What is Giving Compass?
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Giving Compass' Take:
• Knight Foundation uses four case studies to demonstrate how newspapers can embrace philanthropic options to sustain local news production.
• How can philanthropists best support local newspapers? What shifts could improve local news outlets in your area?
• Learn about the role of philanthropy restorative justice media.
An emerging class of news businesses is modeling a promising path to sustainability — one drawn from the community itself. Their solution: pursuing nonprofit status rather than the strictly for-profit corporate form, embarking on greater engagement with philanthropic models that reimagine how local news is funded.
Local news organizations play a fundamental role in educating and informing citizens about what is happening in their communities. Although historically this role has been fulfilled by a for-profit corporation, it is well -aligned with IRS guidelines for tax-exempt nonprofit organizations.
From public radio stations to the newly formed American Journalism Project, non -profit local journalism is in a period of rapid expansion across the United States. The success of the nonprofit local news startup The Texas Tribune — now in its 10th year of operation — has inspired the creation of the American Journalism Project, a $50 million venture philanthropy fund to invest in nonprofit local news startups. In a different approach, ProPublica (a nonprofit focused exclusively on investigative reporting) launched the ProPublica Local Reporting Network in 2018. The purpose of the network is to bring ProPublica’s investigative resources (funded by philanthropy) to strengthen and amplify local reporting, many of which are for-profit newsrooms.
Other nonprofit news initiatives have emerged (including Report for America and the Table Stakes Project), but the fact remains that the overwhelming majority of local reporting in the United States is done by journalists employed by for-profit entities. Most of those entities have been experiencing profound business challenges over the last few years, and in this environment the appeal of tapping philanthropic support is growing. Much as hospitals and universities stand as robust, nonprofit community pillars, many local newspapers across the United States might begin to move in this direction. Bold leadership is needed to chart the way toward a new era of civic news media.
This report offers some fundamental ground rules for decision-makers and provides a foundational explanation of relevant tax policy and implications. It also directly considers four possible models through case studies.
A crucial consideration across all the case studies is the ongoing importance of sustainable revenue streams. In many of the structures outlined below, the pressure for profitability is diminished. But a business plan is still essential in part because the size and scale of most local newspapers is large and complex, and also because of IRS rules do not allow nonprofit ownership to exist for the sole purpose of helping subsidize a money-losing, for-profit operation. Regardless of the structure, a local news company is still obligated to find longterm sustainable revenue streams.