It’s still a business and you must pay the bills

Dorian heads Teeming Media, a thought leadership communication consultancy focused on media technology, as well as The Verticals Collective group of media company founders and operators. He teaches media business at Columbia University’s J-school and the Zicklin School of Business at CUNY/Baruch.

It grates on Eric Barnes when another leader of a nonprofit news organization professes ignorance about the business side of their operations.

That happens with some regularity, he says, at gatherings where he and other local news executives gather. I emphatically agree with Barnes, CEO and founder of The Daily Memphian, who spoke with me over coffee near his home base in Memphis, Tennessee.

“No money, no mission!” is his succinct and oft-repeated summation of the business imperative.

Lessons from Memphis

New local news organizations are often structured as nonprofits and get charitable funding to launch. Their founders then face the challenge of how to continue operations into the future far beyond what that funding will cover. The solution varies according to the mission and the community.

The stated mission of the Daily Memphian, previously profiled by RJI, is to deliver “impactful, high-quality local news reporting” in its region. The Memphis area has just under a million people, major corporate headquarters and offices, well-endowed local foundations, and a large number of high-net-worth individuals. The city proper, with more than 600,000 people, is said to be the largest majority Black city in the U.S. and has a  poverty rate of 22.6%, much higher than the country as a whole.

In 2024, the Daily Memphian’s primary revenue source was subscriptions, accounting for about 52% of income, Barnes says. Last April, it raised the yearly price from $109 to $168 to make up for what he calls a “mistake” in keeping prices flat for two years after Covid subsided. The Daily Memphian then lost hundreds of subscribers but increased total subscription revenues, and has continued to build the number of subscribers back — to about 17,500 by January. In future years, the company will raise prices incrementally to help cover increasing expenses, he says.

About 23% of revenue comes from advertising. Most of the remaining 25% is from philanthropy, a proportion Barnes wants to bring down to 20% this year so as to be even closer to full self-reliance.

“If all the philanthropy went away tomorrow, it wouldn’t be fun, but we would continue to survive,” he says.

A local focus

The Daily Memphian is careful about the philanthropies it targets. All but about $400,000 of the roughly $20 million garnered over seven years comes from local foundations. This year the Daily Memphian is hiring a development director to help bring in smaller contributions of $5,000 and below, targeting individual donors.

“Local funders generally have already bought into what we do,” Barnes says. “They want to know that we’re going to keep doing what we do.”

Despite the subscription wall, the organization provides a lot of what it produces for free to people logged on at local public schools, libraries, and community centers, and puts a lot of its content in more than 30 email newsletters at no charge.

“If we were The Wall Street Journal, we would be like, ‘Are you kidding? You’re gonna pay for that,’” Barnes says. “And a subscription would be $300 a year, not $168.”

“But then our audience wouldn’t be representative of the city,” he adds.

Lessons for everyone

OK, you may be thinking, good for them. The Daily Memphian is one of the largest non-profit news operations in the U.S. Its yearly budget is $5.5 million. It has 52 full-time people (38 of whom are journalists) and about 20 contractors. It’s based in a major urban and industrial center. Are there lessons for leaders of non-profit news organizations based anywhere? 

Yes. Here are some:

• See yourself as a business manager. Focus on your mission, core capabilities, and the business imperatives.
• Have a plan for reaching financial sustainability beyond the life of any grants, and try to aggressively increase the proportion of non-grant funding.
• Diversify revenue. You’ll have a primary stream. Add other ones over time.
• Cultivate your community, which may be very different from Memphis. Can subscriptions cover a large share of your costs? What kinds of advertising, sponsored events, e-commerce, or, yes, philanthropy, is available? Perhaps, in your community a separate business (such as a cafe) can help fund your journalistic endeavors.
• If you’ll need to renew grant funding, track the ways in which you’re achieving funders’ goals to bolster your chances.
• Go for grants that help you become more self-sufficient, such as for training and technologies.
• Pay attention to the particulars of your revenue streams and how they work for you. The Daily Memphian, for example, sells ads directly to advertisers priced at a flat rate for a specific time and spot, regardless of traffic. It doesn’t take programmatic advertising or charge on a CPM (a.k.a. per-view) basis.
• Run tests, such as whether a given spot on a page is worth more for paid ads or to sell tickets to an event you’re running or for e-commerce.
• Find cases in which you help fulfill your mission and also bring in revenue, and do more of that. The Daily Memphian finds that exclusive local coverage — such as about the fight over a historic building being converted to a car wash — brings in subscribers.
• Raise prices periodically in reasonable increments that you can explain to supporters, whether consumers, advertisers, or partners.

In my Columbia Journalism School business class, in which Barnes has been a guest, students sometimes say they’ll keep a proposed startup afloat by making it a nonprofit. I’ll then state the maxim: “Nonprofit is a tax status, not a business model.” That’s a lesson that even well-endowed nonprofits have had to learn. If you are nonprofit (or not-for-profit; there is a slight difference) you do get a big break on taxes. Achieving nonprofit status is not always easy.

I wish I could say there was a single formula for success to stay in business. There’s not, although there are methodologies that work. I can, however, say I believe that if you’re persistent, have a mission, and serve an audience, you stand a good chance of getting there.

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Cite this article

Benkoil, Dorian (2024, March 19). Not-for-profit isn’t not-for-money. Reynolds Journalism Institute. Retrieved from: https://rjionline.org/news/not-for-profit-isnt-not-for-money/