How a For-Profit Hawaii Publication Made the Switch to Nonprofit
We spoke with the editor of the Honolulu Civil Beat about their transition.
by Marc Cohen, Washington City Paper, November 10, 2017 (excerpt)
…Honolulu Civil Beat operated for six years under a for-profit model before transitioning into a nonprofit organization. “Civil Beat was [Omidyar’s] first foray into the news business,” says Epler. “They were convinced that they were able to find a business model that would make investigative journalism financially viable.”
That business model centered on subscriptions at $19.99 a month. “We got a few hundred subscribers, but nothing really earth shattering,” Epler says.
After a few years, the Civil Beat found that their for-profit model wasn’t bringing in the type of funds they were hoping for. “We’ve always been much more of a mission-operated operation as opposed to a retail-based paper,” Epler says, emphasizing that as a for-profit publication, they didn’t sell advertisements.
“Becoming a nonprofit underscores our mission to educate and engage the community on important issues,” Epler wrote in an editorial announcing the Civil Beat’s transition to a nonprofit. “We’ve always followed a mission strategy, as opposed to the retail strategy used by most other news operations in Hawaii. We’ve never sold advertising. In fact, as we’ve grown over the past six years, it has become obvious that our particular role in the current media landscape is to offer solutions-oriented, explanatory and investigative journalism. No other media outlet in Hawaii gives public policy issues the attention that we do.”
As the Civil Beat team waited for the IRS to approve their nonprofit status, they found a fiscal sponsor in the Institute for Nonprofit News, a coalition of more than 100 nonprofit newsrooms across the country. Their paywall came down and all of their subscribers immediately became “founding members.”
Epler, who started working at the Civil Beat in 2011 and became editor in 2012, says they “hired a really great director of philanthropy” to launch the fundraising arm of the Civil Beat, and in their first year “exceeded all expectations, all projections for revenue.”
Of course, it helped that Omidyar continued to stay on with the publication as its publisher and serves on its board of directors (and still contributes to it financially).
Today, the Civil Beat has an annual budget of roughly $3 million and a staff of about 22 to 24 people. That tally includes both business and reporting staff. Their funding comes from a combination of member donations, various grants, and the charitable foundations of big institutions, like banks and developers, which Epler says “helps to fund a lot of stories.”….
read … Washington City Paper