By NYU Staff

Transition from journalism to running a start-up nonprofit center for news is hardly an easy one, especially if it is focused on investigative reporting. From human resources to get the money flowing, handling tax issues and ensuring transparency are few of the challenges along the way.

Low costs of publishing and a dramatic change in the newspaper industry are pushing investigative reporters to seek out on their own. Coupled with a limited number of traditional nonprofit centers in the country and an emergence of new funders are creating new start-ups.

NewzBeta spoke to a few media entrepreneurs who have crossed the divide and cut their teeth in this new world. Here are a few pointers to those raring to go.

Getting Started

Investigative Journalists make it on their own

“The biggest lesson is plan your work, work your plan,” says Daniel Lathrop, a digital strategist at Seattle-based Investigate West. The nonprofit focuses on regional investigative journalism on the West coast. Lathrop is an award-winning journalist, formerly at the Seattle Post-Intelligencer. He is an expert on computer assisted reporting. When the newspaper closed its print version in March this year, Lathrop and team had a few months to plan their nonprofit center.

Fresh from his experience, he advises setting up meetings with local foundations and with local VIPs, people who are active in the community. “Getting their advice about where the business model should be, who you should be approaching for support helps,” he says. Business development consultant Point B helped the team. A law firm made the nonprofit a pro bono client and spent hundreds of thousands of dollars worth of its time. The team also has a professional fund raiser and believes in fundraising around specific stories.

Build an audience

It is important to be organized. “You need to have strong ideas about what you are doing, why you are doing,” Lathrop says. And stay focused on executing that.

Building a consistent audience is a very hard task online, and if a business plan depends on that, figuring out who your audience is going to be is very important. Also of priority is zeroing in on credible people to partner with. “You need to do good work, else no one will partner with you in the future. If funders respect your work, it is priceless,” Lathrop says.

Keep overhead low

David Cohn of Spot.us who pioneered the idea of crowd funded community reporting, faced an uphill task of launching his site in the fall of 2008 just when the economy was falling apart. “I was nervous as hell. It was a little bit more difficult to have people reach their pocket to donate,” he recalls. Cohn was first a technology reporter writing for Wired. Absorbed in the build up of Web 2.0, he adopted the principles of open source journalism.

The majority of his effort was geared towards small donors. He did receive a $340,000 grant from the Knight Foundation. With an operating budget of $200,000 a year, Cohn raised another $60,000. More than a dozen reporters working on over 40 projects for Spot.us are paid through the contributions raised online. These reporters include everyone from two-time Pulitzer winners to eager high school students.

This media entrepreneur does not have an office because of the costs involved. He is opting for ‘co-working’ instead. Under this arrangement he will rent out a desk in a downtown San Francisco office for $150 a month with fellow journalists working for their different publications. “It has a feel of newsroom,” Cohn says.

Tax and legal issues

Lorie Hearn, executive director, at the San Diego based Watchdog Institute says, “I certainly never realized what it is to start a business.”

The Institute was founded with a generous funding from the Union Tribune when it was sold off to Platinum Equity in June this year. In an unusual turn of events, Hearn who headed the investigative unit floated a nonprofit with her former employer as the chief benefactor. “We took the investigative team into the nonprofit world,” she says. The new owners believed investigative journalism was important, even as they wanted to save on costs, she says. The Institute has a two-year contract and Hearn hopes to prolong the agreement in future.

“Setting up a nonprofit is like setting up a small business,” Hearn says. The center has four employees. “I have had to set up payroll, learn about health benefits, workers compensation and general liability insurance. We had to negotiate our MoU with U-T. We had to obtain a lease with the journalism school in San Diego State University. A big part of it has nothing to do with producing stories,” Hearn who has been a reporter for 20 years and a manager for 15, says.

Getting a tax exempt status from the IRS is a lot of paperwork for a nonprofit.  But it is important since it will streamline donations. Filling out a 10 (23) is an exhausting task, Hearn who sought counsel from her attorney friend in San Diego said.  A law firm is now helping with the formalities on a pro bono basis for the Institute.

Meanwhile, the Center for Public Integrity is acting as a fiscal agent for the Institute. By collecting donations on behalf of the Institute and routing it back to the Hearn’s team, it has ensured the flow of money pending the tax exempt status.

“It is all about being accountable to the public. You can’t have a name like the watchdog institute, and say you are doing investigative reporting and not be transparent about how you do your own business,” Hearn says.

Governance

Charles Lewis, a veteran investigative journalist who founded the Center for Public Integrity in 1989, says “the overseer of daily operations should not also chair the board of directors, which is charged with the fiduciary oversight and responsibility for the incorporated entity.” He goes on to enlist the governing instruments for nonprofit outfits: bylaws and articles of corporation which must be formulated and submitted to the state. This was a part of his article for the Investigative Reporters and Editors (IRE) Journal in Spring 2009, ‘10 rules of the road for nonprofit centers’.

How to keep it going?

Talking on phone from Washington D.C. Lewis says, “It is used to be that the commercial media would be condescending and say that this non-profit media is not sustainable, did not have the kind of solid support that advertising provides. Now it’s a slightly amusing observation. Perceptions and perspectives about this have shifted, especially in the last one year and that to me is progress.”

Should start-ups worry about competition? “We are a part of the future. It needs to be done in tandem with other different projects,” Cohn says modestly. After a whole year, his take home pay is $40,000. “Keep your head down and don’t worry about competition. It’s a distraction,” he adds.

Start-ups have to constantly make trade-offs between spending money and time. “It is difficult, lot of hard work but doing this work is really worth the struggle,” Lathrop says.