By Joe Mathewson
As our newspapers suffer through declining revenues and readership, threatening not only their profits but their very existence, we may well ask: must good journalism be profitable? In fact, does journalism even require a profit motive?
The not-for-profit route beckons. The Internal Revenue Service has demonstrated for decades that it’s prepared to grant tax-exempt status to organizations that generate and disseminate information, provided they have substantial financial support from the general public. The tax exemption helps generate that support, enabling the organizations to seek tax-deductible donations and foundation grants.
Leading the parade, in the years after World War II, were public broadcasting stations, which over many years consistently have produced some of the finest stories available to the American public, from daily breaking news to historical documentaries.
But the I.R.S. also has bestowed its tax-exempt blessing on more traditional,
news-only organizations that primarily produce investigative or interpretive journalism. They just don’t publish newspapers.
The Center for Investigative Reporting, Inc., founded in 1977 in Berkeley, California, declares on its Web site that its mission “is to produce and distribute multimedia reporting that reveals injustice and abuse of power, has an impact, and is relevant to people’s lives.” It has won numerous journalism awards, including the George Polk Award, Emmy Award, Society of Professional Journalists’ Sigma Delta Chi Award, and Investigative Reporters and Editors Award.
Among the C.I.R.’s major backers are the Carnegie Corporation of New York, the William and Flora Hewlett Foundation, the John S. and James L. Knight Foundation, the McCormick Tribune Foundation, the Park Foundation and the Rockefeller Brothers Fund. Such major contributors provide the bulk of the organization’s revenue, which was $2.6 million in 2008; 46 percent was “public support.”
The Center for Public Integrity, in Washington, D.C., was recognized by the I.R.S in 1990 as a tax-exempt organization. Its mission, according to its Web site, is “to produce original investigative journalism about significant public issues to make institutional power more transparent and accountable.”
In cooperation with the Fund for Independence in Journalism, the C.P.I. reported in January 2008 that “President Bush and seven of his top officials made at least 935 false statements in the two years following 9/11 about the national security threat posed by Saddam Hussein’s Iraq.” Other C.P.I. stories questioned the credentials of Bush judicial appointees.
In 2009 the C.P.I. found, through computer analysis of nearly 7.2 million high-interest or subprime mortgage loans, that “at least 21 of the top 25 subprime lenders were financed by banks that received bailout money,” a report picked up by the Los Angeles Times, the Washington Post, USA Today and a number of other papers. In March 2010 the C.P.I. published an analysis of lobbying expenditures related to health care reform legislation, concluding that “about 1,750 businesses and organizations hired about 4,525 lobbyists, total–eight for each member of Congress–and spent at least $1.2 billion.”
Pro Publica, Inc., based in New York, joined the ranks of tax-exempt investigative news organizations with a national scope in 2008. It’s headed by former Wall Street Journal managing editor Paul Steiger and former New York Times investigative editor Stephen Engelberg, staffed by about 30 seasoned journalists. It came briskly to life with a stunning three-year pledge of $30 million from Herbert and Marion Sandler, founders of Golden West Financial Corporation, a savings-and-loan holding company that they sold to Wachovia Corporation in 2008 for about $24 billion.
In its application for 501(c)(3) status, Pro Publica stated it would focus its considerable resources on “truly important stories, stories with ‘moral force.’ We will do this by producing journalism that shines a light on exploitation of the weak by the strong and on the failures of those with power to vindicate the trust placed in them.”
ProPublica’s stories are published in The New York Times, the Chicago Tribune and other newspapers. Sometimes the paper’s reporters collaborate in the reporting and writing.
Another well-financed, tax-exempt national organization, the American Independent (founded in 2006 by former journalist and entrepreneur David S. Bennahum as the Center for Independent Media), in Washington, D.C., operates a “new journalist” training program. It “provides the skills and mentorship to bloggers and online journalists, state by state, with the aim of creating a robust corps of individuals who can systematically report on issues critical to these communities, while adhering to the highest standards of professional journalism.”
The organization also supports its trainees in the establishment of state news operations, first in Colorado and Minnesota, then in Iowa, Michigan and New Mexico. In addition the American Independent operates a national news bureau in Washington, D.C. In their short existence these organizations have won awards from the Society of Professional Journalists, the McCormick Foundation Specialized Reporting Institute on Financial Crime, the National Press Club, the Online News Association, and various local organizations. The American Independent is more successful than other national journalism not-for-profits in attracting public support, which was 58 percent of its $4.1 total revenue in 2008.
In a future post we’ll look at not-for-profit news organizations with a state or local focus that have obtained tax-exempt status from the I.R.S.