Small Business Ad Kit: The Grant Approach

Another approach to supporting small business advertising in local news outlets is via a grant program. The idea is philosophically identical to the small business advertising tax credit: Provide money to local small businesses and, potentially, nonprofits to advertise in qualified local news outlets. In this case, however, the funds would get to the small business via a grant from the government rather than through a tax refund. The grant-making entity could be housed in a local department for economic or business development, a small business association or even a chamber of commerce foundation.

A possible downside to this approach is that lawmakers often allocate less money to grant programs than usually results from tax-code interventions. If rules aren’t clear, the prospects for political manipulation or favoritism could grow. Grants should not be distributed by the office of the governor or mayor. The Kansas Press Association, for example, is considering the grant approach and housing it in the state’s Department of Commerce. Policymakers would need to build in clear rules. 

There are some advantages of the grant program over the tax approach. It provides small businesses with liquid capital to advertise immediately. Under the tax plan, the benefit would be delayed. Some small businesses, particularly those in economically distressed areas, may not have the available funds to advertise, meaning they would miss the benefits of the program. A grant approach would also make it possible for local nonprofits, such as museums and other arts and culture institutions, to participate. 

This approach could be scaled down to the most local levels of government. A county or even a city, not just a state, could implement the program. A grant program could also be more flexible when it comes to funding opportunities. A business association, chamber of commerce, arts alliance, press association or coalition of journalism organizations could go directly to a state’s, county’s or city’s commerce or economic development office and pitch the program using existing funds, without having to go through a full legislative process.

From a financial point of view, a grant program would make it easier to limit the costs of the program, as there would be a fixed appropriation from the city or state. Finally, in some cases state governments may be able to implement the idea from existing programs or pools of money, without needing to pass new law.

That’s what happened in Meriden, Connecticut. Local government officials and newspaper leaders used money that had already been allotted to Meriden through American Rescue Plan Act funds. In 2022, Liz White, then-publisher of the Record Journal newspaper in Meriden submitted a proposal to the local ARPA board for a grant program that would support the recovery of local businesses and nonprofits by giving them a $2,000 grant to advertise in the Record Journal. The Record Journal then matched the grant with an additional $2,000 in advertising inventory, so the business got $4,000 worth of advertising exposure.

The council awarded the Record Journal Media Group a grant equal to the value of the program. Local small businesses and nonprofits then applied directly to the Record Journal to participate in the program. (The application was also available in Spanish.) RJ Media Group also ran ads in English and Spanish to advertise the program. A representative from the Record Journal Media Group vetted applications alongside the Meriden economic development director on a first-come, first-served basis. That said, 50 of the 150 slots were reserved for businesses with 25 or fewer employees. The other 100 slots were for businesses of any size. The only criteria for businesses and nonprofits was that they must be registered in the city of Meriden. 

In all, 150 businesses and nonprofits were awarded grants via the program, which resulted in a $235,000 profit for the Record Journal. An overwhelming majority of the benefiting businesses and nonprofits surveyed spoke highly of the program, saying it brought them new customers and greater visibility. A local plumber said they received three new jobs in the first two days of publishing the advertisements and a local salon said it believes the advertisements helped them keep busy in the slower months. Fifty-four of the 58 grant recipients that replied to a survey about the program said they would be interested in the same or similar program if it were offered again. White shared her one-pager on the Business Boost program and an explanatory deck in an interview with Editor & Publisher.  

Scaling the grant approach

There are two ways to structure a small business/nonprofit advertising program.  

Grants to community organizations:

Jurisdictions could partner with third party organizations, like chambers of commerce, arts alliance and other organizations listed above, which would give qualified news outlets grants directly. The news outlets would then give nonprofits and small businesses free advertising to the value of the grant. This approach can ensure that funds from the program are allocated across media outlets, as opposed to deferring to business or nonprofit interests, which may skew in favor of larger, more established outlets. 

The downside of this approach is it decreases advertiser choice. Instead of advertisers choosing media outlets, media outlets are choosing advertisers. Politically, one of the great appeals of this approach has been that businesses are deciding which news organizations to support rather than government entities making that decision. This approach loses that characteristic. Lastly, it weakens the argument that the primary beneficiary of the program is small businesses and nonprofits.  

REBUILD LOCAL RECOMMENDATION:
If a jurisdiction partners with a community organization to administer the policy, the actual administration of the grants should be done by an independent third party like a chamber of commerce, arts alliance or local journalism support organization like the New Jersey Civic Information Consortium. The structure of the grant program should, like all local journalism grant programs,  conform to best practices for public grantmaking. There should be a transparent set of criteria, mirroring the criteria established in the model bill, used to vet news outlets who apply for the advertising grants. All reporting on the grants should be to the independent third party, not directly to a non-independent government body. Reporting should be rigorous enough to show that the intent of the grant was honored – including documentation such as copies of the advertisements placed, receipts of the cost of the advertising and evidence that the business met the stated scope of the grant (i.e. a small local business or an arts nonprofit or restaurant if the program is tailored to a specific type of establishment). The third party should then report back to the government body on the efficacy of the program. 

To summarize: 

• A community organization, arts alliance, chamber of commerce, small business association, local humanities chapter, etc. asks for an allocation from either a state or local government.
• The purpose of that allocation should be to offer free advertising to either small businesses and nonprofits generally, or a tailored group of small businesses and nonprofits. 
• Qualifying criteria for the news outlets should be transparent and reflect the model bill:
  • • The newsroom employs at least one full-time local reporter. That “reporter” can be an owner/operator as long as that owner is contributing to the editorial product of the newsroom.
    • The news organization primarily serves that state (possibly defined as having at least 33% of its audience within the state)
    • Discloses its ownership and is not owned or majority funded by politically-motivated organizations (more on this below)
• Qualifying criteria for the small businesses and nonprofits should also be clear and transparent.
• The funds should be allocated to the third party community organization.
• The community organization can give funds directly to newsrooms 

Direct to small business: 

This approach is nearly identical to the small business advertising tax credit, just with a grant administration. The benefit would go directly to the small business or nonprofit. The scope could be tailored to, for example, benefit certain arts organizations or restaurants or establishments involved in the local tourism industry. The business or nonprofit organization would then decide where to put its advertising.

REBUILD LOCAL RECOMMENDATION: 

The third-party administrating body is less important in this case, since the benefit goes directly to the small business or nonprofit, which then decides where to place their advertisements. That said, there should  still be a transparent set of criteria that identifies which news organizations qualify for the benefit. The news organization should give the establishment proof that the advertising was placed at a qualified news outlet, but reporting on the use of the money should be between the business and a government entity. 

To summarize: 

• Establish a grant program for small businesses and local nonprofits to advertise with local newsrooms.
• Give benefits straight to a small business, which would then make its advertising decisions.
• Create a transparent set of criteria, based on the model bill, to establish what is and is not a qualifying local news outlet.

Require small businesses to provide copies of advertising, receipts of advertising expenditures and a statement from the news outlet that it meets the qualifying criteria for the grant.