Last week Sally Duros spoke to our online journalism class about different strategies for funding an entity such as The Red Line Project. As a former Chicago Sun-Times editor and current advocate for L3C newsrooms, Duros had great insight on nearly all aspects of the journalism world.
The point of Duros discussion that was of the most interest to myself as a potential entrepreneur and “owner” of The Red Line Project was her explanation of what L3C is. Low-profit, limited liability corporations (L3Cs) are a new and innovative way to create early funding for a project such as a hyper local news site without having to immediately identify as a non-profit. Duros described L3Cs as projects that are “for profit with a non-profit soul.”
L3Cs differ from non-profit organizations in that they offer investors a return on their investment. This type of business model allows for less risk for investors and more freedom for the L3C itself. Investors allow L3Cs to get off the ground until they can start generating revenue of their own. With the promise of eventually operating self-sufficiently L3Cs are given the freedom to do and stand for whatever they believe in. There are no ongoing sponsors to please.
Investments for L3Cs typically come from people who truly care about the organization, the people involved and/or what the organization stands for. In the case of The Red Line Project investors potential investors could be individuals and foundations that stand for community journalism, student journalism, or even the city of Chicago itself.
I think this would be a very smart path to research as we make more and more progress towards developing The Red Line Project into a fully operational news site. In an age in which online journalism, specifically hyper local journalism, is growing at such a fast rate I think it would be limiting to file The Red Line Project as a non-profit organization. It might allow for early success, but I feel that the website would be granted more freedom in its content and growth as an L3C.