Bad News for Nonprofit Journalism

By Josh Stearns | YES! Magazine

Nonprofit news organizations are winning awards and covering issues mainstream media doesn’t, so why is the IRS clamping down on nonprofit media?

Right now, the Internal Revenue Service is considering whether journalism and media organizations should be eligible for nonprofit status. That may sound odd given that nonprofit journalism has been a part, albeit a small part, of American media for decades—think Mother Jones, NPR, the Christian Science Monitor, even the Associated Press. YES! Magazine itself has operated as a nonprofit since its founding 16 years ago.

Nonetheless, a whole cadre of new journalism start-ups like the San Francisco Public Press, Worcester Wired, and Monitor Oklahoma have been waiting months—some even years—for the IRS to approve their applications for nonprofit status.
How did we get here?

At the end of the last decade, it was becoming increasingly clear that the advertiser-driven commercial media model was not producing the full extent of news and information our communities need. Job cuts decimated newsrooms, companies closed foreign bureaus, and the number of journalists covering statehouses had shrunk to almost zero in many places.
Ideally American media would be as diverse as American communities in representation, perspectives, and business models.

In response to these changes, many journalists turned to a nonprofit model that would refocus newsrooms on their public mission instead of just their stock prices. Since 2008, there has been a spike in applications for 501(c)(3) nonprofit status from journalism organizations. This uptick has raised red flags at the IRS, which has put a hold on nearly all of these new journalism applications until it decides how it will rule.

We are at a critical juncture. This moment could be the start of a new era of noncommercial journalism in America, with innovative new nonprofits poised to fill the gaps in meaningful reporting that have been left by much of commercial media. Those nonprofit journalism organizations that won IRS approval before the agency’s clamp-down began, such as ProPublica, the Texas Tribune, MinnPost and Voice of San Diego, are illustrating the power of this model. They are winning awards, engaging communities, and covering issues that the mainstream media have largely abandoned.

If you are a regular reader of YES! Magazine, then you understand the need for a different kind of journalism than we see in most of American media. Now imagine a thousand new YES! Magazines, imagine local versions covering beats in your neighborhood, or a YES! Magazine dedicated to 24-hour coverage of your statehouse. The seeds of change are there, but this delay at the IRS is hindering the growth and sustainability of nonprofit journalism efforts. Worse, a bad ruling from the IRS could threaten the survival of even longstanding nonprofit publications and websites.
In the same way that monoculture crops are dangerous to the food system because they are all share the same weaknesses, for too long our journalism ecosystem has suffered from monocultural thinking.

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 proven it will not provide the full extent and diversity of news and perspectives we need. In her paper “Can Nonprofits Save Journalism?,” Marion R. Fremont‐Smith argues that IRS regulations don’t take into consideration the current economics of the news industry. She reminds us that “[revising] prior precedent due to changed circumstances is the essence of charity law,” and has ushered in important innovations and institutions we now consider fundamental to American society.

Nonprofit journalism is not a silver bullet for the future of journalism. But fostering a more diverse media system is. Ideally American media would be as diverse as American communities in representation, perspectives, and business models. What the IRS doesn’t understand, or what its policies won’t let it admit, is that we need a vibrant and diverse mix of for-profit, nonprofit, public, and community media organizations. In the same way that monoculture crops are dangerous to the food system because they are all share the same weaknesses, for too long our journalism ecosystem has suffered from monocultural thinking. Tough economic times and shifts in advertising have hit longtime journalism institutions hard.

We shouldn’t let the IRS put us in the same position again. The IRS is working with a set of outdated policies that don’t account for the state of our media today. In the long term, we need to change those policies, but right now we need to clear the way so we can get more journalists on the street serving our communities.

Josh Stearns wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Josh is the journalism and public media campaign director for Free Press. Follow him on Twitter.