I don’t mean to minimize the complexity of some of the issues with which the IRS must grapple. Its job is to interpret the current law, not make up policy that might have a particular desirable outcome. Perhaps we’ll find out that the IRS is hard at work on a coherent rethinking of their approach with an eye toward adapting to the modern digital marketplace. Or perhaps Congress will need to create a new 501c category for journalism as it has for railroad retirees, black-lung disease benefit trusts, cemetery companies, and other groups (pdf).
If that’s the case, I hope they’ll consider a few basic points:
First, a solution needs to be found that would enable nonprofit groups to develop sustainable business models.
Second, time is of the essence. Local media systems are in crisis, social entrepreneurs are frantically working to fill the gaps, and the last thing they need is unnecessary delays in setting up shop.
And finally, the future of American journalism will likely depend not only on innovations in the commercial media sector but on the ability of nonprofit media to flourish, too. What the IRS decides to do, in terms of facilitating or hampering these new outlets, will be of historic importance.
Unfortunately, the U.S. can't really afford anymore non-profits. Our fiscal needs are so great, we need businesses that are making money to pay the taxes needed to support governments and their expenditures. Non-profits are a fiscal drag in that they use resources that would be better spent on for profit businesses that can generate cash for investment and growth.
#1 Posted by Norm Astwood, CJR on Sun 27 Nov 2011 at 11:58 PM
Really Norm? That's a pretty narrow definition of the taxes that can be derived from a not for profit company.
I'm in the process of setting up a not for profit journalism service. I have three people who want to work (myself included). I'm creating jobs for them and we'll all pay taxes on our income. If we're lucky, our total budget for the year will be in the tens of thousands, any corporation tax paid on profits would be miniscule compared to the income taxes we'll pay. And the size of my news service is typical for these kinds of ventures.
I'll pay taxes on any goods or services I buy to make the service run (website development and maintenance, office supplies, etc). I'll be generating economic activity by running and working for this business.
We aim to do good, explanatory journalism about health care in our state, and I really don't want to have to take advertisements from hospitals, insurers, etc. in order to do that.
But if I'm for profit, I won't be able to apply for foundation grants, etc, that won't taint our readers' perceptions of what we're trying to do. In many ways, it'd be easier for me to be a for profit, but I'm choosing this other way.
I'm pretty sure that not for profits are anything but a 'drag' on our nation's resources.
#2 Posted by Rose Hoban, RN, MPH, CJR on Tue 6 Dec 2011 at 10:14 PM
I have journalist peers, who after losing their jobs, formed nonprofit news entities so they could get donations to support themselves. Advertising and subscriptions are the public's way of saying, "yes, I see value in the news you are reporting and want to support that" the same way a shopper chooses which competitive products it will purchase in the grocery store. As the article above states, without the tax-deductable status of a donation by a donor, they wouldn't survive either. Soooooo, is the current onslaught of new nonprofit news organizations really about furthering the stories they "claim" aren't covered by commercial news organizations or is it more about a bunch of unemployed journalists with tin cups insisting that the rest of us need them and their prose to such a degree that they deserve charity? Journalists research and write news stories. A "research fund" that funds writers is justified as nonprofit even though they're doing the same thing "researching" that a journalist working for a for-profit medium does. I'm truly baffled...
#3 Posted by Krystyn Hartman, CJR on Fri 10 Feb 2012 at 05:31 PM
Oh, and just to clarify, I don't mean the NPRs, academic publications and so on; those make sense to me as nonprofits. I'm talking about the recent onslaught of nonprofit "activist" media as they refer to themselves. For example, Nation of Change that openly gives money to organizations like the Occupy Movement that are not nonprofit.
#4 Posted by Krystyn Hartman, CJR on Fri 10 Feb 2012 at 05:43 PM