Can Non-Profit Status Save the Newspaper Industry?

As the tough times for newspapers in New Jersey and across the nation continue so does the search for a new model that can resuscitate the industry.

Conventional wisdom says that newspapers need to find a way to make money now that their content is available for free on the internet. But what if the conventional wisdom is wrong?

“The crisis in journalism right now is primarily a crisis in for-profit journalism, because the sources of that profit have dried up,” Monika Bauerlein, a co-editor of the non-profit magazine Mother Jones, said in a New York Times article last month.

Bauerlein makes a good point. It is the business side of journalism that is suffering. Although the impact of this downturn has been devastating, good reporters and editors are still doing what they always have done best. Albeit under extremely trying conditions, today’s journalists are providing people with the news and information they need and they continue to serve as watchdogs over government and other powerful institutions.

But how can newspapers continue to provide quality journalism when the business side of the industry no longer is producing the revenue necessary to support the type of reporting the public needs? The answer may be to separate the business side of the industry from the journalism side and move to a non-profit model.

At first, the concept of news organizations operating as non-profits seems odd. And indeed it is. But the non-profit model is starting to attract attention.

Much of the attention has focused on ProPublica a non-profit corporation based in Manhattan that has been successfully producing investigative journalism pieces, which it then offers – at no cost — to traditional news organizations for publication or broadcast.

On Capitol Hill, U.S. Senator Benjamin Cardin (D-Md.) has introduced a bill called the Newspaper Revitalization Act, which would allow newspapers to operate as non-profits, under the same 501(c)(3) status now granted to charitable organizations. Under the proposal, advertising and subscription revenue would be tax exempt and contributions to support coverage or operations could be tax deductible.

“As long as newspapers remain for-profit enterprises, they will find no refuge from their financial problems,” David Swensen, the chief investment officer at Yale University, wrote in a New York Times op-ed in January. “The advertising revenues that newspaper web sites generate are not enough to sustain robust news coverage.”

The concept has its skeptics, most of whom worry about newspapers losing their independence since non-profit status would place new restrictions on their operations, such as a prohibition on endorsing political candidates. There also are concerns about the likelihood of obtaining the large endowments that would be needed to fund news operations, especially in today’s economic climate. In addition, there is fear that even if large endowments are forthcoming, they will come with conditions and restrictions.

Nevertheless, could a switch to non-profit status rejuvenate any of New Jersey’s struggling newspapers?

That is a question best answered by the men and women who run our state’s newspapers. But New Jersey does have a track record of sorts in this area with New Jersey Network television, which features nightly newscasts about the Garden State. NJN is a part of state government and receives state funds every year, but it also relies on contributions to support its operations. The fact that NJN is funded by the same state government that its reporters cover has raised questions similar to those now being asked about non-profit news operations that would be funded by large endowments: Does the financial support come with any strings attached?

In NJN’s case, I have observed the station and its news operations for some 25 years – initially as fellow reporter and later as a staffer for the State Assembly and the Governor – and I do not believe its coverage has been swayed by the fact that it is part of state government. The truth of the matter is even privately owned news entities such as The Star-Ledger and The Asbury Park Press have corporate owners with wide varieties of business interests and priorities that have the potential to influence the content of their news pages.

It takes the commitment of good journalists to keep the potential of undue influence from becoming a reality. Their track record is not perfect, but it still is a pretty good one – perhaps good enough to take a chance on a non-profit model somewhere in New Jersey.

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2 Responses to Can Non-Profit Status Save the Newspaper Industry?

  1. Pingback: Better, Faster, Stronger: How Blogs Have Evolved Beyond Print Media | Techgeist

  2. Pingback: Off Beat Michael » Better, Faster, Stronger: How Blogs Have Evolved Beyond Print Media

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