Turn newsrooms into nonprofits, fight the political corruption


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The Philadelphia Inquirer, Salt Lake Tribune and Tampa Bay Times newspapers have transformed into 501(c)(3)s.

Declining subscription and advertising revenue cannot adequately nourish the world-class journalism our society requires to function and improve.

When I was growing up, my father proudly subscribed to five local newspapers. Each day, he’d mention highlights from school board meetings, investigations into municipal officials, delayed road projects and over budget and stories of regular people making a difference that didn’t make the cut for the nightly news broadcasts. The reporters behind those stories made an impact that extended beyond their readership, and their work often became the starting point for stories that deserved a brighter light.

Locals are best positioned to thoughtfully and thoroughly report on community-level issues. When reporters are less abundant or under-resourced, those inclined to abuse the public trust are emboldened because their misdeeds will likely go unquestioned. Most important, local representatives can reveal corruption, waste and mismanagement that must be identified before the problem can begin to be addressed.

A November 2019 report from The Brookings Institution, “Local journalism in crisis: Why America must revive its local newsrooms,” affirmed,

“The declining capacity of newsrooms to investigate potential stories not only renders newspapers less valuable to news consumers, but also results in a newspaper that is less valuable to its community. When important stories are not told, community members lack the information they need to participate in the political process and hold government and powerful private actors accountable.”

For more than 50 years, the Corporation for Public Broadcasting has distributed federal funds to partially support local radio and television stations, such as NPR and PBS. Yet more is needed beyond what Congress currently appropriates. More funding could ensure all communities have access to independent local news sources, not just those in locations able to attract the necessary philanthropy from private donors. Today’s urgency to preserve and expand the number of professional journalists is accelerated by agenda-driven privately-funded advocates masquerading as legitimate reporters.

However, declining revenue is not the only front where traditional commercial newsrooms are under attack. Alden Global Capital is a hedge fund with a business model of hacking newsroom staff down to where content and coverage suffer. Alden has gutted for-profit institutions of American journalism such as The Baltimore Sun, The Hartford Courant, The Chicago Tribune and The Denver Post.

Comparable papers such as The Philadelphia Inquirer, Salt Lake Tribune and Tampa Bay Times adopted a nonprofit structure and have arguably enhanced their viability and diminished their appeal to profit-driven aggressors.

A potential solution to help the growing number of nonprofit news organizations attract and fairly compensate staff is a refundable payroll tax credit modeled after the federal Employee Retention Credit or ERC in 2020’s bipartisan CARES Act. As the nation adjusted to life with COVID-19, the ERC provided a critical boost to eligible employers with up to $5,000 per employee in 2020 and $7,000 per quarter per employee in 2021 until Sept. 30, 2021.

A nonprofit entity under section 501(c)(3) of the Internal Revenue Code — which can accept tax-deductible contributions — cannot participate or intervene in political campaigns. By restricting the proposed credit to nonprofit newsrooms organized as 501(c)(3)s, partisan propaganda would not exploit what is intended to benefit nonpartisan reporting.

A refundable employment tax credit could entice vulnerable newsrooms toward a more stable financial footing as a nonprofit to fortify their long-term survival and mission. While subscription and advertising revenue will remain necessary, a new sustainable model for funding journalism must emerge.

Now is the time for lawmakers to craft a practical approach to nurturing an indispensable profession in distress. If enacted, the credit will effectively safeguard the public’s interest now and for future generations.

Peter Gariepy is a Missouri CPA specializing in state and federal tax credits, with a personal interest in how the tax system can be better utilized for greater public benefit. He lives in Richmond Heights.


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