The L3C from A to Z, June 6, 7 at NU’s Kellogg School, Levy Entrepreneurship Center

Americans for Community Development is hosting its first conference exploring the intricate financial and legal aspects of the L3C with true experts in the field. As Liaison for the Media Working Group for ACD, I’ll be hosting a conversation with others in the journalism field about the possibilities of an L3C newsroom. This is an everything you ever wanted to know about L3Cs, what they are and how they relate to 501(c)3s and the whole concept of social enterprise and sustainable social change.

The L3C (Low-profit Limited Liability Company) is a hot topic in the nonprofit sector that up until now has only received minimal attention at all the nonprofit conferences and meetings. It may change the way socially beneficial services are delivered. It may represent a whole new paradigm in private public partnerships. And it may finally bring substantial amounts of market rate investment dollars into the social sector.

Americans for Community Development and The Levy Entrepreneurship Center of the Kellogg School of Management at Northwestern University have partnered along with Supporting Sponsor Council On Foundations to present the first conference devoted exclusively to the L3C.

Do you work in the charitable sector, an economic development agency, a foundation, a government agency, social finance,
healthcare? Are you interested in how we can do more with less from government, while rebuilding our infrastructure? Is social enterprise your thing? If any answer is yes, you need to be in Evanston, Illinois June 6th and 7th, 2011.

For additional information or questions
Karen Woods: (231) 578-0905
Janice Lang: (914) 248-8443

To register, visit the ACD website.

Welcome to the birth of journalism!

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.

As dots connect, whole emerges for future of news

First published Huffington Post, June 12, 2010

The online dots are quickly connecting. Gov2.0 entrepreneurs are building a strong backbone for a hyperlocal new stream. And much of the innovation is seated here in Chicago.

Everyblock and SeeClickFix have formed a partnership.

Many Chicago alderman are signed up for SeeClickFix. We are forming new communication channels on the Web for talking to our governments, creating a crowd-sourced complaint system and measuring the quality of government’s response to our complaints and requests for service. [I’ve embedded it here on my website – so give it a spin.] More to come on the feedback systems that could drive all this.

I haven’t talked with OutsideIn for a while but I see that the creators of the conceptual framework of the Emerging Ecosystem of News Delivery have a robust stream of information coming in from news blogs.

There’s no formula for bringing all this together and making it all work like a well-oiled machine. But – as was evident from a panel on models for news and the optimistic viewpoint of Steve Rhodes about revenue models at Chicago’s Community Media Workshop last week, we have many reasons to look brightly to the future.

We also have the “Big” thinkers now stepping forward and touting tools for getting the information you want, many of which James Fallows outlined in this June piece in the Atlantic Monthly. Give GoogleNews a spin – you’ll like it. Even the New York Times Magazine is taking notice of the plight of New Journalism Entrepreneurs in this May 10 piece by Andrew Rice “Putting a Price on Words.” It’s something I first noted in a ChuffPo post last year.

At this rarified high level of information exchange online, there’s much going on front stage and behind the scenes. There are more moving parts than can be counted.

I was reminded last week that all this blue sky can quickly go gray from the clouds cast by the lack of online access for underserved communities. Committed community news activists and journalists (no longer news-room bound) gathered in Detroit for “Create or Die” an open space on Journalism that Matters.

That’s a conversation that is continuing at a higher pitch and urgency June 24 at “From Blueprint to Building: Making the Market for Digital Information,” which Bill Densmore calls an action congress for trust, identity and Internet information commerce serving newspapers and beyond. Trust is our currency on the Web, and we’ve made much progress defining that since Pierre Omidyar made his first discoveries on eBay. Now even Omidyar has gotten the news bug and has launched Honolulu’s Civil Beat. Densmore hopes his “Blueprint” will dot the “i’s and cross the “t”s on the next phase of online trust. We’re hopeful and we will see.

As the Chicago News Cooperative continues to explore the idea of the low-profit limited liability, or L3C, business structure, the Pt. Reyes Light in Marin County says it is taking the plunge and will become a mission-driven newsroom.

As Steve Yelvington explained so well in this presentation last year at the University of Minnesota Economic Models for News, journalism has never had a business model of its own. My thinking is that it is about time it does, as I explained at Community Media Workshop panel last month. That’s why I am continuing to follow and braid the threads leading to a social enterprise news stream.

It can’t be long now before this all comes together, and when it does it will be in several robust forms that will provide access to volumes of information we’ve not had access to before. And it will be up to a diversity of journalists to do the job of helping to create, vet, sort and distribute these streams.

Hold on for a wild ride.

Follow Sally Duros on Twitter: www.twitter.com/saduros

As dots connect, whole is emerging for future of news

Chicago Journalism Townhall
Chicago Journalism Townhall (Photo credit: sally garden)

As dots connect, whole is emerging for future of news

The online dots are quickly connecting. Gov2.0 entrepreneurs are building a strong backbone for a hyperlocal new stream. And much of it is happening here in Chicago.

Continue reading As dots connect, whole is emerging for future of news

CMW panel on L3C and some thoughts on PRI-Makers Network

The Community Media Workshop held a panel May 7 on the future of news as a social enterprise and the L3C [low profit limited liability company] model.

The following Monday, I attended the bi-annual conference of the PRI-Makers Network. PRIs are Program Related Investments and they are posed at the center of the L3C model. A PRI is an investment made by a foundation — in various forms —  at below market rates. The foundation expects a return on the money – with varying degrees of rigidity. And this investment is “program related” because its is tied to the program areas funded by the foundations. Pretty simple concept!

I will be sharing more of what I learned during those three days in some upcoming posts. Meanwhile, some of my thoughts going in were confirmed: only a small number of foundations are making PRIS. PRIs are only a tiny percent — 1%— of total funding by foundations. As I say in the clip, PRI makers are similar to angels in that they seek and expect a dollar return for their investment.

Their money is, however, patient, [unlike venture capitalists] in that they are asking a below market rate return and will work with the social venture to ensure its success over time. Topmost they are expecting a return in social good for their investment. Foundations are typically working with many partners to make these deals work and there is a lot of haggling at the table over details as in any deal. Foundations themselves are going through a vast culture shift themselves over PRIs and how they fit into philanthropy.

I informally floated the idea of a journalistic operation as a social enterprise by a few PRI-Makers and the idea was met with interest, albeit reserved, as to be expected. More to come

Video 3 from Community Media Workshop on Vimeo.

L3C discussion at Community Media Workshop

I’ll be joining John Plunkett and Thom Clark in a discussion about the new L3C business structure and how it could be useful to new media orgs on Friday, May 7. Stop by and join the discussion.

I hope you’ll be able to join us Friday when The Chicago Community Trust’s Community News Matters program and Community Media Workshop host an informational session to discuss the L3C model and how it might benefit new news organizations looking for a more flexible method of organizing that differs both from standard business
incorporation and 501c3 nonprofit status.

When: Friday, May 7; Coffee at 8:30; program from 9-10:30
Where: Room 401, 600 S. Michigan Ave. at Columbia College Chicago

We’ll discuss what an L3C is and why some new news journalists have
been exploring it. Harborquest CEO John Plunkett, whose nonprofit
helped initiate the enabling legislation that created L3Cs in the
state of Illinois and was the first to use the new status, will talk
about how to take advantage of L3C status and how it fits into the new
wave of “social venture investing” in Chicago. Journalist and media
expert Sally Duros will talk about special considerations for news
outlets.

We hope you’ll join us to find out more about the new L3C model.

This event is free but please RSVP by emailing Maggie Walker at
maggie@newstips.org.

Vivian Vahlberg
Project Director
Community News Matters