Non-For-Profit Isn’t A Business Model For Newspapers

Earlier this week, I took part in the Duke Conference on Nonprofit Media. The goal was to explore promising non-profit structures (e.g. 501(3)c, low-profit limited liability corp/L3C) that might provide some financial assistance to struggling news organizations. But here’s the problem: non-profit status for a poorly run industry merely preserves a poorly run industry.

My role, in addition to providing a background paper on the newspaper industry’s financial woes, seemed to be to remind everyone that the business model wasn’t working and that philanthropists don’t typically give funds to organizations that have yet to find stability. While I won’t go so far as to suggest that the current problems are all due to poor management, management was ill-equipped to handle the competitive challenges created by the Internet and changing media consumption and advertising habits. Despite that, many still went on an acquisition binge that has pushed several into bankruptcy. Some of these teams still think an economic recovery will fix all their problems.

Everyone agrees that journalism is worth preserving. I say, let the market figure it out on its own. A plethora of start-ups have launched based on that presumption. MinnPost, St. Louis Beacon, ProPublica, Pulitzer Center on Crisis Reporting, New England Center of Investigative Journalism and GlobalPost are among the many relatively new organizations attempting to both fill the gaps being left by reduced coverage at major metropolitan papers as well as take some of them on directly.

Sure, these are mostly not-for-profits themselves. But the reason why they have a decent shot at surviving isn’t because of that philanthropic support — it’s because of their entrepreneurial spirit and lean cost structure, two things most newspaper companies are lacking. While these startups may not all thrive, that more-organic model is still better than taking poorly run newspapers and granting them nonprofit status and expecting that to cure their problems. Nonprofit is not a business model.