Nonprofit Media

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.

• As it grows, The Marshall Project finds plenty of partners, but fundraising is still not easy – Nieman Journalism Lab
  Founder of The Marshall Project discusses their recent achievements, but comments that “we’ll still be fundraising for the rest of our professional lives”, highlighting the funding pressures on nonprofit journalism organizations.
• Yelp and ProPublica Collaborate on a Mixed-Source Medical Review Program – Nonprofit Quarterly
  Nonprofit news organization, ProPublica, has partnered with Yelp to provide public reviews of healthcare providers.
• Bill Keller Discusses The Marshall Project's Nonprofit Journalism – WWD
  In an interview with WWD, The Marshall Project’s Bill Keller discusses their model of nonprofit journalism, his take on the future of print journalism and how they have partnered with their funders.
• At some Minnesota news sites, partisans write the checks – Minnesota Public Radio
  MPR News reports on Minnesota-based nonprofit journalism and media organizations with possible political ties. The article raises the question of partisan involvement in nonprofit media and the need for transparency around funding sources.
• Marshall Project stakes out high ground on journalism's slippery slope – Columbia Journalism Review
  This article highlights the dilemma facing cause-driven nonprofit journalism organizations as to whether to partner with for-profit outlets. Specifically, The Marshall Project’s model of collaboration is discussed.

Read more

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.

Nonprofit Media Working Group Members

Other Resources

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.

New Resources for Nonprofit Journalism

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.  See the DMLP homepage for more information.

Growthink, a consulting firm that helps businesses grow and raise capital, has created a thorough guide to creating a non-profit business plan, which also provides a template. Access this for free at:

https://www.growthink.com/businessplan/help-center/non-profit-business-plans

Video: Busting the Myths about Journalism and the IRS

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.