Non-profit status is often cited as an exciting new option for struggling local news outlets. ProPublica, MinnPost, and the Voice of San Diego are inspiring examples of non-profit startups, while the Christian Science Monitor, NPR and other organizations are all long-standing examples. It’s not difficult to see that old and young non-profit platforms alike are among the leaders in news innovation.
I agree that there are many upsides to the non-profit path, but it also carries significant management risk. The business environment of non-profits is often deeply misunderstood, even by the managers of tax-exempt companies themselves. More worrisome, boards are frequently ill-equipped to understand the strategic or operational specifics of non-profits, or even unable to read the peculiarities of their balance sheets. (Board Source is a great place to go for those looking to help their boards through some of these challenges.)
For news outlets, non-profit status would eliminate some of the negative pressures of shareholders looking for high margins at the expense of the essential role of news as social glue in a community. But while they don’t have a mandate to generate shareholder value, non-profits do have a mandate to deliver measurable social value. Non-profit status is not a pass on the imperative to innovate, no matter how noble your cause, nor how deep your moral certitude.
To fulfill the responsibility that comes with their tax-free status, non-profit news outlets must fight to prove their measurable worth to society. If they fail, and many will, the creative destruction of the social market should sweep them away to make room for new rising social entrepreneurs to take their place.