The Port Talbot Magnet in South Wales, Your Thurrock, Brixton Media, WHALE Arts in Edinburgh and Cybermoor Ltd in Cumbria were selected from nearly 80 applications from across the UK and Ireland to become a 'Carnegie Partner' in the neighbourhood news initiative.
The initiative was set up to help develop innovative ways of producing local news, the Carnegie UK Trust said in a release.
In return for the funding the winners are required to "participate in an external evaluation of their new local news project – so that their experiences and learning can be shared with policymakers, practitioners and funders across the UK and Ireland", the release explains.
Douglas White, senior policy officer at the Carnegie UK Trust and chair of the Neighbourhood News Advisory Group said in the release: "We received some fantastic applications from projects where local groups are producing great news outlets and creating a real sense of belonging for communities."
The team at Brixton Media plan to use the grant to set up a trainee programme at the Brixton Blog, giving young people the chance to learn journalism skills such as media law, story-writing and basic broadcast production techniques.
"Our project is about improving local news but doing so by also offering opportunities to local people within the community," said Zoe Jewell, editor at the Brixton Blog.
"In an area with high youth unemployment we hope that it will give some young people the chance to further a career in journalism."
In the age of the internet, Jewell said, any proclamations about the demise of community are unfounded and the majority of people are still very interested in their local news.
This sentiment was echoed by Michael Casey, editor of Your Thurrock, who plans to use the grant to launch a second hyperlocal site for Harlow, and grow the video production of both sites.
"What I'd like to do is try again to get a lot more people involved in user-generated content, have another crack at trying to create a 'video nation'," Casey told Journalism.co.uk, adding how Your Thurrock has produced almost 5,000 videos since its launch in 2008.
"Also, we've got Harlow college, esteemed journalism hub over 50 years, a mile from our office and we'd like to discuss an obvious outlet for UGC and users actually being journalism students keen to get published.
"A lot of them have gone, in a five-year period, from saying I can't find a job to saying I can't find work experience."
Casey said that hyperlocal journalism may be the way forward for some journalists who want to work in a different way.
"I think you could make a living out of working on your own on an online newspaper," he said, "working on your own, put your office in your house, use social media, work very hard seven days a week.
"My heart breaks every time I see a paper folding or a journalist being made redundant after 38 years but there are solutions out there."
The Edinburgh-based Wester Hailes Arts for Leisure and Education (WHALE) Arts Agency; Alston Moor's hyperlocal news, WiFi and consultancy co-operative Cybermoor; and part-crowdfunded co-operative Port Talbot Magnet will also receive funding.