Tracking best practices in the business of digital news

By Jake Batsell

Like many nonprofit news startups, drew most of its early revenues from foundation grants and individual donations. But in 2011, the state politics site in Vermont got serious about earning more of its own cash, hiring a full-time sponsorship director with a background in marketing.

Two years later, founder and editor Anne Galloway says corporate underwriting has grown to nearly half of VTDigger’s revenue — 43 percent ($150,000) last year and a projected 45 percent ($185,000) in 2013.

VTDigger is among a growing tide of nonprofit news outlets relying less on donations and more on self-generated “earned revenue” such as corporate sponsorships, syndication and events, a trend highlighted this week in a comprehensive report released by the Knight Foundation.

We’re really assertive in our reporting, and people respect that,” Galloway said. “They also understand we need support. And so it’s not a hard sell at all, because it’s built on our integrity.”

VTDigger pitches sponsorships not only as a way to support independent journalism, but as a strategic way for businesses to reach influential readers. An audience survey provides key selling points: 90 percent of the site’s readers vote in every election, 86 percent own their home and 62 percent are involved in politics.

“We’re able to bring in enough traffic to justify a kind of value proposition to underwriters,” Galloway said. “We’re able to say, you might be able to reach this well-heeled, well-educated audience, and that means something to underwriters. It’s easy to translate.”

During a recent panel at the Online News Association conference in Atlanta, an audience member asked Galloway a no-nonsense question: For news organizations looking to diversify their revenue streams, what strategy provides the most bang for the buck?

Galloway’s answer was unequivocal: selling corporate underwriting. (Here at The Texas Tribune, corporate sponsorships generate even more revenue than events, which I’ll explore in a future “Brass Tacks” post.)

I asked Galloway to send me VTDigger’s rate card, which offers corporate underwriting packages on a sliding scale ranging from $200 to $500 per week depending on the number of desired impressions (from 12,000 to 25,000 per week) and the length of the sponsorship (from one week to a year).

The underwriting strategy – mapped out in tandem with the Vermont Journalism Trust, which became VTDigger’s publisher in 2011 – has landed dozens of sponsors from law firms to retailers to trade organizations. And those sponsorships (along with continued grants) helped the site grow its staff to 10 employees, including five full-time positions.

“As we got grant money in, we never saw that as a long-term proposition,” Galloway said. “We saw it as, essentially, like venture capital — a way to get a certain distance with our project to attract a certain number of readers so we could get to a point that we could launch a strong membership campaign and attract enough underwriting to reach a level of sustainability.”

Galloway, a veteran newspaper editor who founded VTDigger in 2009, admits she initially was “terrified” at the idea of asking people for money. She credits programs including Block by Block and the Investigative News Network’s Community Journalism Executive Training with awakening her to the business-side realities of news entrepreneurship.

“From the beginning, if you’re going to make it work, you have to embrace the business side,” she said. “You have to understand that the journalism is super-important, but you can’t do it without money eventually.”

Jake Batsell (@jbatsell), an assistant professor of journalism at Southern Methodist University, is spending the 2013-14 academic year as a Texas Tribune Fellow based in Austin.

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