Nonprofit Newspapers II: Perry White Goes to Washington
We’re sure feeling the lurv here at Sotto Voce HQ. Our very own Senators, Ben Cardin and Barbara Mikulski, have respectively sponsored and co-sponsored a bill into the Senate proposing to amend section 501(c)(3) of the Internal Revenue Code of 1986 to include “certain newspapers” that are organized as nonprofits, an idea I endorsed on SV not too long ago.
The bill, S. 673, clearly answers my question about how a nonprofit newspaper organization would qualify as a nonprofit:
I see the potential for a big snag, though, in the proposed language for “Unrelated Business Income:”
That’s fudgy enough to cause problems in practice. What constitutes “exceeds?” A 50-50 split in column inches? Per page or overall? Will there be different text-to-ad ratios for news, sports, and articles because they don’t “weigh” the same in terms of fulfilling the newspaper’s educational purpose? What about print vs. online editions (a distinction not covered in the bill, BTW)?
Don’t doubt for a minute that people are going to haggle and parse those thinner than deli salmon. The so-called “mega-donors” who are likely to be the primary benefactors of nonprofit newspapers are 1) likely to reserve property interests in their gifts, allowing them to bring suit to enforce restrictions, and 2) can probably afford better lawyers than the nonprofit. What happens when a paper’s biggest donor finds out that it’s about to do an investigative series on a company on whose board he sits?
Oh, and by the way, is subscription revenue covered already in the existing Code? If not, shouldn’t that be Paragraph (l) after advertising revenue?
In any case, right now the bill is just sittin’ on Capitol Hill. Sen. Mikulski is the only co-sponsor, and I suspect that it will not emerge from the almighty Finance Committee (where the above issues could be haggled out) to see the light of a floor vote.
Regardless of the bill’s prima facie strengths and weaknesses, and also regardless of its ultimate fate, I think it’s an important first step. It would open up one more avenue for news organizations to try and make a go of it, and Sen. Cardin deserves big kudos for surveying the route. Senator, if you’re reading this, I’ll buy you a Boh and a bucket of crabs any time.
And in the meantime: newspapers, it probably wouldn’t kill you to start charging for online articles. Look at it this way: since you’re already giving everything away for free, from the moment you get one online subscriber, you’re already making money.
Or to put it another way: what else do you have to lose?
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One thing I should also mention is that the bill is designed to be a very quiet, procedural type bill. There’s no windy preamble full of WHEREASes and THEREFOREs, or a declaration of newspapers as “a bedrock of our democratic way of life,” or an invocation of the founding fathers’s opinions about the need for a free press. It’s designed to be just a simple amendment to the paperwork: “let’s add this paragraph over there and tweak this one over here.” I think that’s why I like it so much; it’s intended to make something possible, not to be a big noisy crusading declaration. As such, I think it stands a better chance of acceptance should it ever get to the floor.
“Senate Panel Hears Argument for Newspapers as Nonprofits:”
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003969892
The money quotes:
“‘While the newspaper industry is in the midst of major transition, we need to protect and nurture the information-gathering abilities that currently reside with newspapers,’ Sen. Ben Cardin, D-Md., said in remarks prepared for delivery to a subcommittee of the Senate’s commerce committee.”
“‘This approach is certainly no panacea,’ [former Washington Post managing editor Steve] Coll said in prepared remarks. ‘Even in the best case, very few of them can be expected to make this transition to nonprofit strategies.'”
“‘As a means of conveying news in a timely way, paper and ink have become obsolete, eclipsed by the power, efficiency and technological elegance of the Internet,’ [Sen. John] Kerry said as he opened the hearing. ‘But just looking at the erosion of newspapers is not the full picture; it’s just one casualty of a completely shifting and churning information landscape.'”
The seeds of the answers, as always, lie in the questions themselves. The more discussion, the better.
Here’s one to watch: Staci D. Kramer, “Nonprofit Texas Tribune Launches With Budget Covered For Two Years,” paidContent.org (which, incidentally, makes their articles available for free) : http://paidcontent.org/article/419-nonprofit-texas-tribune-launches/.
The money quote: “Unlike some of the new crop of local and regional news startups, the Tribune is launching with enough money for a well-paid staff of 16, including 11 reporters.”
Their model calls for funding to be “almost exclusively through philanthropy the first year and gradually transition . . . by the third year [to] two thirds philanthropy and a third earned income.”
This piece from the Nieman J-Lab does a nice job reviewing the current state of affairs with nonprofit newspapers, including discussion of some of the same points raised in my post: Nikki Usher, “Can we make journalism a tax-exempt purpose? Expanding the meaning of nonprofit journalism:” http://bit.ly/9VC968 .
Nearly a year since my last followup on this post, it’s nice to see the word “proliferating” used to describe how nonprofit newspapers are doing.
Kudos to the Nieman J-Lab for continuing to follow the nonprofit newspaper thread wherever it may lead. Take a look at this case study: Lois Beckett, “‘Gee, you guys are spending an awful lot of money’: The Bay Citizen editor on funding quality news,” http://bit.ly/fMzJG9 . (Incidentally, the strong reportage coming out of the Nieman program makes me absolutely unafraid for the future of journalism online.)