If the darkest hour is just before dawn, publishers of local online news sites are looking forward to sunrise.
This month, the Minnesota Star Tribune, which had been seen as one of the few survivors amid the decimation of local newspapers, announced it would cut about 15% of its staff. The for-profit Strib, as it’s known, is exploring an ownership transition to a non-profit foundation, as have other newspapers in recent years.
“The business model and organizational footprint that has sustained local news for generations is undergoing its biggest disruption ever,” publisher Steve Grove said in a memo to employees, a month after the newspaper won a Pulitzer Prize for breaking news reporting.
In April, the Pittsburgh Post-Gazette was rescued from imminent closure when the nonprofit Venetoulis Institute for Local Journalism, which also publishes the Baltimore Banner, agreed to buy its assets. Venetoulis. The Salt Lake City Tribune and the Chicago Sun-Times have also converted to nonprofit status in recent years.
The nonprofit conversions are, in part, intended to position the news organizations for philanthropic funding. Publishers in some states are pressing for public funding as well.
But many nonprofit newsrooms are eager to move beyond grant funding and get ready for loans, revenue-based financing and even equity-type investments to grow their readership and their revenues. Such catalytic capital has helped expand financing options for affordable housing, community development finance, financial inclusion, clean energy and arts and culture organizations.
“Local news shares many of the same characteristics of those sectors before their financing markets matured,” Public Media Co.’s Caroline Ross writes in a new report for the philanthropic collaborative Press Forward. “The public need is clear, the social value is high, business models are evolving, markets are fragmented, and growth often requires patient capital, technical assistance, and risk tolerance.”
Underwriting news
Last year’s loss of federal funding, and subsequent closure of the Corporation for Public Broadcasting has added even more urgency to the development of more diversified and resilient financing for civic media. The federal support constituted about 20% of the annual budget for many public radio and television stations. Public Media Co. has raised more than half of a planned $120 million Bridge Fund to help the stations develop new business models.
Earned revenue from subscriptions or memberships cover only about one-quarter of the budgets of the digital-first nonprofit news organizations, according to an April report from the Philadelphia-based Wyncote Foundation. The foundation found that nearly 400 digital-first nonprofit newsrooms generated $650 million to $700 million in revenues in 2024 – about 1% of the combined advertising and circulation revenue earned by the newspaper industry 20 years earlier.
Still, many of the new crop of lean, digital-native publishers covering underserved local markets already are profitable and ready for growth, Google’s News Sustainability Project found last year. In eastern Europe, Africa and Asia, the Media Development Investment Fund has demonstrated that small news outlets in tough markets are able to repay loans and reach sustainability with capital and business support.
Press Forward itself has invested more than $400 million in local news, mostly through grants, since 2023. The new report, “Catalytic Capital for Local News,” identified a small set of investors already underwriting local news with loans, technical assistance and infrastructure investments.
Glen Nelson Center’s $10 million Horizon Fund makes equity investments in technology companies that benefit the media sector. The center is part of American Public Media Group, producer of “Marketplace.”
In Colorado, Gates Family Foundation has used loan guarantees and other forms of “blended capital” to support the digital startup The Colorado Sun as well as a shared printing facility launched by the National Trust for Local News. The Sun used its investment to reach new audiences across Colorado.
Invest Appalachia, which also invests in food systems, agriculture, and clean energy, is applying its community development lending expertise to local news. The organization’s Rural News Fund provides one-year grants and technical assistance to small news organizations to help build their capacity to take on debt.
URL Media’s Media Resilience Fund provides working-capital loans of up to $100,000 to local news organizations.
Flexible financing
Traditional market-rate capital, however, is often unavailable or poorly suited to local news businesses.
“Local news organizations resemble mission-driven small businesses operating in markets that traditional finance systems do not fully understand,” the report found. “Many outlets lack the margins, collateral, scale, or repayment history conventional lenders expect. What is missing is a middle layer of capital: catalytic capital – flexible, patient, mission-driven financing that fits between grants and commercial capital.”
The report argues that the traditional separation of editorial and business functions in news organizations – sometimes referred to as “church and state” – may not serve the purpose of long-term business sustainability. “In practice, this separation can make it more difficult for organizations to iterate on products, respond to audience needs, and achieve strong product-market fit,” Ross argues.
The report argues for building media expertise into existing community financing structures, such as community development financial institutions, or CDFIs. “Existing community finance institutions already have experience lending in underserved markets, supporting small businesses, and pairing capital with technical assistance. With the right media-specific expertise, they could become important partners in financing local news organizations.”
In the report, Ross cites ImpactAlpha as part of the broader impact investing ecosystem that could be tapped for expertise and partnerships with local news organizations.
“The local news field has a growing base of capable operators, strong intermediaries, coordinated philanthropy, emerging investment vehicles, and increasing recognition that local news is essential civic infrastructure,” she concludes. “Catalytic capital can help local news move beyond a cycle of grant scarcity and crisis response.”
