A new initiative of the Knight Foundation and the Investigative News Network targets critical gaps in the emerging nonprofit news ecosystem - engagement and revenue.

Knight on Tuesday announced it would invest $1 million to provide small grants to about 30 organizations to "encourage innovation and experimentation in nonprofit news and public media organizations."

The idea is to seed new ideas that will help the field of local nonprofit media create a path to sustainability. Another $3.5 million is being allocated to news organizations that are at least three years old and have demonstrated potential for growth.

The sector is growing - more independent nonprofit sites are launching and established public media outlets are investing more resources in original local reporting.

At the same time, these organizations - many led by journalists from traditional ranks - are not consistently connecting the dots of revenue and engagement and are not investing in the technology to support those activities. Many still devote most of their resources - usually start up grants and/or large dontations - in creating editorial content at levels that are unlikely to be sustainable.

That is the picture that has emerged from two detailed Knight studies of nonprofit news outlets. The most recent, "Finding a Foothold: How Nonprofit News Ventures Seek Sustainability," was published in November 2013, building on a 2011 report. (Note: I helped research and write these reports.)

Leading organizations such as Texas Tribune, Voice of San Diego and MinnPost, are demonstrating the relationship between audience engagement and revenue strategies.

As I noted in a previous post, these organizations have achieved the most diversity of revenue sources, and their revenue strategies are linked to their understanding of their audience and their ability to engage communities of support for their work.

How do they connect the dots? Voice of San Diego is developing membership as one significant source of revenue. But it doesn't end there. CEO Scott Lewis says a strong, engaged membership base will drive attendance at VOSD events and give the organization crediblity with foundations, sponsors and large donors.

Similarly, The Texas Tribune stages events related to state issues to fulfill it's mission of engaging more citizens in civic affairs and to drive significant revenue from sponsorships.

The $1 million INNovation fund holds the promise to engage more organizations in leading the way to new solutions to common problems. The Knight investment also underscores a critical message to publishers: Quality content alone is not the path to a future.

INN will beging accepting applications for the INNovation Fund on Feb. 1.