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.
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Aaron Read
Honest question: how often is the prohibition against influencing legislation ignored?I ask because I know there’s been controversy with various churches that are clearly violating that rule, and sometimes people try to call them on it. I don’t think anyone’s succeeded by my memory is fuzzy and incomplete (and that’s being generous). I think it was about trying to overturn Roe v Wade, and/or lobbying against the “keep your distance” rules around Planned Parenthood clinics.Not that it makes it “right”, but one wonders if papers would make a calculated risk to ignore that part of the non-profit law.
Meredith O'Brien
Newsgathering funded by endowments in a non-profit fashion would, under this model, have to be limited to straight news reporting and perhaps, news analyses.Do you think such a model would keep opinion journalism in the for-profit realm? And do you think there’s a for-profit model that could sustain opinion journalism?The notion of separating newsgathering from opinion journalism isn’t something I’ve previously considered.
Javaun
Excellent post Dan, though I am going to argue the flip side as the Times has stated them.As the authors of the Times Op/Ed stated, I wonder if it really matters if large media outlets like papers lose the ability to take partisan stances, since there are more choices and more niche outlets than ever before. The current landscape is highly fractured, and the proliferation of blogs and startup, non-traditional news organizations have created thousands of niche news viewpoints. Anecdotally, it seems that many news consumers gravitate towards news outlets that mirror (or reinforce) their current viewpoints. In that sort of climate, open dialogue and big picture issues succumb to highly partisan debate. While I agree in principal that it is valuable for organizations to be able to advocate partisan issues or endorse candidates, the flip side of this is that this also brings with it the possibility of abuse. If there is a personal agenda in the newsroom or an attenuation of the wall between editorial and corporate/moneyed issues, news outlets are undermining their own future, skewing the debate, and ultimately damaging the trust of their readers.Beyond the aspect of funding, one opportunity for trusted, non-partisan organizations is to bridge this news divide and provide a forum to discuss common public goals; while the rest of the news landscape goes ultra niche, there is success to be won by staying broad and appealing to common issues.- Javaun MoradiDisclosure: I work at NPR, though I am not a journalist
jvwalt
It can be argued that excesses of the free market are more to blame for the plight of newspapers than the inherent economics of the newspaper business. Wave after wave of mergers and acquisitions have left big media companies with large debt loads — not unlike homeowners who bought big or refinanced when housing prices were high, and who now can’t cover the payments. A lot of newspapers are actually, STILL, making money on operations. They just aren’t making enough to service their part of their corporate parent’s debt. My point, getting back to Dan’s post, is that newspapers would be on a much sounder financial footing if they were out of the stock/trading marketplace. It might actually be possible for newspapers to survive indefinitely, even in the Internet age. The nonprofit model isn’t perfect, but it’d beat hell out of no newspapers at all.
Peter Porcupine
DK – what about a different sort of non-profit especially FOR newspapers?As you note, news has a unique status. Traditional non-profit is not a good model – unless, wait – does that make my subscriptions tax-deductible?Most non-profit strictures center around partisan, rather than rather than issue based, activities. If the tax breaks are stated, wouldn’t they be protected from partisan ebb and flow? A model for this may exist in public broadcasting funding.
Dan Kennedy
PP: I don’t think public broadcasters are allowed to take partisan political positions. The difference is that regulation of broadcasting is well-established, whether we like it or not. Regulation of print or online would be pretty awful. (That said, I believe Mother Jones magazine operates under such strictures.)Why not do away with the rule that says you lose your tax exemption if you take a political stand? It only goes back to Lyndon Johnson, who secretly pushed this provision through in 1954 when he was Senate majority leader.Yes, I’m well aware this would unleash a lot of right-wing evangelical ministers. So be it.
NewsHound
The Manchester Union Leader not endorsing Republican candidates because it is illegal is about as silly as not selling hot dogs at Fenway Park.There are newspapers that operate as a community, non-profit project. Many though, operate as a For Profit but with little or no profit.
ron-newman
501c3 organizations are allowed to “influence legislation” (also known as “lobbying”). They just have to limit this activity to being a minor part of their expenditures. I think one can safely argue that editorial pages are a minor part of a newspaper.
ron-newman
Also, aren’t some of our favorite magazines published by non-profits, such as Harper’s? They certainly don’t shy away from political issues.
Aaron Read
Yes, I’m well aware this would unleash a lot of right-wing evangelical ministers. So be it.Eep. I dunno, Dan. After moving out to western NY, I realized just how sheltered Bostonians are from religious nutbags. Hell, even the Globe says so! :-)Not that all religious folks are nutbags, but IMHO, a whole lot of nutbags are pretty heavily religious! Dear God (pun intended) we have four separate Godcaster radio networks just in the Finger Lakes; not exactly a huge metropolis of people!And when you start heading south of the Mason-Dixon line? There are thousands…THOUSANDS…of mega-churches out there, each with four-, five- and six-figure membership rolls…and seven-, eight- and nine-digit bankrolls. These organizations have money far, far beyond what any newspaper does these days. To unleash them and let them, effectively, lobby elected officials in the court of public opinion is a scary, scary thought.With the way newspapers are looking to sell, I can guarantee you that if you changed the code as you describe, it wouldn’t be long before a major daily was snapped up by a megaChurch. And the effect would be just like Rupert buying the WSJ. Small, subtle, but pervasive and inexorable.I suppose this doesn’t really square with my original comment…but your mention of “unleashing” made me realize something I hadn’t thought of before.
Aaron Read
PP: I don’t think public broadcasters are allowed to take partisan political positionsWe’re not. The FCC forbids non-commercial/education licensees from endorsing a candidate for public office. (i.e. while running for election or re-election)Nor may we allow a candidate to use our airwaves to campaign without triggering an onerous “equal time” rule for opposing viewpoints/candidates.That’s why you never hear a politician’s stump speech on an NPR station…UNLESS it’s part of overall news coverage and analysis.That said, NPR certainly does a pretty good job covering the news despite these restrictions. But I agree; something about forcing newspapers to restrain themselves like that feels very slimy to me.
Peter Porcupine
Mr. Read – I agree, but we may be talking about continued existence. And as I said, issues could still be covered, just not partisan activities. How much value is there in bi-partisan gotcha at the end of the day, really? There are a gazillion sources, other than newspapers (NEWS in there, see?) to cover political gladitorial contests. Me, I’d LIKE to see facts presented in a non-partisan way.