By Katy Snyder
JVA Communications/Resource Development Associate

Amidst recent chatter about the imminent demise of the Rocky Mountain News comes a New York Times editorial suggesting that newspapers become nonprofits—endowed institutions that would enjoy the same stability that universities do. While getting nonprofit status would allow newspapers to weather advertising and circulations slumps, it would also leave them reliant on the economy and its effects on individual donors.

An article on newspaperdeathwatch.com, a Web site dedicated to chronicling the crumpling newspaper industry, cites concerns about just how big of an endowment it would take to sustain a newsroom. For The New York Times, this figure would be somewhere around five billion dollars. According to newspaperdeathwatch.com, there are just 18 academic institutions in the U.S. that have managed to secure donations that are above this figure, which is compounded by the fact that all of these organizations have been accruing their endowments for 100 years or more.

Under current conditions, newspaper reporters could be pressured to write content that is appealing to advertisers and readers. Although the Times article says “the best-run news organizations insulate reporters from pressures to produce profits or to placate advertisers,” the fact remains that newspapers have to pay attention to the bottom line when considering content. At an endowed foundation, the Times argues, there would be no pressure from stockholders or advertisers. While The Times is correct in saying that this type of pressure eases, nonprofits know all too well that in order to receive donations, donors must be kept happy. One has to wonder if newspapers would simply be answering to a different audience if they became endowed.

Another possible barrier is that the endowed newspaper model has not yet been tested among mainstream papers. The majority of papers that operate as nonprofits are religious—the Christian Science Monitor and The Desert News, which is affiliated with the Mormon church—and are much smaller than papers like The Times or the Rocky. Even as a nonprofit, the Monitor has still had to make major changes to its circulation, recently switching its daily paper circulation to weekly and making its online site its main source of news.

Another suggestion for funding newspapers comes from Andrew Hudson, Denver PR guru and creator of prjobslist.com. Hudson suggests a “newspaper tax” that would subsidize newspapers much the way public transportation and cultural institutions are.

According to Hudson, such a tax would not come close to fully subsidizing newspapers and would still require changes on the part of newspapers, such as switching to fewer days of paper delivery and ramping up online content. It is important to note that through the model that Hudson is proposing, newspapers would not become nonprofits but would remain for-profit (a model that has worked for various industries such as the auto and airline industries). Like the Times article, Hudson suggests that a subsidized model would not lead to increased censorship of content. Since a tax-supported newspaper is also an untested model, this remains to be seen.

As a nonprofit organization, why should you care? Have you ever had your gala event advertised or covered in the paper? Has recent coverage of the plight of human services nonprofits in The Denver Post and the Rocky Mountain News brought in more donations? Do television news shows cover these types of issues in the depth that newspapers do? According to Hudson, a recent Rocky article on a local nonprofit helped to generate $50,000 in donations in one week. As a nonprofit, can you afford to lose this type of coverage?

Let JVA Consulting know what you think—should newspapers seek 501(c)(3) status, or should we create a new sales tax to subsidize some of their operating costs? How would losing local papers like the Post and the Rocky affect your nonprofit? What are some of the challenges and opportunities you see to acquiring nonprofit status or creating new taxes to support newspapers? Please leave a comment to give your opinion or to offer suggestions.