Small team does local journalism, motivated locals donate to keep it running. It's that simple. Some people are happy to donate $20 a month to their favorite Twitch streamer or open source project, and other people are happy to do the same for their local newspaper.

The failed model is trying to run it like a journalism factory: producing articles at some marginal cost and selling them at a fixed price that exceeds marginal cost.

Just look at NPR and member stations. The federal government ended their funding, but they kept right on going because of donations.

I thought about the best way to share it and realized it might vary in different countries and regions.

As a general introduction to hyperlocal journalism: https://www.google.com/search?q=hyperlocal+journalism

From here you can see there's various references and entry points to hyperlocal journalism in the US, Canada, etc, all working to fill the void of local newspapers departing, or local newspapers increasingly only providing national or state level news.

Instead of ads alone, its a sponsorship model, one from the readers side (optional), and one from the local organizations who are outright sponsoring the local news to be created, maybe in different categories, etc.