This case study series is a part of the Quick Guide to Converting a For-profit to Nonprofit News Outlet. This content has not been updated since publishing.
Case Study: Community members persuaded this publisher to go nonprofit so they could help
Case Study: A longtime community publisher feels re-energized as a nonprofit
Case Study: Residents stepped up to save a struggling for-profit newspaper company
Name: The San Antonio Report, San Antonio, Texas
Publisher: Robert Rivard, editor & publisher
Profile: The San Antonio Report is a free, online publication covering San Antonio. It was founded in 2012 as The Rivard Report, a community blog by Robert Rivard and his wife, Monika Maeckle. It developed into an online news site, newsletter and community events organization now named The San Antonio Report, and has grown from a small staff to the current 21 employees. Rivard had a classic journalism background as editor of the San Antonio Express-News and as a foreign correspondent, senior editor and global chief of correspondents at Newsweek.
Trigger for change: The Report was scraping by, selling advertising and receiving some donations, but was largely subsidized by Rivard and Maeckle, who did not draw a salary. Rivard wanted financial stability and funding to grow the business, and friends with experience in tech, finance, nonprofits and journalism also wanted to help the publication get on solid financial footing. These community members spent months in financial modeling and discussions. Ultimately, the team realized that the lack of robust returns would make it difficult to attract traditional return-driven investors, and that the Report was better positioned to seek donors willing to support community journalism.
Their story: The idea to convert to a nonprofit was the brainchild of Rivard’s friend, John “Chico” Newman Jr., a philanthropist with years of experience in nonprofits, including those focused on journalism. Newman is a strong believer that healthy communities depend on robust local news sources. Rivard was reluctant to take the nonprofit route, hoping to retain control and turn a profit. “He was going to burn out,” Newman said. “And I just didn’t think his business model was sustainable.”
So Newman staged what was essentially a financial intervention over dinner, and made the case that Rivard should change strategy. He recruited a small group of funders, who made three-year commitments of financial support. With about $600,000 in donations and an annual budget of $300,000 to $400,000, they were ready to go. “All of a sudden, that was a serious runway,” Rivard said. Persuading donors to make a multiyear commitment is key, Newman believes, to giving an organization the time and resources to establish itself.
The group created a board of seven people, although it plans to expand to about 15 as the nonprofit matures. The rationale is that a small, strongly committed board is more effective in the critical early stages of growth and development when decisions must be made quickly. Rivard was keen to foster a diversity of voices, so the organization created a community advisory board.
One of their first hires as a nonprofit was a development director who also was tasked with developing a business team and becoming the COO. She hired an advertising director, a membership director and an events coordinator, who built up a scaled membership program with options that include newsletters, invitations to events and public recognition. The Report has also created a corporate sponsorship program with tiered contribution levels.
The Report joined the Institute for Nonprofit News and the News Revenue Hub and participated in a Facebook Membership Accelerator program. The Revenue Hub helps with conceptualizing revenue generation, provides technology tools and hosts an active Slack channel. “Being part of other like-minded organizations has been a wonderful opportunity” to brainstorm, share experiences and learn from each other, said Jenna Price Mallette, chief operating officer.
Newman believes getting professional help in areas new to most journalists is key. “The fact that someone is a good editor doesn’t mean they are good at business,” Newman said. “Strategy is when unlimited aspirations meet limited resources.” Rivard agrees that “journalists traditionally aren’t good business people.” The Report has benefited from the business training he received at Northwestern University mid-career as a newspaper editor. Rivard has seen organizations burn through their capital and struggle. He urges others to follow his doctrine “never to spend money we didn’t have.”
“We are thoughtful and strategic,” Rivard said, so they tend not to be surprised or at loss about what to do as the business landscape changes. “We try to consider all the eventualities, what could happen, as well as identifying opportunities.” With a new publisher and CEO on board, the plan is to grow from a $2.5 million organization to a $5 million organization, with expanded reach, including more journalists, more podcasts, more civic engagement events.
“There is something about this model at this moment in time, when traditional, corporate-owned for-profit media is collapsing, to fill an important gap. It’s turning out to be what works,” Newman said.
Fundraising: Rivard spent years in San Antonio as a high-profile editor and entered this project with trusting relationships with community leaders and wealthy potential donors. He launched an active public outreach program focused on the decision to become a nonprofit and the opportunity to take the enterprise to the next level. He was surprised that once the organization was a nonprofit, “people in the community saw it as a public trust. They started to think I wasn’t in it for the money.” Community reaction was really positive, he said. “People really opened their pockets. It was almost like they owned it instead of us.”
The pitch was simple and direct: “Local communities without good news organizations are not good places to live.” Newman noted studies have found higher bond rates and quality of life issues in communities without robust local news.
The Report attracted individual donors the first year with a membership challenge grant. “People were excited. They wanted to be part of it. They wanted to help us reach that goal,” Mallette said. The Report currently is on a path to 3,000 members and wants to grow to 5,000.
Business membership is another program. For larger partners, The Report develops custom programs that mix some advertising, visibility opportunities, and event sponsorship.
Form of transition: The San Antonio Report was part of the for-profit Arsenal Group. The nonprofit San Antonio Report filed for IRS tax-exempt status in August 2015, and received approval in December. The San Antonio Report assets, except for some custom furniture pieces designed by Rivard’s son, were donated to the nonprofit. While awaiting the IRS decision, they used the Institute for Nonprofit News as their fiscal sponsor.
Current status: Conversion to nonprofit is complete.
Legal resource/attorneys: Roberto Rondero de Mosier, the general counsel of The Guild in Austin, Texas, and adjunct professor at St. Mary’s University in San Antonio, provided legal assistance. Rivard said he found the legal process much less challenging than fundraising.
What changed: Membership campaigns, tiered business sponsorship opportunities and monthly events as a revenue source have changed as the Report grew. Some events are paid participation, but most are free as part of the nonprofit’s civic engagement program. “Membership Is a huge part of our success. Continuing to grow membership as a percentage of our revenue is an important part of the plan,” Mallette said.
As part of the long-term plan, Angie Mock was hired in December 2020 as publisher and CEO, and brings nonprofit sector and substantial fundraising experience in the region. Rivard was able to hand off fundraising and business operations to Mock and become the full-time editor. The Report is recruiting for a new editor, who they hope to have in place by midyear. This will allow Rivard to focus on his twice-weekly column and eventually retire.
Nonprofit funding mix: Membership campaigns, tiered business sponsorship opportunities and monthly events as a revenue source have changed as the Report grew. Some events are paid participation, but most are free as part of the nonprofit’s civic engagement program. “Membership Is a huge part of our success. Continuing to grow membership as a percentage of our revenue is an important part of the plan,” Mallette said.
As part of the long-term plan, Angie Mock was hired in December 2020 as publisher and CEO, and brings nonprofit sector and substantial fundraising experience in the region. Rivard was able to hand off fundraising and business operations to Mock and become the full-time editor. The Report is recruiting for a new editor, who they hope to have in place by midyear. This will allow Rivard to focus on his twice-weekly column and eventually retire.
What they wished they’d known: “We got in trouble when we made decisions that were reactive instead of slowing down, thinking about the impact and then making the decision,” Newman reflected.
Advice:
For more information on the San Antonio Report’s transition to a nonprofit, see this Nieman writeup.
Name: Growing Community Media, Oak Park, IL
Profile: Growing Community Media publishes four weekly community newspapers on the west side and near west suburbs of Chicago: Wednesday Journal, Austin Weekly News, Riverside-Brookfield Landmark and Forest Park Review.
Trigger for change: After four to five years of steadily declining advertising revenue, Dan Haley, editor and publisher, and his fellow owners understood their newspapers needed new revenue streams to stay in business more than another year or two. Their work was born in community activism of the 1980s and so they reached out to the community for answers. “The business model is broken. A lot of things are broken these days beyond newspapers, but we aren’t selling groceries,” Haley said. Figuring out a new way to support community journalism was more complicated, he concluded, than morphing into an untethered digital business. They needed people with feet on the ground, covering the community by being in the community. Haley and his team were determined to find a way.
Their story: The Wednesday Journal Inc., publisher of the four newspapers, began in 1980 when a small group of friends decided to start a local newspaper as part of an urban renewal and social justice movement in the Oak Park and Austin neighborhoods of Chicago. They sold shares to about 70 people who each invested $1,000. It was a healthy business for decades, but “the last four or five years were pretty brutal, and it was clear we couldn’t continue as we had been,” Haley said. They considered seeking more investors, but Haley said he could not, in good conscience, ask friends and the community to invest in what was no longer a viable business model. Haley started looking at other options, including riding out the decline or becoming a nonprofit.
He attended the Institute for Nonprofit News’ INN Days conference and loved the energy and commitment of the publishers he encountered. Haley conferred with his four fellow board members and they decided to convert to a nonprofit. It wasn’t an easy decision because the 14 shareholders would have to donate their stakes to the nonprofit, giving away a retirement nest egg. These were investments they had hoped they eventually could sell.
To guide him, Haley reached out to Case Hoogendoorn, an attorney active in nonprofits. They knew each other from community work over the years. After an analysis of the business and outreach to community leaders and other nonprofits in the region, they decided to create a new nonprofit organization called Growing Community Media with a deep focus on community journalism.
Hoogendoorn helped Haley develop a business plan with a new revenue mix that included donors, subscriptions and grants, as well as advertising. A difficult decision was made to sell a monthly magazine, Chicago Parent, to raise some money and focus solely on community journalism. The sale required creating two independent staffs, separating design, circulation and other departments. “There was grieving over losing colleagues and a publication we were proud of and had invested in over the years,” Haley conceded.
Their goal is to build a new revenue mix of reader subscriptions, community donors, foundations and advertising. The business model counts on donations ranging from $250 from individuals to tens of thousands of dollars from major donors, grants and foundations.
Haley has concluded the issues facing for-profit newspapers run deeper in the publishing industry than just the ad-supported business model being broken: Owners who took 30% profits without substantially investing in innovation, investor-owned newspapers that no longer have community roots, and even the way news is conceived. “The way we gather news, the people we choose to talk to, is also broken… Who are we talking to, how do we choose stories, how do we tell stories differently …Race is a gigantic issue… how do you cover equity issues?” he mused. “It’s a hell of a moment.”
Growing Community Media wants to be more about community, and a convener of voices, especially voices not often heard. It will focus on equity, race issues and sustainability. It will talk less to school superintendents and more to parents. It also plans to draw in people from the community and mentor them to foster the next generation of reporters and community leaders.
Form of transition: A new nonprofit, Growing Community Media was created. The 14 shareholders of Wednesday Journal Inc. donated their stakes to Growing Community Media. Wednesday Journal, Inc. was dissolved in January 2020.
Current status: The IRS approved Growing Community Media’s application for tax-exempt 501(c)(3) status in April 2020.
Legal resource/attorneys: Hoogendoorn & Talbot LLP,
Chicago Community reaction: An initial fundraising drive raised $100,000 from more than 1,000 readers in a few weeks. “There is a sudden realization in Chicago that community journalism is on the verge of extinction and they need to step up,” Haley said. He held a series of breakfast meetings with community leaders and was heartened by the understanding of the role of community newspapers and pledges of support. “You are the glue that holds this whole place together, people said. If you aren’t here, how do we know the work of the other nonprofits; where is the accountability of government?”
Fundraising: The goal is to build a sustaining blend of advertising, reader revenue, local philanthropy and foundation and corporate support. Early on, Haley reached out to the local community foundation, which has been encouraging and supportive, including with a recent $5,000 grant to support coronavirus coverage.
Haley received conflicting advice on hiring a development director – “It’s your most important hire to don’t hire one” – “so it feels like a crapshoot.” The nonprofit brought on a development consultant in late 2020. Fundraising has involved a mix of a lot of one-on-one meetings and meetings with affinity groups of 20-30 people to ask for funding for specific editorial positions to cover equity or environmental stewardship.
The community has been supportive. As of March 2021 the nonprofit raised more than $300,000 from readers and donors and built a 14,400-person email list. More than 1,000 people agreed to donate. A fundraising appeal letter at the start of the pandemic brought in $40,000 in two weeks from 600 people. “I am kind of stunned,” Haley said, “People are giving $500 or $5,000. Readers are coming around to the idea that they need to pay for it,” Haley said. But it’s a never-ending task: “You gotta ask and ask.”
What changed: In re-orienting to be a fundraiser and even more community-based, Growing Community Media will move from a five-person board of owners to a nine- to 11-person community board. The goal is to be more inclusive, with representatives of the seven neighborhoods they cover, with diversity of gender, age and race. Haley will move off the board and become executive director reporting to the board. Also, the pandemic accelerated a shift into digital publishing.
Nonprofit funding mix: Pre-conversion, the revenue mix was 70 percent advertising and 30 percent print subscriptions. The website is free. The post-conversion plan was to replace advertising with a 30/10/60 share of donor revenue, subscription and advertising. Events may be part of the mix, but Haley is cautious about counting on them for much revenue. The newspapers had hosted community conversation events, and some had great attendance, but others flopped.
Biggest surprise: “Our mission for 40 years was to be a for-profit, but never solely focused on profits,” he said. Still, being a nonprofit “is a really different mindset and I don’t think I really understand that fully. I am still figuring it out,” he said. “The culture in the company needs to be different in how people think of connection to community, even though I am proud of our community connections. We need to think differently about connection to readers.”
Pros & Cons: For many news organizations, political commentary and endorsing candidates for election are important editorial functions that Hoogendoorn warns may be difficult for some publishers to let go of in order to maintain nonprofit status. He expects a publisher may challenge that concept, which he said, has never been constitutionally tested.
Advice:
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:
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