What does the grant mean, and what’s required to get it? A little context is helpful.
The grant is issued through U.S. News and World Report’s magazine, which is published separately every year. This year’s issue is due out on April 1. It represents an annual $5.5 million revenue raise for the magazine over the first eight years. However, because the annual fee represents an annual income for the magazine, and if the magazine spends more money than it receives in the year, then the annual grant is reduced accordingly.
“If you want to talk about real growth, it’s a great revenue source,” said John Lichtman, executive editor of U.S. News, who said that a big part of the magazine’s growth has come from being a larger presence on college campuses. “There is a strong value there and it has to be respected,” he said.
The annual grant is divided into two halves: $1 million for the first four years and $500,000 for the rest over the course of ten years. The $2 million for the first four years grants the magazine an increase in print advertising revenue of 6% over the first four years, but because the magazine must pay for more than $1 million less in circulation, that increase in print advertising revenue can only be 3%.
If the magazine spends $500,000 more in a year for digital advertising than it is receiving in print advertising, then there are several ways to determine whether the magazine’s increased print advertising revenue can compensate for that loss in its print advertising revenue: For instance, if digital ad spending accounts for 10% of advertising revenue in the magazine’s first four years, the magazine must find $250,000 in revenue growth over the same period. If it spends $500,000 more than its print advertising revenue in a year, it must find a 10% increase in digital ad revenue in the following year.
“For most magazine industry companies, this is a difficult challenge,” said Lichtman. “Most companies are looking for more than one growth line where there is no return on investment. A great magazine like ours does not have an owner; it is owned by the readers, by their participation and the way in which magazines are sold.”
The final part of the grant is an annual $1,000,000 fee, which, as a point of comparison, is about $1.5 million a year more than the magazine gets from the magazine’s circulation fees,
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