Grant funding has provided key support for digital native media outlets in Latin America, Africa and Southeast Asia during the pandemic, a new report by SembraMedia suggests.
Funding from grants represented almost 31% of revenue on average among the newsrooms surveyed about their finances in the Inflection Point International report. This relatively high percentage — nearly a third of newsroom revenue — comes with a warning, however: being too dependent on grant funding can make it difficult for organizations to build sustainable business models. To that, SembraMedia has a recommendation: “Apply for grants, but don’t become overly reliant on donor support.”
Produced in partnership with the global philanthropic organization Luminate, with additional support from the Center for International Media Assistance, Inflection Point International aims to help digital media entrepreneurs navigate today’s news industry. Its authors believe that traditional media leaders may also benefit from the report’s insights, since digital innovation “continues to erode traditional media business models.”
The report adds: “[Inflection Point International] represents the deepest and broadest research ever done into the state of digital native media in Latin America, Southeast Asia and Africa.”
As a non-profit focused on supporting entrepreneurial journalists in Latin America, SembraMedia has seen first hand the challenges that large grants to small media organizations can present. For one, they can compel newsrooms to grow their staff — with no guarantee of being able to sustain the larger team past the grant’s end date. “This can lead to layoffs and, in some cases, media closures when grant programs end abruptly — especially when they come with no business support, or they include restrictions that the funds can only be spent on reporting projects,” the report explains.
SembraMedia offers a recommendation to mitigate this issue: “When you develop proposed budgets for grants, make sure to include at least 10% for overhead and business expenses. And whenever possible, use grant funding to strengthen your organization and develop new revenue sources, as well as produce great journalism.”
The report’s findings build on those of the first Inflection Point study released in 2017, which focused only on Latin America, explained Janine Warner, the co-founder of SembraMedia, and an ICFJ Knight Fellow. “While there are differences across the three regions, what struck us most as we reviewed the data were the similarities that emerged among these news organizations as they strive to cover their communities and build sustainable business models,” she said.
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