A song to read by: "The Deadbeat Club," by The B-52's
What I'm reading: "The Wretched of the Earth," by Frantz Fanon
When I first heard the phrase “nonprofit,” like many people I assumed it was an admission of a defeat: a business so backward that it never even hoped to make money.
But, after two years of reporting on nonprofits and discussing the model with its acolytes, I have come to another conclusion: That the phrase, odious as it is to our sensitive capitalist ears, is simply an advanced form of camouflage, in the same way a possum plays dead to escape its predator. The term deliberately offends American sensibilities, and in doing so reserves its riches only for the enlightened few who dare envision a world beyond revenue.
The problem is: Everyone needs to understand the brilliance of the nonprofit model, because readers and journalists alike might need to embrace it if they want to keep the presses running.
The nonprofit money-making machine
There are a number of particulars that distinguish for-profit institutions from their nonprofit brethren, but the key distinction is this: That nonprofits can accept massive donations of money, and donors can write off those donations as tax credits.
On its face, such a delineation seems trivial, or at least it did to me. Then, when I started looking more closely at the financial statements of nonprofits, the reality of its genius dawned on me.
Nonprofits do not just supplement their revenue with donations, or “gifts” as they are often called; they essentially replace them.
Many of the nonprofits I have written about — successful ones, ones whose reporting you have probably read and which you have almost certainly heard of — generate such paltry amounts of reader and advertiser revenue that they would hardly be able to keep the lights on without their big, pillowy cushions of donated money.
Broken down by percentage, donations represent 80%, 90% and even 95% of these publications’ finances; their existence relies almost exclusively on their ability to fundraise. To run a successful nonprofit, in other words, is to run a company almost entirely unconcerned with the need to make money. Sounds like journalism, doesn’t it?
As with all things nonprofit, these publications make this no secret. Nonprofit newsrooms build their entire brand on transparency, and they routinely publish their finances for all to see. But is there anything less intriguing than intimate details shared without pause?
Richard J. Tofel, who founded the Ur nonprofit ProPublica, recently announced that he is stepping away from the publication after 14 years, and he has written some very insightful pieces about the lessons he learned from the “nonprofit revolution.” I cannot recommend this particular one enough.
In it, he says much of what I am saying now: That ProPublica, in a world where it had to fund itself in the for-profit fashion, would never exist.
“We in nonprofit news exist precisely because earned revenues, especially from advertising but even more recently from subscriptions, proved insufficient to sustain much of the legacy press,” Tofel writes.
The problem with for-profit news
What Tofel realized years ago is what much of the media world is realizing now: That the old ways are never coming back.
A number of recent articles, including this great, depressing one from Politico’s Jack Shafer and this commentary from Matt Yglesias, make the case that local news has “a demand problem.” Readership has declined, for many reasons, and it appears unlikely to ever return.
I have quietly nurtured this somewhat heretical belief for years, as I have a cynical but I think realistic view of the average person. I think we generally like entertainment over news, passive over active, free over expensive, and easy over hard.
I think people never really loved reading the news, they just lacked any better option. But go back to the news-devouring readership of, say, the 1980s, plop a TikTok-equipped iPhone in their ink-stained fingers, and watch the subscriber rates plummet.
People have always gravitated toward cheap, easy, entertaining content, but they simply had less access to it than they do now. Sure, we can lament the fundamental hedonism of the human race, but any solution that insists on using moral rectitude as its value prop is destined for failure.
The entire story of humanity is just one inexorable slouch toward samizdat, so why pretend otherwise?
Especially now, as the attention economy really heats up, what chance does the news have against the outrage of the internet? Advertising revenue used to fund reporting, but advertising follows eyeballs, and the eyeballs of today prefer Facebook.
If journalism tries to compete with social media, it risks getting washed out, becoming entertainment rather than enlightenment. So, if stooping to the platforms’ level is not an option, but attention pays the bills, what future could journalism have?
With nonprofits, the naivety is accounted for
Nonprofits make no assumption that the free-market model works for news: It might have used to, before consumers could scroll through Twitter on their lunch breaks instead of reading a magazine, but it cannot any longer.
No, nonprofits look at the existing business landscape and make an informed decision: If advertising is no longer a viable option, and reader revenue is scarce and incredibly competitive, what other options do we have?
Luckily, reader, this is America, and so we have the rich, er — “high net-worth individuals.” Tofel breaks down the usual donors into major camps — institutions, the wealthy, and the laypeople (that’s us) — and runs through the different behavioral levers you can pull to squeeze money out of each.
In short, the system works. Predicting the future is impossible, but it seems sustainable, too: There really is so much unevenly distributed wealth in the country that, with the right playbook, pioneering nonprofits can sustain their business for years just by cajoling the right billionaires.
Plus, nonprofits mean no paywalls, which means their reporting is far more accessible than the current for-profit system. Of course, there are tradeoffs to be made, especially if you believe, like I do, that philanthropy is a white-washing tool for the tarnished reputations of the demonically greedy. But hey — what’s a little poetic irony among friends?
One other group gets left out in the cold — what we used to call magazines — because nonprofits generally require some civic-minded mission, so publications chronicling the latest food trends, celebrity gossip or marathon-running techniques will have to find their operating profits elsewhere.
Still, if what we are in the business of saving is democracy-sustaining, corruption-derailing, community-building journalism, the nonprofit model seems more and more like the most viable path forward.
Some good readin'
— I wrote about the wave of new “future of work” coverage, and why the subject has become so popular overnight. (Adweek)
— Speaking of ProPublica, their tax expose took a juicy turn with its latest bombshell findings about Peter Thiel. (ProPublica)
— I lent some thoughts and words to this piece about Facebook and Twitter’s attempts to get into the newsletter world. (The Wrap)
— New Anna Wiener just dropped! This gets sooo close to pinning down the issues with tech right now. (The New Yorker)
Cover image: "Lake George," by Georgia O’Keeffe