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Donor dependency, wherein media outlets rely heavily on external grants, has become a major challenge for independent media. While crucial for the survival of many outlets, it comes with substantial risks, as the recent freeze on US funding has demonstrated. Experts emphasise the need for revenue diversification to ensure long-term sustainability.

Donor dependency occurs when an organisation relies predominantly on external grants from philanthropies or other donors to sustain its operations. This has become particularly common among independent media operating in challenging environments where alternative revenue streams are scarce.

Anya Schiffrin, Director of the Media, Technology, and Communications specialisation at Columbia University’s School of International and Public Affairs, notes that donor dependency is not a new phenomenon. However, concerns related to it were different two decades ago. When new donors entered the field and started to fund reporting on certain topics, it raised concerns about editorial independence. Later, “donors started to fund too many outlets,” which began to compete for the same resources.

The landscape changed after the 2008 financial crisis. “Everyone needed money,” Schiffrin argues, adding that a lot of news organisations improved their fundraising capabilities in the process. As her study highlighted in 2019, advertising remained difficult to secure and audience-based revenue models often failed to generate sufficient funds. A report by Free Press Unlimited further reinforced that many public interest media, especially those operating in difficult environments, became highly dependent on donor funding, as many struggled to generate commercial income.

In regions like the Western Balkans and Central and Eastern Europe, “donor support has been part of media business models,” argues Davor Marko, Central and South East Europe Programme Manager at Thomson Foundation. While grants were crucial in establishing independent voices after the wars in the Balkans, donor dependency has now become a threat, as many media outlets have neglected sustainability and capacity building.

The Consequences of Donor Dependency

While donor support is often essential for independent media, particularly in restrictive environments, over-reliance on external funding creates significant risks. One major consequence is financial instability. Newsrooms that fail to develop independent revenue streams risk severe financial crises or even closure when donor funding ends. A striking example is the recent USAID funding freeze, which has left many news organisations struggling to stay afloat.

Donor dependency can also distort market dynamics and weaken audience engagement. Donor-funded media often neglect sustainable revenue strategies. As a result, they may capitulate to donor priorities over audience needs, failing to cultivate a loyal readership or produce content that people are willing to pay for. This undermines long-term viability.

In authoritarian or hybrid regimes, donor dependency also exposes media outlets to political pressure. These governments frequently label donor-funded organisations as “foreign agents” or tools of foreign influence, using this narrative to restrict their operations or damage their credibility.

How Can Newsrooms Reduce Donor Dependency?

Reducing donor dependency requires a shift in mindset and a commitment to exploring new revenue streams. For years, many media outlets operated under the assumption that donor funding, particularly from US-funded programmes, would be reliable, Marko notes, adding that this led to a complacent approach wherein newsrooms did not prioritise exit strategies. Now, with US funding drying up, the urgency to adapt has never been greater. Schiffrin warns that European countries are unlikely to fill the gap in journalism support left by US funding, and she expects widespread layoffs. “I am definitely worried. There will be a bloodbath,” she says.

Diversifying revenue to mitigate the risks associated with donor dependency is a critical step. This could include subscriptions, memberships, advertising, and commercial services. Some media outlets have successfully experimented with alternative business models, such as offering video storytelling or live streaming services. Marko points to a newsroom in Serbia that has leveraged its expertise to provide video production at competitive prices. However, these strategies are not one-size-fits-all, he argues; local market conditions must be considered when designing new business models. “The Thomson worked with 100+ media outlets in Central and Eastern Europe and the Western Balkans. 10% of them were successful in creating something new and sustainable,” he says.

Audience engagement is another key factor in financial sustainability. Encouraging reader support through crowdfunding or membership programmes can help newsrooms build financial independence. However, securing this support is not easy, as it requires trust and consistent value delivery to readers.

Collaboration may offer additional opportunities. Anya Schiffrin suggests smaller newsrooms consider partnerships with other outlets or even universities. Academic institutions could provide resources such as office space or even students, although increased bureaucracy might be a trade-off.

Despite these possibilities, the overall outlook remains uncertain. The media development sector is undergoing dramatic changes, and without strategic-level thinking, many outlets will struggle to survive, Marko concludes.