So you want to start a nonprofit newsroom? Here’s one thing that can make all the difference
When I first embarked on the idea of starting a new online news outlet to serve the Kansas City region, I had no clue what to do. I knew how to write stories, of course, but from a business perspective, what really goes into creating a sustainable media organization?
Early on, I realized that a non-profit model would likely work best for our market (don't get non-profit tax status confused with a business model -- that's a whole other post!). About half of the newspaper reporters across the U.S. have lost their jobs in the last decade. Meanwhile, the Institute for Nonprofit News cites that nonprofit journalism outlets are launching (growing!) in the U.S. at a rate of about one per month for the last 10 years.
But what does it take to start a non-profit media organization? What are the rules with the taxes? Fundraising? Grant writing? Where do you even begin?
In early 2019, the executive director of the Kansas Press Association had an idea I'd never even heard about: Fiscal Sponsorship.
It sounds daunting, but it really isn’t. An entity that already has its 501(c)(3) designation can act as a sponsor for a new organization. It’s a way to fast-track incubation of new non-profits while having financial oversight and accountability for the new organization.
So we created an MOU. But here's the key: It can't just be a pass-through. Your fiscal sponsor must have oversight. In addition to oversight of our expenditures, I give regular reports on our activities while the agreement is in place. The MOU dissolves once we have our own 501(c)(3). The foundation gets to keep 3 percent of whatever I fundraise for accounting and administrative costs. I can apply for major grants. Our donors get their tax write-offs. Everyone wins.
If we hadn’t made the decision to move forward with this idea early on, I would be more than a year behind in fundraising for a journalism outlet at a time where the clock is ticking on the industry.
For those who are interested in doing something similar, talk to lawyers and tax professionals. Determine what you’re comfortable with as terms of an MOU. And most importantly, trust who you’re going into business with. I trust the Kansas Press Association and its offshoot, the Kansas Newspaper Foundation. It’s going to take more innovation and creative thinking like this to help save local journalism across the U.S.
Kelsey Ryan is the founder of The Beacon, a nonprofit newsroom coming to the Kansas City region in 2020.