Exclusive: MacArthur, Knight back $21M investment fund for local news
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Several well-known philanthropies and local news groups are investing $21 million in a new investment fund aimed at helping local news businesses grow, executives told Axios.
Why it matters: It's part of a broader effort within the local news community to create investment vehicles beyond grants.
Zoom in: The new Local News Impact Investment Fund was launched by Social Finance, a nonprofit that also serves as registered investment advisor.
- The group will manage the fund and oversee its investments, Kirstin Hill, president and COO of Social Finance, told Axios.
- The purpose of the fund is to help local news outlets build growth strategies and invest in new technologies that help expand their revenue sources to build sustainable business models.
Between the lines: The fund has raised $21 million in initial commitments from Social Finance, Knight Foundation, MacArthur Foundation and Press Forward.
- For MacArthur, which has a long history of deploying grants to local news, the fund represents its first financial investment in local news through its impact investing program.
- The investment draws on MacArthur's $750 million pool of catalytic capital, which is designed to support mission-driven investments that conventional lenders might consider too risky.
- "It's effectively a more patient, more flexible, more risk-tolerant form of investing," said John Balbach, director of impact investments at MacArthur.
- MacArthur's director of local news Silvia Rivera said news organizations with promising revenue models and real opportunities to grow often lack access to that kind of capital.
How it works: The fund will deploy investments that range from $500,000 to $2 million for non-profit and for-profit local news outlets, executives said.
- Social Finance will be responsible for identifying potential investments and doing due diligence on those deals.
Zoom out: The fund aims to grow to $30 million–$35 million over the next two years, per Hill.
- "We would expect to fundraise for, you know, a year and a half, two years after this, and the fundraising will be constrained in many ways by how much capital we think we can responsibly deploy into this sector," she said.
The big picture: More local news groups are looking to diversify their investment strategies away from being heavily reliant on grants.
- "It's not only grants or bust," Knight Foundation president and CEO Maribel Pérez Wadsworth told Axios.
- Pérez Wadsworth said the fund serves as a "real confidence builder for the sector," proving local news can be an investable industry capable of producing financial returns alongside societal impact.
What to watch: Knight Foundation has already begun experimenting with investment models that go beyond traditional grants.
- It recently made a $5 million impact investment in Canadian local news giant Village Media.
The bottom line: "What we see the purpose of this fund and this work as being is to begin to demonstrate that there are sectors and parts of the local news ecosystem that have revenue streams and business models that can be financed," Hill said.
