Name: Piedmont Journalism Foundation, Virginia

President: Boisfeuillet Jones Jr.

Profile: The Piedmont Journalism Foundation (PJF) was created in 2018 to identify and fund in-depth coverage of important local issues and to provide that coverage without cost to local news organizations in Northern Virginia. In November 2019, the foundation took ownership of Piedmont Media, publisher of two weekly newspapers, the paid-circulation Fauquier Times and the free Prince William Times, and their associated websites and newsletters. The Fauquier Times dates back, through various owners and names, to the region’s first newspaper, which began publishing in 1817. PJF is led and operated by volunteer community members. Fauquier County, about an hour’s drive from Washington D.C., is an affluent residential and agricultural community of about 70,000 people.

The challenge/trigger: The newspapers had operated under family ownership with the usual pressure to provide a return to the family. Some felt the newspapers lacked the resources and ambition to tackle important local issues, and in 2016, a group of 47 concerned residents raised the money to purchase the newspapers, forming Piedmont Media. The group paid about $1.6 million for the newspapers and invested $600,000 to strengthen the coverage and improve business operations, addressing years of neglect including outdated equipment, high receivables, and a depleted sales staff. Some of the new owners made loans to keep the newspapers going. They finally concluded another approach was required, and in 2019 asked the PJF to take over ownership.

Their story: As publisher Catherine Nelson put it in a letter to readers, the residents who had purchased the newspapers hoped to preserve their local coverage in the face of cutbacks and closures across the news industry. “They know that strong newspapers help people stay connected to one another in an increasingly disconnected world,” she wrote. “They know how important it is to have an informed citizenry – and that democracy works better in the light.”

The group was led by local businessman George Thompson and later by businessman Landon Butler, and included Trevor Potter, former chairman of the Federal Election Commission and general counsel for John McCain’s presidential campaign; Alex Orfinger of American City Business Journals, and Dana Priest a Pulitzer Prize-winning investigative reporter at The Washington Post and Knight Chair in Public Affairs Journalism at the University of Maryland Merrill College of Journalism. In view of the small news staff, some of the leadership and others suggested creating a nonprofit to provide in-depth journalism.

In early 2018, they approached Boisfeuillet “Bo” Jones Jr., a local resident and former publisher and CEO of The Washington Post and CEO of MacNeil/Lehrer Productions, about leading such an effort along with Jessica Tuchman Mathews, former president of the Carnegie Endowment for International Peace, and Georgia Herbert, the first woman elected to the Fauquier County Board of Supervisors. The group set up a nonprofit that would raise money for local journalism projects that would be offered without cost to the Fauquier newspaper and local websites. The nonprofit status would make it eligible for tax-deductible donations from individuals and grants from family trusts and foundations. PJF decided to use contract writers, rather than staff, to maintain flexibility and minimize administrative costs.

To a considerable extent, PJF modeled its operations after the Foothills Forum down the road in Rappahannock County, Va. Founded in 2014, Foothills describes itself as an independent, nonpartisan civic news organization that partners with the “Rappahannock News and other organizations to research and report on matters of concern to the 7,300 residents of Rappahannock.” PJF and Foothills Forum in 2019 collaborated on a series about the regional effects of the opioid crisis. The series won first prize from the Virginia Press Association for best explanatory journalism among state weeklies.

As advertising revenues continued to decline and operating losses grew, the newspaper owners in late 2019 decided the best course for survival and improvement was to become a nonprofit. They concluded the simplest and quickest approach would be to ask PJF to take ownership of the newspapers. PJF agreed on two conditions: (1) that the current volunteer managers and volunteer board members continue to oversee the newspapers, and (2) that they try to run it on a break-even basis. The newspaper cut costs by eliminating some jobs and switching to mail delivery, all while keeping the core journalism as intact as possible. By early spring 2020 operations reached break-even.

Coronavirus Crisis: After the Covid-19 shutdowns, the newspaper saw almost half its revenue evaporate, largely due to lost advertising. The newspaper survived with financial help from a federal Paycheck Protection Program loan as well as from grants it received from PJF, which is the recipient of foundation grants and donations from generous individuals. By the summer of the pandemic, the newspaper raised subscription rates, instituted a paywall, and posted appeals on the news and PJF websites, which brought in about $10,000 in donations to PJF, some of it in $8 and $10 increments.

Jones said widespread support is important because it shows “people understand a local newspaper’s importance in keeping citizens informed and being the glue that holds a community together.” That support, in turn, encourages large donors and foundations. Some local business people view the newspaper as an important factor in attracting economic development. “For some businesses, you seem like a bush league community if you don’t have a newspaper,” he said.

“We’re getting through this year ok,” Jones said. “But it just takes a few really bad months to put us in difficulty again.’’

Form of transition: The Piedmont Journalism Foundation was formed as a 501(c)(3) nonprofit charity in 2018. PJF used the American Press Institute as its fiscal sponsor until it received IRS approval as a nonprofit public charity in early 2019. The 47 owners of Piedmont Media in November 2019 transferred their ownership shares to PJF, which paid them $1,000 total, prorated among the owners. Piedmont Media remains a for-profit owned by a nonprofit, which is similar to the Tampa Bay Times relationship to the Poynter Institute. PJF filed a postcard Form 990 with the IRS for 2018, and filed a full Form 990 for 2019, which included two months of ownership of Piedmont Media.

Legal resource/attorneys: Trevor Potter and William D. Fournier, Caplin & Drysdale, Washington, D.C.

What changed: Once PJF took ownership of the newspaper, it expanded its board by two people with needed expertise: Robert B. Dale III and Mark Ohrstrom. Dale has an accounting background and is executive director of the Windy Hill Foundation, a local nonprofit that provides affordable housing, and which has for-profit subsidiaries, while Ohrstrom is a local philanthropist and president of an investment firm.

Eventually, PJF expects some realignment, including perhaps having a larger board and adding a development director, instead of the current all-volunteer situation. They may consider changing the newspaper from for-profit to nonprofit status to make fundraising easier. As it is, the foundation reaches out to donors to support its own journalism as well as to support the newspaper, which is the more recognized name.

Nonprofit funding mix/fundraising: Revenue has been about 85% advertising, 15% circulation. PJF budgeted that it would need $250,000 in 2020 in donations and grants to pay for its own journalism and to support the newspaper advertising decline. PJF increased that budget once the pandemic began to impact the newspaper dramatically. PJF’s model is to fund local reporting projects, and to be a safety net for the newspaper, but not to build an annual PJF subsidy into the newspaper’s operating budget. Even with foundation support, it is important for the newspaper’s operations to try to be self-sustaining. “We expect to be there to help in bad times and seasonal shortfalls, and to support special needs and improvements,” Jones said.

PJF hopes to hire a development officer, but for now continues to rely on a volunteer with nonprofit experience to act as interim executive director and fundraiser. The fundraising involves periodic calls and letters, including an end-of-year request. PJF plans to apply to join INN soon and hopes to qualify and participate in NewsMatch in 2021. Its donor base has grown from about 40 donors in 2018-19 to more than 120 in 2020. A goal is to upgrade its customer relationship management from a spreadsheet to a more sophisticated database of donors and their giving history.

Advice:

• The fundamental consideration is how viable charitable support is going to be. “You have to have enough potential donors to support you,” said William D. Fournier, an attorney with Caplin Drysdale who consulted on the Piedmont Media situation and who has advised in other newspaper conversions.
• Conversion is not a silver bullet. “If you are a newspaper losing money hand over fist, you may not make enough to cover the operations,” Fournier said. “You still need to find a way to make the business sustainable.”
• You need to have, or bring in, new expertise. “What I’ve seen most successful is to bring in one or two people who are not journalists or from traditional business, from the philanthropy side who are used to writing grant proposals, fundraising campaigns,” he said. The skills are important, as well as tapping into someone with a fundraising network.
• Your prime consideration to the IRS is that what you are producing is educational in that it is useful to the general public. Most news organizations would fall into that model, Fournier said. The concept is the entity does not distribute profits to shareholders, and needs the support of donations and is thus worthy of tax subsidy.
• For many news organizations, political endorsements are an issue. “You cannot endorse candidates for office,” Fournier said. “The benefit you get in exchange is the tax exemption.”
• A charity that holds a publication as a subsidiary business should have some other activities – seminars, panel discussions, fund journalism-adjacent activities, a broader range of activities than simply owning the publication.
• Creating a nonprofit that then takes over the for-profit entity has a couple of advantages. A new entity needs to apply for IRS approval for 501(c)(3) status. That can take six months or longer and has risks. “You give yourself a window to get IRS blessing and minimize risk,” Fournier said. “Once you have IRS approval, it’s relatively easy to move things over.”
• Don’t fear Unrelated Business Income Tax (UBIT). If you make a profit, you’ll pay tax on it. “It doesn’t put you any worse off than you are today,” Fournier said.