Nonprofit news has become a hot topic over the past few days. Some people are calling on Warren Buffet to drop a cool billion dollars or so to endow newspapers.
Others say going nonprofit is a cop-out.
Fueling these discussions are a couple of myths about the nonprofit world. Since we've operated in it for three years now, let me dispel them:
* Nonprofit is the easy way out. Ahem. Perhaps you noticed that NPR and Chicago Public Radio just laid off staff. Perhaps you, at some point in your career, have written an article or 12 about the local nonprofit school/church/clinic/theater/bookmobile that is going out of business because it can't pay the electric bill.
Nonprofit is not easy, and it's not a cop-out. Asking for donations is just as difficult, if not more, than making ad-sales calls or finding venture capital. Philanthropic fundraising involves identical processes, and has an identical (i.e., horribly low) ratio of prospects to successes.
* All you need to do is find a sugar daddy. If only. Stable nonprofits have a diverse revenue stream, just like stable for-profit businesses. Getting one guy to kick in a huge sum of money is a bad, bad idea.
* Nonprofit news has ethical problems, because you're beholden to those who give you money. Right, and so does for-profit news. Until we invent a business model for news that doesn't require money, news organizations will face this problem. The key to doing it successfully is having policies and procedures in place to govern who you'll take money from, under what circustances, and what, if any, connection that money can have to editorial decisions.
* Nonprofit organizations are not responsive to market forces.
Foundations like to fund organizations that have demonstrable societal impact. If 10 people read your nonprofit news website, you won't attract foundation dollars. If 10 million read it, you will.
Similarly, individuals give to nonprofits with which they have a personal relationship. If 100 people read your website, you'll be lucky to have 10 donors. If you've got 100,000 readers, you might have 10,000 donors.
If that isn't the market at work, I don't know what is.
So, now that I've convinced you that operating a nonprofit is a giant pain in the ass, you may wonder why it's worth doing.
* It fundamentally alters the relationship between the community and the news organization.
When I worked as a reporter at the St. Pete Times (owned by the nonprofit Poynter Institute), I'd often call people on deadline to ask about terrible tragedies that had befallen their loved ones. Frequently, it took a long time to get to the details -- because the bereaved would spend five or ten minutes lavishing praise on the paper, explaining how much they loved the Times. I never had a conversation like it at any of the other seven newspapers I've worked for.
People know nonprofits exist solely to serve the community. They have a sneaking, and these days all-too-accurate, suspicion that their for-profit newspaper would sell the community down the river for the right price.
* It removes the conflict between maximizing shareholder value and fulfilling a news organization's public service role.
News costs money. Period. It's not always clear that there's a solid return on investment for those dollars. And CEOs have a responsibility to do everything they can to boost profit. Often that means cutting newsgathering to the bone.
With nonprofit news organizations, the priority is clear. The yardstick of success is great news coverage, not a great quarterly dividend.
* It allows you to bring more value to advertisers/underwriters. Print ad volume is falling these days, and the industry standard $10/CPM online rates aren't enough to make ends meet.
Here's where nonprofit news really excels. Audiences of those news organizations are typically more engaged than your average newspaper reader, and they hold the news organzation in high esteem. A corporate sponsor who's underwriting their favorite public TV station or local news website is, by definition, a company they like.That goodwill is worth money.
* Taxes. We don't pay them. Trust me, it's just as fantastic as it sounds.