A master’s secrets for funding non-profit news

Second of two parts. The first part is here.

Unlike the founders of most non-profit news sites who concentrate on the journalism they yearn to provide, David S. Bennahum knows his chief task is to build a solid financial foundation for his non-profit Center for Independent Media.

While his emphasis these days is largely on cultivating philanthropic support for the six news sites he operates – and two or three additional ones he aims to open in 2010 – Bennahum hopes to find a way to sustain his organization in the future by generating revenues from the traffic his sites attract.

Right now, however, he is almost single-mindedly focused on raising money. And he’s pretty good at it, too. In an interview shortly before Thanksgiving, he revealed the secrets of how he does it:

Since launching his enterprise in 2006, Bennahum has raised more than $11 million from hundreds of individuals and nearly four-dozen foundations ranging from the Carnegie to Streisand funds.

Bennahum’s accomplishments as a fundraiser are nearly unrivaled in the realm of non-profit news. The total philanthropic support he has raised is surpassed only by Pro Publica, which benefitted from a $30 million grant from a single wealthy family. Bennahum, by contrast, has built his organization through dozens of four-, five- and six-figure donations.

Bennahum has worked hard, and successfully, to diversify his donor base. Although non-profit projects like Pro Publica, the Bay Area News Project in San Francisco, the Voice of San Diego and the Texas Tribune each has been dependent to date on the largesse of one large donor, Bennahum says no single benefactor accounts for more than $150,000, or less than 4%, of his annual funding.

If you let a single donor dominate a project, he said, other philanthropists tend to support different projects on the assumption that the cornerstone donor won’t let the project die. And it’s unwise, he said, to become overly dependent on the generosity of a single benefactor.

Bennahum said it also is a mistake to concentrate on raising money from journalism-oriented foundations. “They only have $80 million to $120 million to give away,” said Bennahum. If a project keeps going back to a J-fund year after year without showing an ability to generate sufficient revenues to eventually stand on its own, there is a danger the fund will lose interest, said Bennahum.

He prefers targeting funds that are eager to support reporting on issues like health or immigration policy. Besides, said Bennahum, a fund like Carnegie, with up to $3 billion to dispense in some years, is a richer target than any J-fund.

Bennahum said he always raises money locally before launching a new site and won’t start a site until he accumulates at least half the necessary funding in a target state.

He brought in $4.1 million in 2008 – his best year yet – but donations were down by nearly $1 million this year because of the weak economy. Bennahum said he was able to sustain operations by cutting back on expenses. “You always can find something to cut in any organization,” he said, noting that he even was forced to freeze his own pay at $200,000 per year.

Bennahum hopes to raise more than $4 million in 2010 to expand to new markets, saying the timing and location of future launches will depend on where donors step forward. California, Florida and Texas look most promising, he said, adding that he is not the least fazed by competition from any of the non-profit news ventures already in progress in those states.

Beyond philanthropic fund raising, Bennahum hopes to raise the level of “earned income” his sites produce through three potential avenues: advertising sales; revenues from live events like seminars and conferences, and subscription news products aimed at perhaps politicians, lobbyists and state contractors.

Of the three areas, the single most significant initiative he has undertaken to date has been in carrying network advertising provided by Google, which is on a run rate to contribute $84,000 per year.

When the Independent sites first started running ads, revenue was averaging 92 cents for every thousand impressions (making for a CPM of $0.92). “But we got an unsolicited email from Google one day that told us how to change our sites to improve the CPM,” said Bennahum. “We did most of what they said and our CPM now is $2.27, an increase of nearly 150%.”

This one case is a perfect example of the practicality, adaptability and mastery of detail that could make Bennahum the man who may turn non-profit news from a series of struggling, one-off ventures into a significant national force.

In other words, he could be the guy who eventually supersizes non-profit news.