The first layoffs in the history of the Texas Tribune, the award-winning outlet renowned for its coverage of the Uvalde shootings, raised concerns about sustaining growth within nonprofit journalism. Cuts at Latino media nonprofit Futuro amplified those worries. But analysts say while certain aspects of the nonprofit journalism model need to evolve in order for these publications to survive, the future isn’t all doom and gloom.
With local news-gathering in crisis and as the digital media struggles with the end of Buzzfeed News and the bankruptcy of Vice, many have looked to nonprofit journalism as a beacon of hope for those wishing to see journalism thrive. Experts say the model still works, even as it faces significant challenges in this turbulent landscape.
“Rightly or wrongly,” the Texas Tribune “serves as a bellwether for the rest of the sector,” Jesse Holcomb, an assistant professor at Calvin University, told TheWrap. “I would caution anyone about frankly reading too much into this one development and extrapolating to the rest of the nonprofit news sector overall.”
Nonprofit journalism is not a “magic bullet or a cure-all,” said Holcomb, who also helps run an annual survey of newsroom for the Institute for Nonprofit News, but it can work if “ownership believes in the mission.”
The Texas Tribune is a “sustainable business,” he added. “It doesn’t mean that they’re not going to stumble or have to recalibrate, but it’s a viable business approach.”
Is there a broader financial struggle looming for the future of nonprofit journalism? Another award-winning nonprofit, Futuro Media Group, also announced job cuts recently. In response to the layoffs, editorial director Fernanda Santos chose to resign, as she announced on X.
Analysts said that while organizations should learn from the mistakes of pioneering independent publications, the nonprofit model itself is not doomed.
Holcomb noted that the Tribune layoffs are a “useful reminder that as stable as a nonprofit sector is, it’s not immune from challenges” in soliciting sponsorships and building other earned revenue streams.
“The digital nonprofit news sector is still emerging,” he added, and there’s a certain “degree of experimentation and iteration that is going to include its share of successes but also setbacks.”
The Tribune laid off 11 staffers last week, citing revenue challenges at the Austin-based publication. The job cuts included employees in the newsroom, engineering, design and operations. Two longtime reporters for the outlet, who had been there since the launch of the Tribune, were part of the layoffs, as well as the entire copy desk.
Yesterday, I was laid off by @TexasTribune after nearly 9 years.
New leadership got rid of its longest-tenured reporters and said they’ll no longer cover the criminal justice beat.
No one on police, prisons, courts, the death penalty. In Texas.
Here’s some of what we’ll lose:
— Jolie McCullough (@jsmccullou) August 24, 2023
The Austin-based nonprofit news organization largely relies on donations from foundations, corporations and individuals. The Tribune has often been viewed as a blueprint for running a successful nonprofit operation. The newspaper ended 2022 with 10,000 members according to its annual report.
When a news organization with such high engagement as the Tribune undergoes job cuts, it may be shocking, but it is a reminder that successful nonprofit news outlets are not immune to the financial hardships that plague the media industry as a whole.
“It should serve as a sobering effect on the growing optimism” for nonprofit news, Victor Pickard, professor of media policy and political economy at the University of Pennsylvania’s Annenberg School for Communication, told TheWrap. “It doesn’t mean there shouldn’t be optimism at all, just a more even-keeled approach to building out a vital nonprofit news sector, with a clear-eyed view of what the limitations are.”
Tribune leaders told staff that the first-ever layoffs were the result of a budget shortfall. The news organization was expecting a 10% uptick in revenue this year but was instead down 5%. The job cuts will save the newsroom approximately $1.1 million, according to Tribune leadership.
Many across the industry felt there was a lack of transparency from Tribune leaders when the job cuts were first announced. CEO Sonal Shah even acknowledged that the layoffs could damage readers’ trust in the publication in a post explaining the move.
“Part of the problem here was that this came on so suddenly,” Pickard told TheWrap. “But there wasn’t a great explanation at first. So into that narrative vacuum, there was all kinds of speculation” about what led to the layoffs at the Tribune. Both Shah (who assumed the role in 2022) and Tribune editor-in-chief Sewell Chan have committed to taking 10% pay cuts, as reported by Poynter.
Meanwhile, Shah noted that the newspaper has hired two additional staffers to its sponsorship team in an attempt to improve revenue.
The Texas Tribune declined TheWrap’s request for comment.
Pickard acknowledged his hesitancy to blame the Tribune layoffs on leadership, as it felt more like “the rug being pulled out from under them.” His take is that the “structural limitations of this [business] model” are to blame. There is no “guaranteed funding” in nonprofit journalism and although the Tribune has “many diverse revenue streams,” the paper is still reliant on private funding from individual or corporate donors.
Being a nonprofit news organization requires just as much focus on balancing the business side as any other part of the process, Steve Waldman, founder and president of Rebuild Local News, told TheWrap. In the case of the Tribune, Waldman said it looked like “their expenses got a little ahead of their revenue.” The paper remains a “very substantial news operation” even after the cutbacks, he added.
Still, there’s an irony: The Tribune had leveraged its early success in diversifying revenue streams to educate and advise other media organizations on building sustainable business models.
Nonprofit local news is growing rapidly, attempting to fill in the gaps created by the loss of local news organizations. There have been around 400 new nonprofit local newsrooms that have sprouted up across the country, up 17% from a year ago and generating $500 million across the field, according to both Waldman and Holcomb.
“What the National Trust for Local News is doing in places like Maine and in Colorado is to recognize the civic value of local news,” Holcomb told TheWrap. “It also recognizes that you can actually make these businesses work.”
However, Waldman said, the financial support coming into local nonprofits from philanthropic endeavors “has been growing, but not quite fast enough, and there are more mouths to feed than food” at the moment.
In 2022, individuals, foundations, and corporations collectively gave an estimated $499.3 billion to U.S. philanthropic organizations. Only about $150 million goes to nonprofit news outlets a year, but the industry needs an estimated $1.75 billion, the Boston Consulting Group recently concluded.
Analysts and other observers agreed that nonprofit newsrooms must diversify their revenue streams while generating work that engages their community and encourages philanthropic donations.
“Every revenue source relies on private spending to some degree,” Waldman told TheWrap, “But smart nonprofits have a diversified fundraising base,” which allows them to be successful in a fickle economic market for media.
“If your newsroom is dependent almost entirely on the whims of one or two donors or foundations, from a business standpoint, that can be unsustainable,” Holcomb said.
For those who do not diversify their revenue streams, they are “at the mercy of their funders,” Pickard noted. “ We can’t have this reliance on private capital, that can just disappear.”
According to Pickard, the industry needs to build business models for nonprofit news organizations that come with “guaranteed funding” to withstand the shakeups within the media industry.
Waldman stressed that at the end of the day, nonprofit news will not survive without the support of the community it serves and there is “no way around the fact that there needs to be more philanthropic money going to local journalism.” According to his estimates, there should be at least “four or five times as much” philanthropic funding going to those causes.
It’s not just a feel-good move to fund news operations: A Brookings study found that losing local news outlets raised government borrowing costs, a result of a lack of watchdogs keeping an eye on wasteful spending.
Compared to other philanthropic issues, “fixing local news is a cheap date,” Waldman says. “It’s not that expensive, yet the consequences are enormous.”
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