Report

Elements of Nonprofit News Management Chapter 6: Sustainability

By Richard J. Tofel

October 4, 2022

Finally, at the other end of the spectrum from where we began, with issues around getting started, is the aim to keep going, to build something enduring. So here are a few critical questions bearing on the sustainability of nonprofit news organizations. 

Business infrastructure and sustainable growth 

How fast should you grow your business operations? In two phrases: as quickly as necessary; and, given that, as slowly as possible. 

One of the great advantages of digital journalism is the leverage it provides — that is, what a large proportion of total spending is devoted to news, particularly compared with legacy print publications. While a print newspaper might have devoted 85 percent of spending to things other than news, a digital operation may fairly readily devote 75 percent of spending to creating and delivering its products and services. This proportion ought to be a key indicator to keep an eye on. 

Yes, you need business-support infrastructure and services — fundraising, legal, HR, finance, IT. And it’s very important to continue scaling these efforts as you grow, both to keep up with demand and to make sure you are not foregoing opportunities both to facilitate the journalism itself and to increase your organizational scope. At the same time, however, never forget that business operations are support structures. There is no prize for making them bigger or fancier or more costly; they are a means, not an end. 

Reserves and endowment 

Almost every new news organization begins its life with no money in reserve. With luck (and prudent planning, as advocated above), it may have enough funding to operate for a year or two, time to raise additional funds to continue publishing — and ideally growing, at least a bit. 

In time, however, it’s critical, if at all possible, to begin accumulating an operating reserve, funds to fall back on if the economy suddenly contracts, or if the organization hits a bump of its own in the road. 

I advocate doing this, first, by managing budgets in such a way that you run at least a small operating surplus each year, planning to take in a bit more than you spend, and managing growth in such a way that this occurs. If you can follow this path, any end-of-year upside surprises in funding will enhance this reserve. If you are very lucky, and happen to be offered a substantial gift that is specified as a one-time event, you should seriously consider adding that, as well, to your reserve. I do not generally favor building reserve funds into your budget — that is to say, planning for a large rather than a small operating surplus. That seems to me a recipe for retarding sustainable growth, which almost all young enterprises need to maximize. 

Your goal for your reserve should be to build it initially to cover six months of operating expenses, and then eventually a full year. As your budget grows, so will the target amount for the reserve. 

If you are fortunate enough to achieve these targets — it will certainly take years to do so — you might then consider moving beyond an operating reserve (money kept basically in the bank) to an endowment, an investment fund of which some portion (5% of the principal at the beginning of the year is the standard figure) is used to fund current operations, while the balance is invested for the long-term benefit of the organization.  

Endowments are usually assembled employing separate fundraising campaigns. The trick is that money for an endowment needs to be raised even as fundraising for current operations continues. A successful endowment campaign will almost certainly require participation by an active fundraising board and at least a few anchor gifts of substantial size. It is very much possible to create a significant and sustainable organization without an endowment. The same cannot be said about a reserve. 

Management succession 

The last task for a successful leader of a nonprofit news organization is to set it up to thrive after that person leaves. This is paradoxical in at least one respect: Preparing the entity for a successful transition is very much a job in which the leader needs to play an active role. But actually conducting the transition needs to be the work of others, those — most importantly, the board — who will remain after the leader departs. Selecting leadership, as noted above, is the most important and most indispensable responsibility of the board. 

Both parts of this paradox can be challenging. Preparing an organization you run to be run by others evokes aspects of planning your own funeral. Try to think of it more in terms of Tom Sawyer than some tragedy.  

And letting a critical decision on the organization’s future be made by people who know less about its present than you do — and when you have been making countless decisions of less importance on your own for years — is a real exercise in the difficulties of letting go. Do it anyway.  

Why? What comes to my mind is a question asked by a number of candidates to succeed me at ProPublica: “What needs to be changed?” Well, I responded, if I knew what needed to be changed, I’d change it, as that was still my job. So, in a sense, I thought nothing needed to be changed. On the other hand, I told them, I was not so stupid as to think that, after 14 years under one person, with his own foibles and limitations, the company needed nothing changed. That’s why succession is tricky. It’s also why it’s ultimately necessary.