Newspapers: “No profit” to “nonprofit”?

As a former newspaper reporter, I’m one who is still addicted to and tends to bemoan the disappearance and struggles of daily newspapers. That’s despite the fact that a lot of newspapers aren’t what they once were (and who am I to really judge whether that’s good or bad.)

U.S. Senator Ben Cardin (D.-Md.) has a somewhat unique idea. Tuesday, he introduced the Newspaper Revitalization Act. The legislation is brief and would allow newspapers to qualify as nonprofit entities existing for educational purposes under the Internal Revenue Code. Although it would require qualifying newspapers to contain “local, national, and international news stories of interest to the general public,” newspapers would not be allowed to make political endorsements. That is because the Internal Revenue Code prohibits nonprofits from engaging in political campaigns, including statements in favor of or in opposition to any candidate for public office. I speculate this provision alone would dissuade most newspaper publishers from pursuing this option if the legislation is enacted.

While the bill would make advertising revenue exempt from taxation, it would do so only if the space allotted to commercial advertising “does not exceed the space allotted to fulfilling the educational purpose” of the newspapers. Cardin said subscription revenue also would be tax exempt and “contributions to support coverage or operations could be tax deductible.” He indicated the legislation, if passed, may not be “an optimal choice for some major newspapers or corporate media chains interested in profit” but should be an option for many local newspapers. One other comment was perhaps the most insightful regarding the state of American newspapers: “This option should cause minimal revenue loss to the Federal Government as most newspaper profits have been falling for years.”

For those of you who might be wondering, the bill wouldn’t make the cost of your newspaper subscription or classified ad tax deductible. That’s because the IRS says a charitable contribution must be made “without getting, or expecting to get, anything of equal value.” Comments about whether you are getting value equal to the price of your subscription should be directed to your local newspaper.

I think the future is electronic. It’s radio, television and the Internet; it’s not really newspapers anymore. I think we’ll always have newspapers but they’ll lose influence.

Boston Globe sportswriter Will McDonough, Teen Ink (December 1999)

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