more transactional.

RESOURCES:
“The Generosity Network: New Transformational Tools for Successful Fund-Raising” book by Jennifer McCrae and Jeffrey C. Walker

Searchable database of foundation, charity and nonprofit tax filings from Candid: 990 Finder

Your pitch to different funders should vary somewhat, but you should not change your core values and accomplishments to meet the interests of your funders. You need to know and communicate to all possible funders your mission, what you are good at, and how you are serving the public. You don’t want to be pulled wildly one way because there is funding there and then wildly another way because there is different funding next year.

Nevertheless, your mission and work will probably have different aspects that you can emphasize when talking to prospective funders. Finding out what in your work excites or resonates with your perspective donors should shape your funding pitch. Suppose a news organization’s core mission is to cover environmental issues. Communicating with a journalism foundation about what in that work is important to them might be quite different than what’s said to an organization that wants to build public awareness of an environmental issue. Your pitch will vary with institutional donors depending on their needs and what they hope your work will accomplish.

Individual donors also have different interests in what you are doing. One might really love reporters, think they are doing heroic work, and want to support good journalism. Another might be motivated by a desire to have community members become well-informed voters. Both those individuals may support you, but your conversations with them should be different, reflecting what in your work appeals to them. The first conversation might be a behind-the-scenes look at who your reporters are and how they covered a story. The second conversation would focus on stories that had never been told before, the extent of readership, and the civic impact of the journalism.

Resource: Solutions Journalism Network’s Learning Lab, Revenue Playbook

Nonprofits should be as open as possible around their sources of funding for several reasons: Research shows that when people know where support for a newsroom comes from, they have a greater sense of ease around their relationship with the news source. With technology companies providing so many platforms that push out news from a mix of reliable and shady sources, people really have to pay careful attention to know where their information is coming from. Nonprofit news organizations help restore trust in fact-based media by building a relationship and creating engagement with readers, listeners and viewers who feel they know the newsroom team producing the reporting they are consuming.

The financial reports of nonprofit news organizations are public records. Most people are not going to go through the trouble to find your 990 tax returns, but you can make it easy for them by posting your financial records, and any audits if you are audited. Publishing the information demonstrates your sense of responsibility to your audience and supporters. Being open about funding helps differentiate nonprofits from for-profits and positions them as a community asset. Nonprofits don’t pay taxes because they are a public trust, so they should be transparent to reinforce that idea.

Some nonprofit newsrooms have been unsure what to do when offered a truly anonymous donation. They feel that can’t be influenced by a donor when they don’t know who the donor is. But the lack of transparency has risks: It is difficult if not impossible for the public to know and trust that you don’t know or at least have a good idea who the donor is. And you could find out too late that the money came from a problematic source. Another challenge to maintaining transparency involves donor-advised funds. When a newsroom lists such a fund as a donor, it may have a name but obscure who is behind the fund.

INN recommends that its members publicly declare any gift above $5,000 per individual, and for the most part they do so. INN advises startups to avoid taking any significant amount of anonymous funding, to establish trust. Over time, exceptions may arise where a small foundation demands anonymity and a nonprofit agrees, but only after careful consideration. Established news nonprofits have worked out processes for deciding when and how they are going to decide to take such funding.

Ethics Policies

Having a written ethics policy at the time a startup launches is not difficult and will save trouble and heartache. Put it on your website and on your grant acknowledgments. It is important to make clear to funders and to the public that donations are never tied to involvement in the editorial product. Many honorable people who are upstanding citizens and not out to corrupt you may simply have never thought about editorial independence. They may be business people who are used to getting something in return for their money. Having a clear ethics policy and discussing it when you first go out and start asking for money will strengthen your relationships and prevent misunderstandings. To be diplomatic and not accusatory, the discussion should be framed around the value of news and what readers gain from your editorial independence.

Sample ethics policies are on our website, and on our members’ sites. The policies vary as members adopt wording from each other, from the Society of Professional Journalists and from nonprofits outside the news industry.

RESOURCE: Using campaign contribution data in your fundraising

Later in this guide we will discuss how to project your revenue and expenses in your business plan, and deal with your overall finances. Here we address the earliest stage of financing a startup, the capital also known as seed money. Across the country, the nonprofit news sites that have grown rapidly and become powerhouses within their states, and those that have become influential and had impact in their topical journalism, often started with a substantial bankroll before they even began publishing. The Marshall Project, Texas Tribune, Voice of San Diego, MinnPost, rapidly gained a foothold because they were backed by investment capital upfront.

Many journalists come to INN saying they are planning to start a nonprofit by bootstrapping it. They plan to just start writing to show people what they can do and then raise money. Jumping into publishing that way creates a very challenging route to success. We have found that you are going to be able to do more journalism with more impact more quickly if you have funds upfront—raised even before you formally organize as a 501(c)(3) nonprofit.

Our recommendation is that whenever possible you gather enough capital to cover a minimum of two years of expenses before launching. We advise startups to spend equally on the journalism and on building audience and support. If you are starting with one person leading the newsroom and another on the business side, your expenses include two salaries plus whatever you have outlined in your business plan as the professional services and equipment you need to get registered and develop your mechanism of delivering news. If you have enough funding to start with more staff, you can expect to have more impact more quickly, and that in turn will help you raise more funds.

Making a Capital Pitch

As you are planning your publication, you should be out talking to your local community or the community of people who really care about the topic you will be covering. As you do that, you will develop and refine a summary document or slideshow (often called an investment pitch deck) that communicates what you intend to cover and why you are qualified to do so. You will want to leave behind with them a presentation about what you are intending to do and what part they can play. The same points should be very clear in your mind so you can talk simply and compellingly to inspire excitement about participating in your venture as a key donor.

The terms partner and investor are sometimes used interchangeably to refer to the key donors who provide our members’ upfront capital. But while an investor in a for-profit company typical expects a financial return in the form of shares or a cash payback with interest, the payoff for the investor in a nonprofit news organization is the coverage that results and the strengthening of the community in which you and they live and participate. Your pitch therefore focuses on that outcome, the change they can expect to make, and what they can accomplish with their money and your effort.

Many sites start with one key donor who is the catalyst and brings in other investors. If you have not found that wonderful person, go out into your community and ask people about their needs. Then ask, “Do you know anyone who would want to support and invest in our meeting that need?” You gain multiple benefits from one conversation by using it to introduce yourself and your venture, learn your community needs and also get leads on sources of funding. If you are meeting with a community or family foundation, they may not be a direct giver but may be a connector to donors whose interests they know or represent.

In some cases, foundations will provide seed money for your venture. They may call it a planning grant or a pilot project grant. Crowdfunding is another way to build startup capital in some communities and for some topics. But it takes a lot of marketing to get enough people to make the small donations that characterize crowdfunding, so it is considered a supplemental revenue source.

INN conducted a grant-funded pilot program with eight members to test strategies and tools for improving major donor giving. Among the findings: A major donor program builds on skills many journalists have.

“The curiosity and persistence that journalists bring to their investigative work are exactly the skills required for major gift work. What is missing are the tools and training that journalists need in order to have the confidence to go talk with their donors — and ask for a gift,” said Diane Remin of MajorDonors.com, who coached the news nonprofits in the pilot program.

Journalists have the ability to explain their newsroom’s story and priorities to potential funders. But news nonprofit founders often have put off setting up major gift programs until they could employ a development specialist. That delay could be short-sighted. Major gifts are a crucial potential revenue stream for news nonprofits, particularly those focused on investigative journalism.

The INN pilot program findings suggest that with the help of outside coaches, members can set up systems and build significant revenue even before they have full-time development directors. Seven of the eight newsrooms said the most valuable outcome of the coaching was learning to transfer skills from journalism to fundraising.

RESOURCES:

INN Major Gifts Case Study

How Bay City News raised major donor revenue in a time of hardship (INN, 2021)

INN Development Director Lawrence Horne, who has more than three decades of fundraising and nonprofit management experience, offers this advice to startups.

Thousands of resources exist to help nonprofits find and keep track of prospective funders, leaving many startups unsure where to begin. First you must realize that fundraising has no magic wands or silver bullets. You must come up with a methodical, organized approach appropriate to your own situation. It’s a three-step process:

Evaluate your potential sources of support

Make lists of all the possible financial supporters in your own space, working from your inner circle outward. Approaching well-known national foundations is not a realistic starting point. Readily available donors are more likely to be found in your own community or state. Once you have a robust list, you can evaluate which prospects are most available. That research and vetting process, which journalists are well-equipped to perform, will help you prioritize your development efforts.

Decide how to track your development work

A Google search for “basic fundraising tracking form” will give you a wide variety of choices, many of them free. If you are adept at developing your own databases, you can peruse the forms you see online to decide what data fields to include. If you have only basic spreadsheet skills, and decide to download a template ready-made to use in software such as Microsoft Excel, it is wise to customize it to your needs. Thinking like a journalist, ask yourself what information you’ll need to get out of your records in the future. For example, your current funders may all be local, but you may soon wish you had a “state” column in your spreadsheet, because of legal requirements to register for accepting donations in other states.

You will find plenty of advice online suggesting that you need to buy or license database software to manage your development. Companies such as Salesforce, a software service provider worth more than $20 billion, provide powerful tools for customer relationship management (CRM) that are beyond the needs of a startup. Blackbaud Raiser’s Edge and DonorPerfect are examples of fundraising and relationship management software designed for nonprofits. Startups may find themselves investing in CRM software at some point when basic lists and spreadsheets are no longer doing the job.

Even if you have only a few funders now, plan ahead to break your lists into types of donors. Our section on revenue models explained the different sources such as membership, subscriptions, grants and major gifts. Decide how to segment and label these resources in your spreadsheet or database. For example, you may set the cutoff between “individual donor” and “major donor” at $250 per year or $5,000 per year. Many organizations decide that $500+ or $1,000+ should be considered major gifts. You should list foundations and community sources of support in ways that help you prioritize your outreach to them, for example, dates that grants expire and deadlines for applications.

Institute your tracking system

Once your tracking process has been established, use it systematically to expand your development efforts. The minute anyone expresses any interest in your work, the contact should be recorded and placed into your fundraising tracking tool. You’ll want to have a process to follow up with possible new supporters and to contact them through their preferred channels.

Some prospects identify themselves to you by following you on social media, signing up for your newsletters, registering on your website or attending your events. If you are a news nonprofit that distributes content through other publishers, you should always seek opportunities to make your funding needs known to the audience you reach. You can embed links to your own website or social media channels.

Try to work out mutually beneficial exchanges of donor or subscriber lists with similar organizations to grow your pool of funding prospects. Nobody is likely to hand over a list just because you ask. But the more systematic you have been in making your own tracking tools, the more likely you are to have something worthwhile to exchange. Your tracking prowess also will give you data to show institutional funders and major donors why you are worthy of their support.

CRM

Startups often rely on spreadsheets and open-source database software to keep track of their donors, potential funders, subscribers, etc. but then reach a point at which they need a more sophisticated customer relationship management (CRM) program.

Some tips from a 2018 playbook published by the Shorenstein Center on Media, Politics and Public Policy in Collaboration with News Revenue Hub:

  • Consider opportunities to partner with other organizations to share costs and tackle technology projects jointly.
  • Keep in mind all technology tools require upkeep—so the more tools you have, the more you’ll need to budget for maintenance.
  • You’ll either need someone on your staff, or available to you as a volunteer or contractor, who can not just implement fancy tech but can advise on what makes sense for your organization.
  • If you struggle to find tech-focused personnel, keep your tech as simple as possible and suppress the urge for customization until you get good help and good advice.

RESOURCES:
Salesforce nonprofit cloud software
CRM Integration for Nonprofits, 2018 report from Tech Impact

News nonprofits around the country, especially the recent startups, have been working to diversify their revenue streams. The INN Index in 2020 found for the first time a majority of nonprofit news outlets reported that foundation funding made up less than half of their total annual revenue the prior year. Nonprofits still get most of their revenue from philanthropy, but are tapping more into individual giving.

Age and type of organization correlate to different mixes of revenue streams as organizations refine models that match their missions and their communities. Older organizations often have a higher share of foundation funding; local and state organizations generate more revenue from individual donations. This pattern may reflect the concentration of foundation funding in a few national news operations, which was one finding of a 2018 report by the Harvard Kennedy School’s Shorenstein Center and Northeastern University professors.

Developing revenue streams from multiple sources is critical to the stability of an organization, so that the loss of one stream is not catastrophic, as it would be if only one or two sources were available.

An annual fundraising plan is a key component of successful fundraising. Your plan ensures that your staff and board of directors are in alignment about priorities, strategies and roles. Without a plan, reaching goals can be difficult – with no plan, you may not know when you are successful.

Overall, organizations with a fundraising plan generate more of their revenue from individuals, have more donors, and record a higher average gift.

INN has created the News Giving Roadmap — a comprehensive program including templates and samples designed to help our members improve their fundraising. The program offers members a Fundraising Plan Guide that includes a step-by-step outline for:

  • Reviewing your historical data
  • Analyzing your income and expenses
  • Using your fundraising performance to establish your goals
  • Creating and tracking your organizational and fundraising goals

Our Fundraising Plan Guide helps you to gather and analyze your data throughout each step of the planning process. As you organize and analyze your fundraising metrics, it is advised to work with your board, fundraising committee and staff as appropriate while planning.

With a fundraising plan in place, according to the Individual Donor Benchmark Report by Third Space Studio, each donor meeting yields more than $5,000 in increased donor revenue.

And with a fundraising plan that engages board members, for every board member active in fundraising there is an increase of $11,686 for individual donor revenue.*

* Individual Donor Benchmark Report 2015, Third Space Studio

INN Network Philanthropy Director Jeffrey Woolverton offers these best practices:

No practice is more important in the fund development process than stewardship. As competition for donor-investment has increased and the expectation of organizational transparency and reporting becomes routine, so has the need for a commitment to real stewardship.

Many nonprofit organizations may not have a long-term commitment or vision to donor development. Oftentimes it’s quicker to just ask for money without involving and re-engaging people. But in the long run those same nonprofits may not build relationships with donors, and will not maximize the potential for their organization in terms of dollars raised.

Stewardship is a process where you care for and protect your philanthropic support – gifts and the donors who give them – in a way that responds to the donors’ expectations and respects the act of giving.

Examples of stewardship best practices are:

  • Saying thank you
  • Showing results
  • Recognizing people
  • Making them feel good about their gift
  • Commitment to valuing donors
  • Sincerity toward donors as more than checkbooks
  • The ability to intentionally draw a donor into a deeper relationship
  • Turning a donor into an advocate for your organization
  • Start of cultivation strategies for the next gift
  • Being open and transparent with your donor

In spite of its importance, this vital function is often neglected. In an urgent need to fundraise, and in the relief and joy in securing a gift, organizations may forget that the real relationship begins once the gift is made. If donors only hear from you when you are asking for money, they will not feel valued or motivated to give again or at a deeper level.

To be effective you must be intentional about stewardship and have a written plan that describes how staff and board members will be involved in taking care of your donors. Start operationalizing your stewardship efforts by developing a really simple stewardship plan for each donor giving level that is prescriptive.

To help our members with creating stewardship plans, INN has created the News Giving Roadmap — a comprehensive program including templates and samples designed to meet our members where they are and take their fundraising to the next level.

Stewardship should be as routine at your organization as planning for events and applying for grants. With the recognition, gratitude and appreciation of your donors, your overall fundraising efforts can become sustainable.

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