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Nieman Journalism Lab
Pushing to the future of journalism — A project of the Nieman Foundation at Harvard

Nonprofit, for-profit, and all the shades in between: How to choose what kind of civic-minded news organization to start

A scholar at Harvard’s Hauser Center for Nonprofit Organizations runs through the options and how to evaluate them.

How to structure the organizations that produce journalism used to be a pretty simple question. Phase 1: Start a for-profit corporation. Phase 2: ? Phase 3: Profit!.

But as business models shift — and as nonprofit journalism continues to take up a larger (and more valuable) piece of the media pie — aspiring media moguls have an array of business entities available to choose from. A not-for-profit 501(c)3? A for-profit S corp or an LLC? A socially conscious B Corp? An L3C? A nonprofit that spawns a for-profit? In Delaware or in your home state? A 501(c)3 that starts its own 501(c)4? The options are dizzying; each comes with its own set of obligations and drawbacks, and many live at awkward intersections of state and federal law.

That’s why I’m glad our friends at Harvard’s Hauser Center for Nonprofit Organizations asked Marion Fremont-Smith to speak about:

the advantages and disadvantages of seeking tax exempt status and alternative forms for new enterprises. She will summarize both state and federal requirements for tax exempt organizations, and considerations when undertaking to seek such status, including governance requirements and considerations when choosing fiduciaries.

We’ve spoken with her before about these questions, but here she runs through the issues someone planning a new organization should be considering — and there are some interesting questions from the audience, starting 44 minutes in.

Her focus here isn’t limited to news organizations, but the lessons are highly applicable. The issues may be a little arcane to someone who isn’t in startup mode — but if you are, but it’s worth a listen. It might even save you a billable hour or two.

Note: Not much happens in the video, visually speaking, so if you just want the audio, here’s an MP3.

                                   
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Mark Coddington    July 18, 2014
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