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Knight Foundation: Online Nonprofits Must Develop Business Models

Good journalism is not enough to sustain nonprofit online news. That is one of the key findings of a new Knight Foundation study, "Getting Local," that profiled a number of local nonprofits online.

Those nonprofits have to act more like for-profit businesses, the study suggests, including experimenting with different revenue models and being more entrepreneurial.

While the sites are likely to start with funding from foundations, the study says they need to treat that as equity rather than an ongoing revenue stream and look to supplement that with memberships, advertising, sponsorships and events, just as the for-profit sector does.

Knight is one of those foundations, having funded several such sites as part of its effort to help journalism "survive and thrive" in a digital age  that is deconstructing traditional models. It was the Knight Foundation's report, Informing Communities: Sustaining Democracy in the Digital Age, released in October 2009 in association with the Aspen Institute that prompted the FCC to launch its own study of the information needs of communities.

One of the sites profiled, Voice of San Diego, has already looked to the commercial sector for help, a content partnership with the NBC affiliate. And more help is on the way. That became the model for one of the conditions in the Comcast/NBCU deal in which a number of NBC-owned stations are partnering with online nonprofits.

The Knight Foundation pointed out that none of the nonprofits it studied had developed a "clear" business model. It offered some advice. In addition to not relying on foundation support, it recommends studying the audience and finding ways to better engage it. Knight points to Voice of San Diego, which analyzes data on its daily e-mail, and an event, Politifest 2011, that featured an American Idol-like competition for community betterment ideas.

Knight commissioned the study of eight nonprofit startups, focusing on their prospects for sustainability.