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Patrice Schneider, the Chief Strategy Officer of the Media Development Investment Fund (MDIF), shares the lessons learned in the first two years of Pluralis, an impact investment vehicle for news companies led by MDIF. He also discusses how the investment has changed media organisations and offers advice to other funders.

In its first two years, Pluralis invested in Gremi Media, which publishes Rzeczpospolita in Poland, the publishing house Petit Press, publisher of SME in Slovakia, and the Croatian news platform Telegram. Do the three countries share any common challenges despite their different media landscapes?

Schneider: The media landscape in all these countries is indeed quite different. The similarity goes back to the challenge that Pluralis tries to address, which is media plurality. The one thing that unifies these three countries is that independent media companies are being purchased by actors that do not necessarily have an intention of providing more independent media, but rather controlling the narrative.

This is why Pluralis was created: for addressing this challenge. But we knew from the beginning that it is never a one size fits all approach, you cannot just do one transaction with Petit Press and SME and replicate it for Rzeczpospolita or for Telegram in Croatia. After doing this [work] for 28 years at MDIF, we knew there would be different things, but I think what really assembles these three markets is the problem of media plurality.

How do you cope with this challenge?

Schneider: In the world we now live in, it has become an opportunity for ill-intentioned people to buy media companies and turn the narrative in favor of their own interests or a political agenda that satisfies the new investors. So, the challenges were generally the same: finding an independent organization, assessing their capital and development needs, adjusting the capital to match their development plan, and so on.

So the modus operandi is pretty much the same as it was for MDIF for 28 years. The only difference was that we were taking positions in these companies to be able to maintain media plurality, but we were also making sure that there would be no interference.

How do we cope with this? We have the ethics to say that we do not intervene. I mean we do play a role in terms of the development of the company because we do not just do it for press freedom. The company has to survive. And that means that we have to get involved in the business development, helping them where we can. And that is very different whether you are Rzeczpospolita, SME or Telegram. They have totally different needs.

The investment in Croatia is a relatively new one, but the other two took place two years ago. How did your investments change those two organizations?

Schneider: In the case of SME, they had a majority ownership from an investment group called Penta Holding, which was involved in too many things in Slovakia, and they were starting to intervene in content, which is for us a red line. If you are an investor, you do not do this.

The moment when Pluralis bought the shares of Penta Holding, that pressure stopped immediately. I regularly see [chief editor] Beata Balogova from SME being quoted as saying that every three months she is asked about the stories she is proud of. Before that she was being asked about why they covered this story, or why they did not cover that one, and their editorial choices [were] challenged. Now she is only asked about which stories she is proud of. We talk with the business people. Business-wise, Petit Presse is a very sophisticated organization, a profitable organization. It is extraordinarily well run.

Rzeczpospolita, the number one conservative business newspaper in Poland, was going to be potentially purchased by Orlen, the state-owned oil company. That was dangerous in itself. But we also saw that even if they had made progress, they had work to be done on digital subscriptions. If you are a business newspaper in a country the size of Poland, […] they should have been the country’s leader in terms of digital subscription for the information they provide.

At Pluralis we put the capital in to preserve media plurality, but then we bring experts to help them [the organizations we invest in]. So Pluralis has been supplying massive training to Rzeczpospolita. Not on press freedom, not on editorial issues, but on how to increase digital subscriptions. And the first numbers are looking really good. Instead of sending a journalist from Western Europe to talk about press freedom, we sent [them] people from some reputable companies in Europe who have been leaders in digital subscriptions for 15 years, who know exactly how to do it, which means that, in effect, the business manager who has been doing this becomes the press freedom hero. Increasing digital subscriptions makes them more profitable. If they are more profitable, they will have more impact.

The second thing is that Pluralis managed, I think, to maintain pluralist views. Our role is to make sure that people hear different voices and then they can make their decisions.

If there was one lesson that could be considered the most important one learned from investing in these three countries and these three organizations, what would that be?

Schneider: I think that the main lesson is that Pluralis’ hypotheses work, meaning that there is a need for a new type of capital provider for independent media. Linked to that lesson is the fact that there is appetite for a new type of capital provider. And that is critical because you are asking me about the lesson [learned] from investing [in these organizations]. So, it is  not solely about investing in them, but it has taught us that there is a need for a new type of capital provider that aligns with the social value of independent media. There is an appetite for patient capital to fulfill this role of capital provider.

What do you consider Pluralis’ biggest success in its first two years?

Schneider: I think what I mentioned is also our biggest success: finding patient capital that believes in the value of independent media. By now we have raised €50 million. A lot of people thought we would not raise [the targeted] €100 million, but now we are halfway ahead of time. I think there is capital and there are places to invest, and then there is an impact on society. What do you want more?

I mean, really, that is for us the biggest success. But I think I would just tone this down by saying that the real heroes here are not MDIF, it is not Pluralis, it is not even the business people in these companies. It is really the journalists who are doing that work. And all we do is to enable them to do it in the right conditions.

Knowing what you know today, is there anything that you would do differently related to the Pluralis’ investments?

Schneider: On the investment side, not really. The only thing that we would have done differently is the pipeline, to better understand that we are not an investment fund, we are a solution. An investment fund works in a way where you have money coming in and then you ensure that you have money going out. This also means that you raise capital and then already know where you are going to invest it, and it has to be driven by the investors. In the case of Pluralis, we have capital, but we are not going to invest that money anywhere. It has to be under the right conditions of media capture, a media plurality situation. They have to be profitable and so forth.

So the one thing we could have done differently is to go out there much quicker, saying that we exist, and we are here to bring you the right capital for your needs. Hungary is a beautiful example. I wish we had done this there earlier.

Based on the experience gained in the past two years, is there any advice that you would like to share with funders who consider funding media in the region?

Schneider: Pluralis has now raised €50 million [available] for independent media and media plurality. There are many types of funders in that €50 million, but there are some, like foundations, that provided a grant in the capital structure, €5 million out of the €50 [million], and they do not expect the money back. It helps you de-risk the other €45 million, but I think the problem that Pluralis and other organizations are trying to solve is that we need to reach out to other sectors, like banks. We have the Erste Stiftung and GLS Bank, but we also need to reach out to high net worth individuals, people who have never invested in independent media. They don’t know about independent media, but you have to approach them with a product which looks risk-adjusted, and safe.

I would tell the funders: consider the word “leverage”. It is not a bad word in the financial world. I think we need to bring it to the impact investment world. Five million [euros] in grants allows you to get €45 million more for the ecosystem of independent media in emerging democracies. We need grants in many places, but also a different way of using capital, which could be either an investment, or a grant [used] simply to de-risk. I think that one, grants aimed to de-risk, is a big call for action because we are going to need more money.

Philanthropic support for media and journalism has been growing in recent years and is seen as a way to strengthen democracy and civic engagement. However, there are still many challenges and opportunities for both funders and recipients of this support.

On 28 April Philea, in collaboration with GFMD, organised the 13th edition of “Philanthropy for Ukraine” sessions with a focus on journalism in the context of the war. During the session, four Ukrainian media experts shared their insights on the challenges and opportunities for international donors to support the media.

Ievgeniia Oliinyk, Program Director of the Media Development Foundation, shared about the MDF’s experience of collaborating with local media outlets by presenting the main findings of their new annual research on the state of local news outlets in Ukraine. The report shows that regional media have survived and resisted the war, despite the massive staff turnover, the constant threat of violence, the propaganda and misinformation, and the lack of resources. The MDF report also praises the role of regional journalists in documenting war crimes, debunking fake news, telling human stories, and helping Ukrainians stay sane and informed. It calls for more support and solidarity from the international community, the government, and civil society to protect and empower regional media as a vital pillar of democracy and peace. Ievgeniia also highlighted the importance of avoiding news deserts in Ukraine and providing additional support to the regions with such a tendency.

Discussing the state of the media at a national scale, Andrey Boborykin, Executive Director of Ukrainska Pravda, shared the newspaper’s experience. He noted that advertising spending across Ukraine has declined due to the economic crisis and the war, and this has forced Ukrainska Pravda to fundraise with the international donor community, which was not something that they were actively involved in before the war.

The media viability concept has to be rethought in the context of Ukraine, where media outlets face economic hardships and need to adapt to a changing and challenging environment, noted Olga Myrovych, the CEO of Lviv Media Forum. She argued that supporting the Ukrainian media is vital for the country’s recovery and justice and that the international community should recognize and amplify the voice of Ukrainian journalists and editors. Olga also addresses the issue of mental health among journalists in Ukraine, who have been exposed to trauma due to the ongoing war. In particular, Lviv Media Forum has offered psychological support to more than 150 media professionals to help them cope and restore their psychological resilience.

Continuing the discussion on the main issues that affect the media industry in Ukraine, Jakub Parusinski, Co-founder and Editor of The Fix Media, and CFO of The Kyiv Independent, highlighted that one of the main problems that media organizations in Ukraine encounter is the lack of qualified journalists, editors, project managers, sales managers and other media professionals. The current generation of journalists has suffered a significant attrition rate due to psychological breakdown, volunteering causes, frontline work, and the inability to work in the sector. This problem is exacerbated by a demographic problem in Ukraine, with only a quarter of a million graduates a year, down by half from over half a million in 2010. How can media organizations overcome this shortage? Jakub suggests that shared service centres could be a solution. He also argues that the media themselves should invest in training programs, work with universities, and create career development opportunities for their staff.

Another challenge that media organizations face is how to reintegrate veterans as content creators, audiences, and workers. Jakub Parusinski believes that media can play a vital role in helping veterans reintegrate into society. A third issue that media organisations have to deal with is how to connect with the millions of Ukrainians who had to flee abroad. Parusinski argues that the media has a significant responsibility to preserve Ukrainian culture and ties within Ukrainian communities and fight against Russia’s attempt to destroy it.

Based on their experience of being a recipient of media support, speakers shared their ideas and advice on how philanthropic or foundation support for media and journalism could be improved:

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A reflection on the Journalism Funders Forum’s in-person event, 16 February, Brussels
By Are We Europe

On 16 February, Philea and the Journalism Funders Forum (JFF) held their first ever in-person event together, bringing together representatives of foundations to discuss their mission of supporting public interest journalism in Europe.

The role of independent journalism in society has never been more important than in the current moment. It is what builds a bridge between communities and ensures balanced information is available to all. Over the past decade, media oppression has been on the rise in both authoritarian states and open societies in Europe. Media organisations and freelance journalists alike increasingly turn to philanthropic funders for support to continue their work despite increasingly difficult conditions.

JFF aims to support the funding landscape for journalism in Europe through three strands of work. Firstly, by improving learning opportunities and knowledge about journalism funding across the continent. Secondly, the forum works to diversify and increase the number of journalism funders in Europe, as well as foster connections between them. Thirdly, the forum strives to help build a more effective, transparent and equitable funding environment for journalism in Europe.

At the event in Brussels, funders had the opportunity to share successful strategies, learnings and challenges that they face in supporting public interest journalism. Openly sharing one’s challenges and hopes is the only way to entice other funders that are not yet active in journalism to do so. Just like in journalism, honesty is key.

A pillar of democracy

While many would hope that quality journalism can fund itself, the past few decades have irreversibly damaged most media outlets’ business models. The internet is the straw that broke the proverbial camel’s back, paving the way for higher outreach but also forcing many publications to put their content behind a paywall in order to remain sustainable. Some would say the latter hinders journalism’s duty to contribute to public discourse.

Throughout the day, an ever-present topic on the discussions was democracy. After all, journalists and their work are essential contributors to informed communities. While many foundations do not explicitly name journalism in their mission statements, it is through their commitment to upholding democracy that they, too, should support this field. Independent, quality journalism contributes to a healthy democracy. And journalism should be free from any influence that may impact their editorial output. Protecting this independence plays a crucial role in what philanthropic funding can do for journalism today. But how can this work be funded sustainably? 

The challenges to funding independent journalism are not unheard of. Funders, of course, need to find quality journalism to support. In turn, many journalists would argue that they simply do not know the relevant funding organisations to contact. The interdependence between journalists and their funders is evident, but it is discussions around the type of funding needed, and how funders can work together to maximise impact, that made the gathering in Brussels so uniquely impactful.

Stability is key

When investigating the ways in which philanthropy can support media organisations, core funding is of great importance. Core funding allows for the necessary breathing room between projects that contributes to better journalistic output. It furthers the creation of sustainable structures within a media outlet and offers opportunities for professional development. It also removes the incentive some might receive from project-based grants to just “go for the money” to survive. Simply put, not worrying about whether they can break even next month allows journalists to thrive. Stability is key. 

This very stability is the one that can allow for the time and resources for journalists to tackle extensive or sensitive topics that can often be more labour-intensive. Unrestricted support from a funding body can help to bring out the best of what journalism can do, speaking truth to power and contributing to societal change. 

The case for pluralism and funder collaboration

As much as cross-border journalism is becoming a reality in newsrooms today, collaboration should be of equal importance among funders. Like most things in life, it’s a two-way street. Pluralism in funding is essential to a system in which pluriform media thrives. And media diversity is vital. When funders act as a group, they send a clear message of support.

While stability is vital to journalists, it is equally important to funds. But there are solutions. Pooled funds are aggregated funds that allow interested parties to fund journalism without being experts on the topic. As the idiom goes, there is safety in numbers. Pooled funding creates quality assurance among funders who may not have the requisite knowledge to select suitable projects. It essentially creates a comfort zone for those who would otherwise hesitate to begin funding journalism. The hope however is that in the future more funders will become comfortable enough to begin funding journalism outside of the access point of a pooled fund.

However, this is not the only way in which funders can collaborate. In sharing knowledge and expertise across the European funding landscape, philanthropic organisations can work together to co-create new projects and grantmaking initiatives. In this sense, funders can co-fund projects independently but work side by side collaboratively. This kind of collaborative decision-making also accounts for the disparate geographic landscape of funding. For example, a country like the Netherlands is comparatively well-funded compared to other regions in Europe like Italy or Spain. Through collaborative processes, funders can contribute to journalistic diversity in landscapes and languages they might not be familiar with. It is a matter of shared trust. 

Looking forward

The first in-person meeting of the Journalism Funders Forum, since it found its new home with Philea, clearly showed that foundations are eager to connect more often. There is a drive to have funders communicate with one another in a casual setting, but also to facilitate communication between funders and potential grantees and partners. The repeated mentions of how difficult it is to communicate, match the need for better understanding between those who support journalism and those who create it. Both JFF and Philea are strengthened in their resolve to keep building connections between journalism funders in Europe and to advocate for the crucial role that philanthropy plays in safeguarding independent media.

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