The New York Times today runs a lengthy op-ed on the idea that the only way to save newspapers may be to turn them over to non-profit endowments. It’s an intriguing notion, but the authors, Yale University endowment officers David Swensen and Michael Schmidt, point out a shortcoming that hadn’t occurred to me before:
As educational and literary organizations devoted to the “promotion of social welfare,” endowed newspapers would benefit from Section 501(c)(3) of the I.R.S. code, which provides exemption from taxes on income and allows tax deductions for people who make contributions to eligible organizations.
One constraint on an endowed institution is the prohibition in the same law against trying to “influence legislation” or “participate in any campaign activity for or against political candidates.” While endowed newspapers would need to refrain from endorsing candidates for public office, they would still be free to participate forcefully in the debate over issues of public importance. The loss of endorsements seems minor in the context of the opinion-heavy Web.
Minor? Uh, no. It’s bad enough that newspapers would be prohibited from endorsing candidates under this scheme. (Not that anyone reads endorsements; it’s the principle that concerns me.) But it’s easy to imagine that critics could go after the paper if any of its columnists, or even straight-news reporters, appeared to be “influenc[ing] legislation.”
I want to see newspapers survive, but I’m not sure it’s worth it if they have to give up their First Amendment rights. There’s a reason that the Founders wrote, “Congress shall make no law … abridging the freedom of speech, or of the press.”
There are a few papers, such as the New Hampshire Union Leader and the St. Petersburg Times, that are for-profit businesses owned by non-profit educational institutions. Such a set-up may not provide all the tax advantages Swensen and Schmidt advocate, but it doesn’t stop them from endorsing candidates for office. For instance, the Union Leader endorsed the McCain-Palin ticket this past October.
Swensen and Schmidt may mean well. But their proposal would diminish newspapers, turning them from independent watchdogs into government-subsidized lapdogs, afraid to exercise the constitutionally protected right to a free press lest the tax collector put them out of business.
Two years ago I wrote an article for CommonWealth Magazine on how alternative ownership models might save newspapers. In it, I took a look at the Union Leader and the St. Pete Times. The article is online here.