Tag Archives: Connecticut Mirror

How the IRS is killing nonprofit media

This article appeared earlier at The Huffington Post.

Outrage over the Internal Revenue Service’s targeting of Tea Party and other right-wing groups continues to boil — yet a potentially more consequential IRS practice has scarcely gained any attention.

Over the past few years the IRS has virtually stopped approving 501(c)(3) status for nonprofit news organizations. Given the well-documented decline of traditional for-profit newspapers, nonprofit journalism can be a vital alternative, especially at the local and regional levels. But even when applications for 501(c)(3) status aren’t rejected outright, they are stacking up, unacted upon, for months and even years.

A recent Council on Foundations report titled “The IRS and Nonprofit Media: Toward Creating a More Informed Public” put it this way:

There is significant anecdotal evidence that the IRS has delayed the approval of nonprofit media, potentially slowed the development of those already created, and harmed communities by leaving them without essential coverage, due to the application of archaic standards.

Starting in the middle part of the last decade, a number of nonprofit entrepreneurs launched community websites that were built roughly on the public radio model, funded by grants, sponsorships and contributions from readers. Gaining 501(c)(3) status allowed donors to make make those contributions tax-exempt.

In researching “The Wired City,” my book on the New Haven Independent and other community news sites, I was struck that nearly all of the best-known nonprofits — the Independent, Voice of San Diego, MinnPost, the Texas Tribune, the Connecticut Mirror and others — had been started during the same time period, from 2004 to 2009.

“There was an initial bubble of nonprofit start-ups, but you haven’t seen that great wave spreading across the country,” Andrew Donohue, the then-editor of Voice of San Diego, told me in 2011. He saw that as potentially a good thing — a sign that journalists were trying a variety of models, for-profit as well as nonprofit. Since then, however, it has become increasingly apparent that the IRS is a principal agent in stifling that great wave.

Consider some of the consequences of the IRS’s actions and inaction:

• In February 2012, the Chicago News Cooperative went under, in part because of its inability to obtain 501(c)(3) status from the IRS, as Ryan Chittum reported in the Columbia Journalism Review.

• Because the IRS does not consider journalism to be among the educational activities covered by the 501(c)(3) rules, the agency told the Investigative News Network to remove the word “journalism” from its articles of incorporation. The INN complied and won approval, according to an article about the Council on Foundations report by Justin Ellis of the Nieman Journalism Lab.

• In a similar vein, according to the report, the Johnston Insider of Rhode Island received a message from the IRS telling it: “While most of your articles may be of interest to individuals residing in your community, they are not educational.” Because of that and other reasons, editor Elizabeth Wayland-Seal announced that she was suspending publication.

What adds to the absurdity of the IRS’s stance, as the report notes, is that we are already accustomed to relying on nonprofit, tax-exempt media for much of our news and information — not just from community news sites but from long-established outlets such as NPR and local public radio stations, “The PBS NewsHour” and magazines such as Mother Jones, Consumer Reports and National Geographic.

Here is how the media-reform organization Free Press, which has assembled a useful repository of information about the IRS and nonprofit news, describes the problem:

Nonprofit journalism is not a silver bullet for the future of journalism. But fostering a more diverse media system is. If the IRS decides against allowing nonprofit status for newsrooms, it will essentially be arguing that all journalism should be done for profit. The problem is, the market has shown it will not support the full extent and diversity of news and perspectives we need.

Four years ago, U.S. Sen. Ben Cardin, a Maryland Democrat, proposed a bill that would have allowed newspapers to become nonprofit organizations. At the time it struck me as superfluous. Now it appears that it warrants another look — not just for newspapers, but for other forms of media as well.

Absent legislation, President Obama should appoint a new IRS commissioner who understands that providing quality local journalism is indeed the sort of educational activity that should be covered by the provisions of 501(c)(3).

At a historical moment when it has become increasingly difficult for the traditional media to provide the information we need to govern ourselves in a democracy, the IRS shouldn’t stand in the way of promising alternatives.

In Chicago, too much hyperlocal competition?

A couple of friends today sent me a link to Mike Fourcher’s ruminations on what he learned running the Center Square Journal, a hyperlocal news site in Chicago that he started three years ago. He offers 21 lessons, and they’re not without value. But what stands out from my reading of them is that he simply faced too much competition for advertisers and readers. And that, in turn, was a consequence of his making an unfortunate choice of location.

Screen Shot 2013-01-15 at 4.07.11 PMThe sites I profile in “The Wired City” — mainly the New Haven Independent, but also The Batavian, CT News Junkie, the Connecticut Mirror, Voice of San Diego and Baristanet — have very different business models, but they all have one thing in common: a niche that was being woefully underserved before they came along to serve it.

New Haven illustrates my point. Paul Bass launched the Independent in 2005 to provide city and neighborhood news that was largely being ignored by everyone else — including the region’s daily paper, the New Haven Register, which tended to focus on the suburbs around New Haven. Eight years later, the Independent and the Register still serve different audiences. They compete for certain types of city news, but mainly they stay out of each other’s way. And because the Independent is a nonprofit, they’re not competing for scarce advertising dollars.

The Batavian is very different from the Independent, but it has similar advantages. The for-profit site was launched in Batavia, N.Y., by the GateHouse chain in 2008 as a pilot project. In 2009 it was acquired by Howard Owens after he was let go as GateHouse’s director of digital media.

The Batavian was up against two established news organizations: The Daily News and WBTA Radio. Owens formed a partnership with the radio station and competed fiercely with The Daily, as the locals call it. Unlike Fourcher’s experience in Chicago, though, there really wasn’t anyone else.

Like Paul Bass in New Haven, Owens carved out a niche by going more local than his competition — one county for The Batavian versus three for The Daily. It turned out that the business community was vibrant enough to support a daily newspaper, a radio station and a community website. But if there were, say, a half-dozen websites all trying to turn a profit, it’s not likely any of them would be able to make money.

Fourcher, a refugee from the robo-news operation Journatic, is now trying something interesting. He’s called a community meeting for Jan. 31 to see if his readers like the Center Square Journal enough to help him continue it in some form, or possibly to take it over in its entirety.

What’s evident from his 21 lessons, though, is that he fell short of making the Journal a vital part of his readers’ lives — possibly because there were already too many other voices competing for people’s time, attention and dollars.

Taking a look at Connecticut budget coverage

Gov. Dannel Malloy

Compared to Greater Boston, the decline of traditional news organizations in Connecticut is considerably more advanced. The Hartford Courant, a venerable statewide daily that traces its founding to 1764, is owned by Tribune Co., which is in bankruptcy. As a result, the Courant has had to cut back on its Statehouse coverage in recent years. Other largish dailies, such as the New Haven Register, no longer even have a full-time Statehouse reporter.

Yet Connecticut has also proved to be a place where digital-media experiments have arisen to fill in some of the gap. Two that are focused on state government are the Connecticut Mirror, a well-funded non-profit, and CT News Junkie, a scrappy for-profit that also functions as the Statehouse bureau for the non-profit New Haven Independent.

With Gov. Dannel Malloy having reached a tentative agreement with the state’s labor leaders on Friday, a deal that could prevent the layoff of nearly 5,000 employees, I thought this was a good time to check in on how the old and new players covered it.

Hartford Courant

  • Lede: “Capping months of secretive talks, Gov. Dannel P. Malloy and state-employee union leaders reached a deal Friday to save $1.6 billion over the next two years in exchange for a promise not to lay off unionized workers for the next four years.”
  • When: Time-stamped at 10:11 p.m. on Friday; published in Saturday’s print edition
  • Length: About 1,600 words
  • What: A densely reported story that is full of details but is a little bewildering if you’re not an insider. Perhaps the one-must read if you’re a stakeholder, but loses points for quoting the chairman of the Republican State Committee as calling the budget “unconstitutional” without offering (or demanding) an explanation.
  • Reported by no one else: “At the end of his prepared remarks in announcing the deal, Malloy’s speech said, ‘Finally … so much for Friday the 13th being an unlucky day!’ But Malloy never delivered that line.”

The Connecticut Mirror

  • Lede: “Negotiators for state employee unions and Gov. Dannel P. Malloy tentatively agreed Friday on a two-year $1.6 billion package of concessions and other labor savings that will help Malloy balance the $40.1 billion biennial budget without 4,700 announced layoffs.”
  • When: Posted on Friday with no time-stamp, but first comment posted at 2:29 p.m.
  • Length: About 1,400 words, plus a 1,100-word sidebar analyzing the implications of the deal for future budget planning, posted later on Friday
  • What: As with the Courant, the Mirror’s main story is densely reported and filled with details of interest mainly to insiders. The sidebar, though, provides needed perspective by demonstrating how difficult it will be for Malloy to hold on to savings in the face of demands that he undo program cuts.
  • Reported by no one else: “With over $19 billion in bonded debt, Connecticut ranks among the top three states in the nation in terms of debt per capita, and debt as a percentage of the taxpayers’ personal income.”

CT News Junkie

  • Lede: “Gov. Dannel P. Malloy said that after months of negotiating he has reached a deal with labor that saves the state $1.6 billion over the next two years and $21.5 billion over the next 20. However, at a 3 p.m. press conference there was little Malloy could say about the agreement until negotiators have had time to brief union members.”
  • When: Friday at 6:12 p.m. (final update); initial post at 2:20 p.m.
  • Length: About 900 words
  • What: As the site’s name suggests, CT News Junkie is mainly geared toward political junkies and insiders. It doesn’t get any more insidery than this: “Also the retirement age will be raised from 60 to 63 for Tier II employees and 62 to 65 for Tier IIa employees, however, those changes won’t kick in until 2022.” But the shorter length makes for a somewhat zippier read without sacrificing much in the way of needed details.
  • Reported by no one else: “In 2009 the last time a the [sic] SEBAC contract was reopened it took the state employee unions three weeks to complete the ratification of the contracts.”

The New York Times

  • Lede: “Threatened with nearly 5,000 layoffs, representatives for 45,000 unionized state employees agreed Friday to $1.6 billion in concessions over two years to help balance a budget that Gov. Dannel P. Malloy says includes pain for everyone: record tax increases, substantial program cuts and worker givebacks in health care, pension benefits and wages.”
  • When: The Web version of the article says it was “published” on Friday; it appeared in print on Saturday
  • Length: About 900 words
  • What: The Times covers major Connecticut stories as part of its New York local report. The story, which cites the Courant for some details, offers a more sweeping view than the others, going with fewer details and seeking to place Malloy’s conciliatory approach with the unions in a broader political context.
  • Reported by no one else: “And while the confrontational approach has made Governor Christie of New Jersey a hot property, there is no early indication that what Mr. Malloy calls ‘shared sacrifice’ is working as well for him. A Quinnipiac University poll in March put his approval rating at 35 percent.”