I agree that there are many upsides to the non-profit path, but it also carries significant management risk. The business environment of non-profits is often deeply misunderstood, even by the managers of tax-exempt companies themselves. More worrisome, boards are frequently ill-equipped to understand the strategic or operational specifics of non-profits, or even unable to read the peculiarities of their balance sheets. (Board Source is a great place to go for those looking to help their boards through some of these challenges.)

For news outlets, non-profit status would eliminate some of the negative pressures of shareholders looking for high margins at the expense of the essential role of news as social glue in a community. But while they don't have a mandate to generate shareholder value, non-profits do have a mandate to deliver measurable social value. Non-profit status is not a pass on the imperative to innovate, no matter how noble your cause, nor how deep your moral certitude.

To fulfill the responsibility that comes with their tax-free status, non-profit news outlets must fight to prove their measurable worth to society. If they fail, and many will, the creative destruction of the social market should sweep them away to make room for new rising social entrepreneurs to take their place.

When done properly, M&E begins with the grantee setting out clearly the objectives of the grant, the activities necessary to achieve the objectives, and the resources applied to make these activities happen. So, for example, blogging for Idea Lab is an activity. An objective might be to create a thriving community, or to help guide the way for community news in transition.

For our Knight project, the objective is a bit more specific: to create open source tools that make community news and information easy to visualize. Activities include mapping existing tools, surveying users for specific unmet needs, coding, testing, translating, demoing, fixing, etc. Our primary resource will be the Drupal community, which is also one of our project's main beneficiaries. Ideally, we will create a virtuous circle.

The grantee is expected to have a clear causal logic, setting out how the activities will achieve the objectives, and identifying verifiable measures to assess performance against targets at each level: resources, activities, and objectives. Especially objectives. It is important to do this well, because far too often the project gets underway and the grantee loses sight of the objectives. They end up obsessing about performance as it relates to activities and resources. This is natural because activities are much more easily controlled and measured than the messy causal chain leading to the objectives. The donor, meanwhile, is mostly interested in the objectives. These differing centers of attention are the root of most donor-grantee disputes.

By starting out so early on M&E -- essentially before the grant even begins -- Knight is demonstrating how these tools can be used for partnership and management, not merely bean-counting. Our opportunity as the grantee is to embrace their challenge of partnership.