With troubled industries from Wall Street to Detroit lining up for federal bailouts, we suppose it was inevitable that someone would come up with a plan to bail out the news business. Sen. Benjamin Cardin, a Maryland Democrat, yesterday "introduced legislation that would allow newspapers to become non-profit organizations in an effort to help the faltering industry survive," declares a Cardin press release:The Newspaper Revitalization Act would allow newspapers to operate as non-profits, if they choose, under 501(c)(3) status for educational purposes, similar to public broadcasting. Under this arrangement, newspapers would not be allowed to make political endorsements, but would be allowed to freely report on all issues, including political campaigns. Advertising and subscription revenue would be tax exempt and contributions to support coverage or operations could be tax deductible.
There is both less and more to Cardin's plan than is described here. Although his bill would expressly permit nonprofits to publish newspapers, there is nothing under current law to prevent them from doing so. The Christian Science Monitor reported in 2008 on some that already do, including the Monitor itself. The only major substantive change in the Cardin bill is a provision that would allow nonprofit newspapers to sell commercial ad space free of taxation, provided that at least as much space is allotted for editorial content as for ads.
The danger of the Cardin bill lies in the restrictions that already apply to nonprofits--a concern one media lawyer voices in an interview with Southern Maryland Online:"I think it really puts the role of censor or critic with IRS," said George Rahdert, legal counsel for the St. Petersburg Times. "So the IRS would be able to say, 'This isn't fair or critical reporting.' "The Florida newspaper was donated to the Poynter Institute, a nonprofit school for journalists. The Times still pays taxes on its profits, so it has no governmental restrictions on what it can print.
Cardin acknowledges the one hard prohibition that applies to nonprofit publications: that against formal political endorsements. This column has no brief for newspaper endorsements, which have always struck us as a rather quaint practice (although they do often enough provide amusing fodder for us that we'd be sorry to see them disappear).
But Section 501(c)3 of the Internal Revenue Code would prevent more than just formal endorsements. It requires that "no substantial part of the activities" of a nonprofit consist in "carrying on propaganda, or otherwise attempting, to influence legislation" and that a nonprofit "does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office."
Taken at face value, this would seem to put a newspaper's nonprofit status at risk not only if it published an unsigned editorial endorsing a candidate, but also if it published a signed column doing the same. It would also seem to bar editorials or columns urging Congress to approve or reject specific legislation. Interpreted more restrictively, it could be taken to bar any sort of commentary on pending legislation. Even the column you are now reading could be construed as an attempt "to influence legislation."
That last example is probably a reductio ad absurdum. We have some experience writing for nonprofit publications, and our sense is that what we are writing now would be kosher under the prevailing interpretation of the Internal Revenue Code. But we know from instructions we have received when writing for nonprofits that the chilling effect of Section 501(c)3's restrictions goes beyond formal institutional endorsements of candidates.
In particular, writers for nonprofit publications are advised to avoid the appearance of partisanship. That's often sound advice journalistically, but sometimes political parties deserve praise--or, especially, criticism. It would diminish freedom of the press for newspapers to subject themselves to a regulatory regime in which they would risk, in effect, losing their license if they were too trenchant in commenting on politicians or parties.
Thursday, March 26, 2009
Down the Cardin Path
Down the Cardin Path: Best of the Web; Wall Street Journal