Focus on your business plan, not your tax status

Posted on May 19, 2011 by Janet Coats

I'm a sucker for the provocative quote, and Mark Potts gave me one a great one to illustrate the importance of focusing on sustainability.

"Non-profit is a tax status, not a business plan.''

Mark was speaking to a group of journalism entrepreneurs gathered in Los Angeles for the Knight Digital Media Center's Bootcamp. These are folks who have started websites aimed at serving a community -- whether geographic or community of interest -- who want to better understand how to sustain their work.

I've long been a fan of Mark's, before we met for the first time last fall at the Block by Block Community News Summit. Mark has been doing the hard thinking and the hard, practical work of building business practices that support journalism in a digital age.

I may be such a fan of Mark's because we share a common world view about some of the missteps of traditional media in the transition to digital and about where entrepreneurs should focus their efforts now.

His words on Wednesday apply not just to journalism, but to a whole range of efforts aimed at enabling social good in a digital world. Just because your cause is a noble one and you establish yourself as a non-profit doesn't exempt you from the hard realities of basic economics.

The changes wrought by the digital world -- the democratization of information, the ability to collaborate virtually, low barriers to entry and distribution and a new level of transparency -- are challenging the way all institutions operate, not just news institutions.

I've learned in the last year that the world of philanthropy is changing in ways every bit as profound as journalism -- it's just a quieter revolution.

And part of that change is a focus on tangible, practical impact and how to build sustainability for the work based on that impact. More and more, foundations are interested in enabling the work creates change across an entire network. The days of focusing funding on one project or one individual's effort for the long-term are, I think, over.

I'm just not sure all of the folks looking for philanthropic help understand that yet.

In the journalism world, I've recently attended a couple of events where entrepreneurial publishers have detailed plans for sustainability that include this line item: "Sustaining funding from foundations.'' The idea that foundation funding can be your sole or majority source of support seems, to me, to be wishful thinking.

Entrepreneurs need to diversify. And they need to put a value on their work.

Building a business plan that puts an economic value on your work -- even your most noble work -- is important not just from the perspective of drawing funding to it. It brings discipline to what you are doing. It helps you make choices about how best to direct your efforts and use your resources.

A business plan gives you focus. At the end of the day, that is far more important than your tax status.

  • Learn about these and other concepts used in TPF's approach to philanthropy.


Leave a comment

You are commenting as guest.