Toward Creating a More Informed Public
What is nonprofit media?
Nonprofit media groups are organizations that seek 501(c)(3) tax-exempt status as public charities. These diverse organizations serve a valuable role in educating citizens through in-depth public interest reporting, including investigative journalism, news reports, explanatory journalism, solutions journalism, and specialty journalism, in order to elevate important social topics, particularly at the local level.
How is the Council involved?
Supported by a grant from the John S. and James L. Knight Foundation, the Council is working with the IRS in an effort to obtain clear guidance on the tax-exempt application process for nonprofit media groups that seek 501(c)(3) status. With the support of the Knight Foundation, in 2012 the Council convened a group of leaders from the foundation and tax-exempt media sector to meet over the course of a year and engage on the challenges and opportunities presented by nonprofit media. On March 4, 2013, this group released a report entitled The IRS and Nonprofit Media: Toward Creating a More Informed Public. The report had five key findings about IRS treatment of these emerging organizations:
- Applications for tax-exempt status are processed inconsistently and take too long;
- The IRS approach appears to undervalue journalism;
- The IRS approach appears to inhibit the long-term sustainability of tax-exempt media organizations;
- Confusion may be inhibiting nonprofit entrepreneurs trying to address the information needs of communities; and
- The IRS approach does not sufficiently recognize the change nature of digital media.
To address some of these concerns, the report recommended the following:
- The IRS methodology for analyzing whether a media organization qualifies for exemption should not take into account irrelevant operational similarities to for-profits;
- The IRS should focus on whether the media organization is engaged primarily in educational activities that provide a community benefit, as opposed to advancing private interests, and whether it is organized and managed as a nonprofit, tax-exempt organization;
- News and journalism do count as “educational” under the tax-exempt rules;
- The IRS should maintain the key structural requirements for being a tax-exempt media organization that properly distinguish it from a commercial enterprise, such as: it cannot have shareholders or investors, it must have a governing board that is independent of private interests, and it cannot endorse candidates or lobby lawmakers.
The Council continues to engage all types of stakeholders on this topic to ensure that nonprofit media organizations are treated consistently and fairly under the law.
Nonprofit Media in the News
Nonprofit media organizations are receiving a lot of media attention these days for stepping up to fill a void in critical public interest reporting. We’ve developed a running list of this coverage as a resource for nonprofit news organizations, the nonprofit and philanthropic community, and anyone who is interested in nonprofit media or who wishes to research this emerging topic.
- Trevor Aaronson Elected to INN Board of Directors - Florida Center for Investigative Reporting
Executive Director of the Florida Center for Investigative Reporting, Trever Aaronson, was elected to the board of directors of the Institute for Nonprofit News. INN’s mission is to promote the value of investigative and nonprofit journalism.
- A new nonprofit hopes to fill a void in coverage of California - Columbia Journalism Review
This article highlights the drop in state political news coverage in California in the last decade, particularly because the state is not an early primary state, nor is it a swing state. A new nonprofit news source, CALmatters, will be launching in July and plans to cover California state policies and politics. Their initial fundraising goal is $5 million and they are about halfway to that goal.
- Bill Moyers: The Challenge of Journalism Is to Survive in the Pressure Cooker of Plutocracy - Moyers & Company
At the presentation of the Helen Bernstein Book Awards for Excellence in Journalism on 5/26/15, Former White House Press Secretary Bill Moyers made a plea for charitable giving to nonprofit media. In addition to citing the FCC’s report on philanthropic investment in nonprofit media in 2011, Moyers also called for better legal protection and reporting requirements to support independent journalists.
- Brilliant Crowdfunding Campaign Connects Community to Solutions Journalism - PBS
This article is written by Josh Stearns from the Geraldine R. Doge Foundation’s journalism sustainability project, and highlights an innovative crowdfunding campaign launched by the nonprofit and community news site based in the Lower East Side, The Lo-Down.
- Knight Funds Community-Oriented Journalism at Detroit Nonprofit News Sites - Nonprofit Quarterly
NPQ reports that the John S. and James L. Knight Foundation has granted $500,000 to the Detroit Journalism Cooperative, a partnership of five Detroit-based nonprofit news organizations. The grant is intended to support the Cooperative’s coverage of community engagement efforts in Detroit.
Nonprofit Media Working Group
The Federal Communications Commission issued a report in 2011 concluding that accountability reporting, especially at the local level, has contracted dramatically, with potentially grave consequences for communities, government responsiveness, and democracy. Moreover, it determined that nonprofit media needs to play an increasingly significant role to help meet the educational needs of citizens. Finally, it found that there was confusion about the IRS approach to nonprofit media. This approach, which has not been updated for the digital age, risks discouraging nonprofit media innovation and undermining the odds of its success.
The report recommended that a group of tax and journalism experts gather to study these issues more carefully and make recommendations for further action. Supported by a generous grant from the John S. and James L. Knight Foundation, the Council on Foundations convened such a group from leaders of the foundation and tax-exempt media world. This group, listed below, has been meeting for the past year.
On Monday, March 4, 2013, the Council on Foundations and the Knight Foundation released the report in Washington, D.C., in conjunction with a panel discussion that featured journalism, legal, and nonprofit leaders.
Watch the Recording of the Release of the Report presented at The Newseum by Knight Foundation and The Council on Foundations
Nonprofit Media Working Group Members
Steven Waldman, Chair
James T. Hamilton
Knight Foundation Representative: Eric Newton, Senior Adviser to the President
Legal Counsel: Marc Owens and Sharon Nokes, Caplin & Drysdale
Project Directors: Janne Gallagher and Shelton Roulhac, Council on Foundations
Digital Media Law Project, Berkman Center for Internet & Society, Harvard University
Since 2007, the Digital Media Law Project (DMLP) has worked to ensure that individuals and organizations involved in online journalism and digital media have access to the legal resources, education, tools, and representation that they need to thrive.
Applying for 501(c)(3) status can be lengthy and complicated process. To help nonprofit journalism organizations prepare for IRS scrutiny, the DMLP now offers a collection of resources that includes: a checklist for whether tax-exempt status may be right for your venture; a breakdown of the IRS application process; a detailed guide to the standards used by the IRS to evaluate news organizations; and an archive of application materials filed by journalism non-profits that successfully obtained 501(c)(3) status.
At 1:00 P.M. Eastern on April 10, 2014, the DMLP will be holding a one-hour online session open to the public where you can ask questions about the DMLP's new resources for tax-exempt journalism and the IRS application process; log-in details will be posted on the DMLP homepage on April 10, so be sure to visit the site then.
As part of DMLP’s new resources for journalism organizations seeking 501(c)(3) status from the IRS, the John S. and James L. Knight Foundation supported the development of this new video that debunks some of the common myths and misconceptions about nonprofit media organizations.