CPB distributes federal funds in accordance with a statutory formula contained in the Public Broadcasting Act of 1967, as amended. Under this formula, more than 70 percent of funds go directly to local public television and radio stations. While CPB’s appropriation accounts for approximately 15 percent of the entire cost of public broadcasting, this “lifeblood” funding leverages critical investments from state and local governments, universities, businesses, foundations—and most important, from viewers and listeners of local stations. Those viewers and listeners add their dollars to the vital core of federal support, writing the checks that allow public broadcasting to continue providing them with services and information important to their lives, education, and careers. In fact, individual donors ($729 million) and local businesses ($435 million) represent the two largest revenue sources for public television and radio.

CPB funding is particularly important to minority-owned public stations and stations in rural areas, which are more challenging to operate because of low population densities in their viewing and listening areas; the need to operate multiple transmitters to reach far-flung populations; and the limited disposable incomes and potential for private support often found in rural America. In FY 2009, individual donations represented 17 percent of an average rural station’s total revenue, versus almost 28 percent for the industry as a whole. The disproportional importance of federal funding to stations in rural areas is clear—in FY 2009, 108 rural stations relied on CPB for at least a quarter of their revenue; while 22 rural stations, many on Native American reservations, relied on CPB funding for half or more of their revenue.

CPB funding also supports the creation of programming for radio, television, and digital media. The statute ensures diversity in this programming by requiring CPB to fund independent and minority producers. CPB fulfills these obligations by funding the Independent Television Service and the five minority consortia in television (which represent African American, Latino, Asian American, Native American, and Pacific Islander producers) and similar organizations in radio. CPB directly supports the National Program Service at PBS, which supports signature programs such as PBS NewsHour, Nova, and American Experience; as well as educational, scientifically researched, impactful, and trusted children’s programming like Sesame Street, Curious George, and Word Girl.

CPB also spends 6 percent of its funds on projects that benefit the entire public broadcasting community. CPB negotiates and pays music royalties for all of public broadcasting, for example, and funds research to explore audience needs and technological opportunities. Added together, these efforts account for 95 percent of the funds appropriated to CPB (which is limited by law to an administrative budget of no more than 5 percent).

In addition to this formula-governed funding, since 2001 Congress has also provided CPB with a special digital appropriation ($36 million in FY 2010) to help public broadcasting use digital transmission technology and other digital platforms to provide expanded public service. CPB has used these funds to support the development of innovative next-generation digital content projects, helping stations buy digital equipment that they will use to provide new streams of news, music, and public service programming, as well as projects like the American Archive.