Whether you have grown up in Madison, call it your second home, or arrived for the first time as a student just before the pandemic, chances are high you are, at some level, familiar with its storied newspaper, Isthmus. Founded in 1976, the alt-weekly paper has for 45 years covered Madison’s arts, culture, food, and entertainment scene, racking up a veritable trophy case of accolades over the decades from organizations such as the Milwaukee Press Club and International Society of Weekly Newspaper Editors; two of its former interns have also gone on to win Pulitzer Prizes.
But as everyone is no doubt aware at this point, even institutions entrenched in their communities like Isthmus have not been spared from the events of the last year and a half. Once virtually all events and shows were forced to cancel over a matter of days, it created a ripple effect that rendered Isthmus’ business model insolvent; because much of Isthmus’ ability to underwrite its $45,000 weekly operating cost came from advertising revenue — a source that dropped 95% over a week — the paper was forced to go on indefinite hiatus in March 2020 (https://madison.com/wsj/business/).
That July, the owners determined they could not continue publishing the paper but pledged to support efforts to transition the business to a nonprofit; this was driven largely by the need to shore up new funding sources unique to nonprofits, such as tax-deductible donations from readers and businesses and some foundation grants. The former owners then donated the intellectual property to a small, volunteer editorial team in October. Finally, this past April the now-rebranded Isthmus Community Media, Inc. received notification from the IRS that its application for nonprofit status had been approved. But with its transformation came a lot of other questions Judith Davidoff and her team needed to answer.
Through a friend, Davidoff was introduced to Anne Smith, Director of the Law & Entrepreneurship Clinic at the UW Law School. Smith then referred her to Michelle Somes-Booher of the Small Business Development Center (SBDC), who provided her with a business plan template, and the Weinert Center’s Mike Williams and his Business & Entrepreneurship Clinic (B&E Clinic) so his team could create a financial plan for Isthmus Community Media, Inc. and build upon the template given by the Small Business Development Center.
As Davidoff explained, “I [was comfortable] writing the narrative — the ‘Who are you?,’ ‘What’s your vision?,’ ‘What’s the history?’… The part we were really looking to Mike and his students for was the more technical [piece], like projecting finances. They also did a lot of the market research, looking at what kind of business we are, what our competition is, what the demographics of the area are.”
Of course, a business plan is a living document, as businesses rarely grow in exact accordance with what is laid out in their long-term plan. Furthermore, unanticipated events that affect operations are all but assured so a business needs to make adjustments accordingly.
Even so, Mike and his team were presented with a unique challenge in Isthmus. Because Isthmus was transforming its business model to non-profit, there were already significant assumptions to make. Those unknowns were further compounded as their transformation is concurrent with a massive economic recovery that similarly comes with many questions yet to be answered.
“Some things we found very hard to guess, like ‘What are our print sales going to be?’ and we’re still not sure of those numbers now,” said Davidoff this past June. “So we chose to try and go out a couple of years as our best guess of what we’re looking at.”
The value of the business plan for Davidoff and her team is in how it facilitates Isthmus’ applying for new funding streams; applicants are often expected to share it with prospective financiers or donors. Prospective donors may ask to see a formal business plan when considering funding requests. While waiting for its official nonprofit designation from the IRS, Isthmus used the financial projections provided by the B&E Clinic to apply for fiscal sponsorship through the Institute for Nonprofit News (INN).
“Without final determination from the IRS we could receive some tax-deductible contributions, but others we were not going to get. Some foundations really want you to have your formal status, as well. So when we applied to INN for membership, we also applied for them to be our fiscal sponsors; that application required a business plan.”
Isthmus will be returning to print in August as a monthly print publication. Those interested are encouraged to visit Isthmus’ website here for local news and stories, where they can additionally make a tax-deductible contribution that will help support its continued grassroots journalism.