Tag: L3C

Carnival of Journalism 2: Take a moment to reflect on your unique skills and circumstances. Then answer: What specific things can you do to increase the number of news sources for a local community.

What specific things can I do to increase the number of news sources for a local community? I can continue to work toward establishing the L3C as a business model for news.

Two things are important to know about the L3C as a business structure for news: 1) it encourages long-term ownership of a news organization that puts journalism first; 2) it is designed to accept an investment from a foundation as seed money.

The starting point for my thought is the current economic and cultural disruption, from which will emerge new ways of doing business. Among these innovations will be branded social enterprise, patient money, slow money and renewed interest in investing in all things local. There’s a lot of cash out there circulating looking for some kind – any kind — of return. The L3C returns 5% or less, and it is designed as a vehicle for investments by foundations, local businesses, institutions and others such as private equity funds.

The ideal owners of an L3C newsroom will be satisfied with this financial return and be enthusiastic about the intangible return, the social benefit delivered by a robust local news stream. Of course, since the foundation provides only seed money, the L3C newsroom in its business plan will have to persuasively describe the full complement of revenue sources for news that everyone is struggling with.

My career spans years in newsrooms, government and the independent sector, so the idea of the L3C newsroom struck me immediately as being worth a shot. But when I spoke to a group of journalism students at DePaul University recently, I was surprised by how easily they grasped the main concept of the L3C social enterprise. They didn’t get everything but they got the gist of it. It was a treat to think how unencumbered they are by the past. My attempt to explain the act of fitting copy on a page the old way could have been a comedy act – with me waving my hands in the air and them watching in puzzled silence. But in the end – who cares? Out with the old and in with the new!

I was also struck by how little the students knew about different types of businesses, including nonprofits. But instructors like DePaul’s Mike Reilley are wise, and they are integrating business concepts into the curriculum. Reilley has assigned the students the task of brainstorming a path forward for transforming their class assignment, “The Red Line Project” into a newsroom with a sustainable revenue stream.

The Knight Foundation points out that the main source of journalism has always been private enterprise and that marketplace incentives have fueled original and verified reporting.

Steve Yelvington, noted thinker on revenue models for news, said at a University of Minnesota School of Journalism event on Economic Models for News: “The truth is that journalism has never had a business model of its own. It’s always been a useful component of some other business model.”

My position is that for the first time, journalism has the potential to be thrown from its “newspaper” nest and born to a higher expression as a crucible for civic life.

Welcome to the birth of journalism as a social enterprise!

The L3C social enterprise is the bulkhead in a growing marketplace, one that values social benefit as well as investment return. There are signs of this emerging marketplace everywhere. Take a look at this recent article in the Harvard Business Review, Shared Value.

Inspired by the Peoria Newspaper Guild and its investigation into the viability of an L3C for the Peoria Journal Star, I brought the idea to my former paper, the Chicago Sun-Times. It didn’t exactly resonant with the Newspaper Guild or the Sun-Times corporate ownership. To answer our Carnival of Journalism question: To help increase the number of news sources I could always knock on the door of the Sun-Times again.

Just as the economy is seeking a foothold to stem foreclosures, create jobs, feed people and improve our lives and communities in systemic and sustainable ways, journalism is now preparing to crawl, then toddle and start to walk on its own. The two can be coupled.

I believe we could we bring together street level metrics and journalism in a mutually supportive system and change the way our society measures wealth while also changing the way we pay for journalism. It’s a nice blue sky thought.

It’s possible some of this blue sky could be added to The Red Line Project as an L3C. I could see adding some community development bells ands whistles – an added plus for foundations that are looking for systemic fixes. Maybe that’s where I should put my effort to increase the number of news sources.

Or I could concentrate on the system of news blogs we have developing here in Chicago and evolving it into an L3C; the Red Line Project could be an arm of it.

Or perhaps I could pitch in at Village Soup, a local news site that is making money and likes the L3C model.

Currently, I know of only one newsroom established as an L3C that has seed money from a foundation and that is the Pt. Reyes Light in the Bay Area. They have the structure in place and the money to get started, but when I spoke with them last fall they were hitting some road bumps in their set up.

It’s been slower going than I would like getting this idea launched and off the ground. Despite limited personal resources I have attended conferences of the Social Enterprise Alliance, BALLE and the PRI-Makers [a group of 100 foundations who make PRIs for systemic change.] I have also attended the FTC hearings on the Future of News, CitiCamp Chicago [Gov2.0] and dozens of events in Chicago about the future of news, as well as numerous technology- and journalism-based events. Thanks to the generosity of the Reynolds Journalism Institute, I was able to attend Journalism that Matters- Detroit, where my systemic community development ideas first started to percolate. I am scheduled to attend the Web2.0 conference in March in San Francisco, as a journalist, where I will be reporting on the latest ideas in developing online revenue.

It’s been slow going because new ideas take time to integrate into the mainstream and there is always push back from existing power centers. The foundations I spoke with at the PRI Makers conference are open to the idea of the L3C and other new economic models for news, but they tend to move slowly and with caution. It’s understandable. In conversations, I found more foundation officers who were open than skeptical. In conjunction with this Carnival of Journalism piece, I am posting a statement from the PRI-Makers on L3Cs and other business models as a kind of sidebar.

One common criticism of the L3C is that it is unnecessary, that there are many ways in which a regular LLC- limited liability company, can be structured to achieve the same purpose. Although it is true that many LLCs have been established in conjunction with 501(c)3s for social benefit, they lack the branding power of the L3C – which some foundation executives see as valuable. As the volunteer convener of the L3C for Media working group at trade association Americans for Community Development, I respond as quickly and thoroughly as I can to questions directed my way. We are all learning together.

To appease the legal industry that has historically profited from PRIs as well as those who have other concerns, Americans for Community Development has drafted Federal legislation to streamline the L3C/PRI process at the federal level. If so moved, the community of journalism thought leaders could join ACD in supporting this legislation. That might give a considerable boost to birthing the future of news as a social enterprise and increasing the number of news sources for a local community.

There is much work to be done. I am confident that with the assistance of many partners, we can establish social enterprise newsrooms that will deliver every possible flavor of credible news for local communities.