I probably should add that I know the guy who runs KFXM; in fact, I worked with him for a while back in the 1980s.
His name is Chris Compton, he is a competent programmer and an excellent radio engineer, and he loves oldies. So when LPFM was authorized by the FCC, he got several local businesspeople that he knew from having lived in the Antelope Valley for years, formed a non-profit corporation to seek the license, then once he won the CP, he pretty much single-handedly built the studios and transmitting facilities.
Chris has kept his engineering consultancy business, so he can afford to run KFXM for no personal compensation. Being a LPFM, he doesn't have to worry about ratings or ad sales, so they only solicit donations to cover operating expenses. Being that he is a long-time resident, he knows all the right people to bring in for community-based programming, and it works.
KFXM has been on the air for 11 years now, so obviously it brings in enough donations to pay the bills, but you have to understand that LPFM is far different from commercial broadcasting. In fact, LPFM was designed to serve community interests that aren't served by commercial radio. That's what Chris is doing, and it works. The same "formula" would likely work in other areas where there are enough listeners to support it; if you could find a geographic area with enough fans of heavy metal polka that would ante up and support it, LPFM would work there as well.
I think LPFM would work, in many cases, to maintain a lot of formats whose demographic appeal has "grayed out". If I had one in (for example) Lake Havasu City I think I'd play beautiful music. I bet the snowbirds would happily donate a few bucks apiece to keep it on the air.