501(c)3 Status: Coming to A Local Newspaper Near You

By Becky Budds

Nearly 1,800 local newspapers have disappeared since 2004, according to a 2018 study by UNC Chapel Hill. But even newsrooms lucky enough to stay afloat have lost the ability to comprehensively cover their community due to layoffs and budget cuts. Now as my hometown newspaper The Chicago Tribune prepares to be bought out by Alden Global Capital, I’m left wondering about the future of local journalism.

But I’ve realized the answer to saving newsrooms across the country comes in the form of a tax status. 501(c)3 status, to be exact.

We know nonprofits to be primarily charities or universities, but what about newspapers? As advertisers pull out from traditional media and readers turn to their phones to keep up with the news, the for-profit model of newspapers has become outdated. Switching to a nonprofit model is the breath of life the industry needs.

Nonprofit organizations don’t have to pay taxes on their income, but their activities must serve the public interest rather than the interest of owners or shareholders and they can’t “participate in any campaign activity for or against political candidates,” according to the IRS. What kind of organization serves public interest and stays out of politics better than a news organization? To me, it’s a no-brainer.

Nonprofits must also have a board of directors to oversee operations. However, the board doesn’t interfere with the reporting or what’s being reported on. For example, my local nonprofit station, Naperville Community Television (NCTV), has a board of directors consisting of community members who are passionate about the mission and want to donate their time.

In an era of newspaper chains being owned by hedge funds that have strip-mined local outlets, it’s refreshing for newsrooms to focus on community members instead of greedy CEOs. It’s refreshing for newsrooms to focus on investigating and telling the truth instead of the bottom line.

Nonprofit newsrooms still have to make enough money to pay people and keep the lights on, but it’s much easier to raise donations and grant money than to convince people to subscribe.In fact, the latest INN Index of member revenues showed less reliance on foundation grants and more income from recurring donations and memberships.

It gives community members the option to “buy in” to their local news and be able to trust that it’s not influenced by advertisers or shareholders. A reader could click on five articles or a hundred articles— they will never encounter a paywall.

Nonprofit newsrooms are small, but mighty. In 2019 NCTV’s revenue was $1.2 million and in 2020 84% of their operating expenses went towards their mission of “telling local stories on air and online.” From city hall meetings to parades and high school football games, NCTV is there for it all thanks to support from local businesses and Napervillians alike. And because they’re there for it all, the community is more than happy to come out and provide support.

Nonprofit journalism isn’t a new concept. Naperville Community Television has been nonprofit since 2003. Notable publications like National Public Radio (NPR) and ProPublica have been nonprofit for quite some time. And the movement is growing.

In the past few years, two major newspapers — The Philadelphia Inquirer and The Salt Lake Tribune — made the switch to nonprofit. The industry is watching them closely. The Institute for Nonprofit News counts around 250 news outlets in its membership, of which 62 percent focus on local and state reporting, according to the 2020 INN Index.

The Knight Foundation declared 2020 the “Year of Nonprofit Local News,” citing the rapid growth of nonprofit news organizations and a business model “tailored for tough times.” They have also found that “nonprofit outlets have launched at a pace of a dozen or more a year since 2008, with 31 INN members launched in 2018-2019.”

I understand that switching to a nonprofit model isn’t easy, and it doesn’t just happen overnight. Newspapers were designed to be for profit. While many of them don’t churn out hefty profits anymore, they’re still worth millions of dollars.

When the Salt Lake Tribune became nonprofit, it’s owner Paul Huntsman gave up his role as sole owner and publisher. Now, he serves as chairman of the board. Huntsman could’ve made budget cuts or sold the paper to a large hedge fund. Instead, he relinquished his power for the good of the paper.

Without leaders like Huntsman, communities across the country will continue to go without accurate and comprehensive local news.

If your local newspaper is nonprofit, become a donor. Donate your time. Share their articles. Every contribution counts and your community will be better from it. We need good, accurate local journalism now more than ever.










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