Woolley then did what he had done throughout decades of starting businesses: due diligence. He hired a consultant in spring 2004. He wanted to know: What was the experience of other news organizations on the Web? Clearly the newspaper business model was failing. Was paper the problem? Could a website, with its comparatively negligible costs of distribution, make enough money through advertising or subscriptions to support a modest staff of reporters? Woolley recalls:

[The consultant] comes back with a report that says no one is making any money out of Web-only.… There was one [site] that had raised $70 or $80 million, but she said in four or five years they’d never made any money, and they’d run through all their money.

If we’re going to lose millions of dollars, why don’t we just declare it a nonprofit? The goal was not to make money… There are a bunch of advantages to being a nonprofit… And setting up a nonprofit business is not much different than setting up a for-profit business, which I’ve been doing all my life.

The first task in legally incorporating a business, either for-profit or nonprofit, was to assemble a board of directors. A typical board comprised professionals from a variety of fields, each of whom brought to bear different expertise to set the overall goals of the corporation, oversee its management, and approve major decisions. Many nonprofit board members donated substantial sums to the organization, and were expected to bring in outside donations as well.

Incorporated . Voice of San Diego officially incorporated in September 2004 as a nonprofit. The VOSD board was unusually hands-on. Woolley had the resources to provide payroll and back-office support for the start-up through his own foundation. He and Morgan agreed Woolley would act as chief executive officer (CEO). [1] While Woolley was willing to finance the start-up, he wanted the board to seek other funding as soon as they had a product to show potential backers. As the remaining three members of the five-member board, he and Morgan selected a marketing and public relations professional, a retired journalist, and an entrepreneur. One would act as chief financial officer (CFO), in charge of keeping the corporation’s balance sheet. These five would establish Voice as a business entity, hire staff, find office space, engage legal counsel—and raise money. As editor, the board hired Barbara Bry, a former journalist and chief executive officer at a Web start-up, who would help recruit staff.

Morgan’s presence on the board of directors, Woolley hoped, would raise Voice ’s local profile. As reporters, the board planned on hiring one or two young San Diego-area journalists. Rent, phones, Internet servers, Web development, and utilities would make up the bulk of the site’s other costs. The anticipated price tag was several hundred thousand dollars for the first year. The founders trusted that the site would expand as it found more sources of financial support.