Recently, I’ve been pondering the role of foundations in funding news start ups. In principle, it’s a good idea to support better community news and information. But the demand far outstrips the grant money available, and some news entrepreneurs get caught up chasing grants when they would be better off chasing sustainable business models.Today, the din of people asking foundations for news and information grants is becoming quite loud. How to choose?

Obviously, foundations assess the need for the project and its potential impact. For news grants, I would also ask these questions:

1. Have the organizers scanned the local news and information landscape? A good first step for any news project is to define a need and assess who is already in the field. What if a community already has two local news sites - does another one offer something different or better?

2. Are partnerships in place?The lone wolf reporter was a great icon of the heyday of newspapers. But today, a one-person news operation is a formula for burnout. Ideally, multiple people are working on the project and/or it has partnerships with community organizations and other local institutions. The News Outlet in Youngstown, Ohio is a great example. Started with modest foundation funding, the program at Youngstown University works with students to produce content that is published by local newspapers. Now, the organizers are ready to scale their operation to other universities and local communities.

3. What’s the plan for sustainability? Do the grant-seekers have a business plan and are they allocating resources to developing it? I recently read a grant proposal for a nice community news idea. The proposal said the project would begin selling advertising in its second year. But there was no money in the budget for someone to start selling ads in the first year, much less the second. To me that suggested the people proposing this project might be a little naive about what it takes to sell local advertising. We’ve seen plenty of other grant-funded sites that have struggled to develop revenue.

Finally, I wouldn’t rule out funding something that’s already started. It’s fun to imagine (and fund) brand new things. But if someone has already started a news operation without waiting for a grant, that suggests they’re enterprising and willing to take educated risks. In a highly dynamic news environment, being adaptive is key to lasting over the long haul. People who bank on the next grant to keep going won’t around for long. Helping build capacity of a going concern may add long-term value. We’ve seen news sites that started big with grants and then collapsed.

Sustainability is a vexing problem. It’s great that foundations are stepping up. Looking at questions like these will help foundations fund projects with legs to carry them into the future.

What else do you think foundations should consider when funding news operations?

Speaking of foundations, the News Leadership 3.0 blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.

By Michele McLellan, 05/10/11 at 3:50 am