It is important to have positive reasons to pursue nonprofit status, beyond a hoped-for exit strategy from a failing business. Many publishers are inspired to explore nonprofit options because of the market shifts that have made running for-profit news businesses terribly difficult. That is understandable. But nonprofit status is not a silver bullet and you still need to find a way to make the business sustainable.
Here are some questions that others found helpful to consider early in the process.
Mission: Can you define a clear public benefit mission and be able to make the case for support?
Community giving capacity: Does your community have the size, history of giving, local foundations, and a critical mass of individuals and small business donors to support a new nonprofit? Do you have relationships with those potential donors so you can reasonably anticipate that local donors and underwriters will support the news outlet as a nonprofit?
Community leadership: Are there diverse individuals willing to form the board of directors and steer the new institution?
Earned revenue: Do you have mission-driven earned revenue opportunities as a nonprofit that you don’t have as a for-profit? Will you keep a paywall or make the content free, or some hybrid? How will advertising revenue fit into your revenue model?
Internal capacity: Are you prepared to redefine your organization as a nonprofit, which requires new business planning, and quite often developing new products, services or revenue streams to replace or augment your advertising revenue?
Ownership, stakeholders and structure: How many owners, debt-holders and stakeholders do you need to involve? What about lenders, note-holders, employees? Is everyone on the same page about making this change?
Editorial independence: To protect your tax-exempt status, can you ensure that your news coverage, editorial opinions and public statements do not advance partisan politics or individuals’ political campaigns?
Content:Is the type of reporting you’re doing sufficiently educational in nature so you qualify as having a tax- exempt purpose? Usually this means in-depth reporting, reporting that’s educational and fosters civic engagement, such as on local government, public health, education, parks or social justice. Areas that might be more problematic would be crime that is sensationalist, or a pop culture focus. They can be part of the mix, but overall the newspaper needs to focus on topics beneficial to the public interest.
Above all, please be aware that becoming a nonprofit news organization is transformation on all levels and is a big lift. The business model, ownership and governance changes. The relationship between the community and the reporting and editorial staff changes. Advertisers and subscribers need to understand and support these changes as well. This guide can help you identify places where such a transition is likely to have the biggest impact on your current model, and areas where you will need to weigh your capacity to make these changes.
INN’s Startup Guide has resources on nonprofit business plans, budget and legal issues that may be helpful to already-operating organizations that are redefining themselves as part of a nonprofit conversion.