Editor’s Note: Nieman Labs reports on a major daily newspaper’s attempt to stay alive. The Salt Lake Tribune has received a green light from the IRS to become a non-profit. It’s the first in the nation to try this approach. We join many others in rooting for its success. You can help get them started with a contribution. – FB
It’s a big step for Salt Lake City — but also a major opening for other newspapers who might find nonprofit status a more appealing alternative than selling or closing down.
CHRISTINE SCHMIDT@newsbyschmidt reports for Nieman Lab.
It was a “happy surprise,” Fraser Nelson said when The Salt Lake Tribune received a letter from the IRS on Friday giving the 148-year-old news outlet nonprofit 501(c)(3) status — no questions asked.
A final verdict on whether the Tribune could become the first legacy newspaper in the U.S. to go fully nonprofit wasn’t expected until early 2020, Nelson (vice president of business innovation) and Jennifer Napier-Pearce (editor-in-chief) told me. It had received approval for the parallel Utah Journalism Foundation a few months ago — also with no questions, but that was a more straightforward request. This approval opens the doors for many more commercial legacy newspapers to seek tax-deductible status and philanthropic funding — a potential lifeline for local news outlets whose owners agree to give up control.
“We argued that our business will not change and we will continue to support the community that we serve and left it open to interpretation,” Napier-Pearce said. “We figured if they do go ahead with it, our circumstance is not going to match the circumstance of local newspapers around the country. We wanted maximum flexibility so other people could tinker with this recipe for their particular needs. Our argument is we’re already doing the work of a nonprofit. We should qualify for that tax status.”
“Without a lot of feedback from the IRS, we’re grateful that we have a pretty blank slate,” Nelson said. “We want to make sure we’re making a decision that makes sense for us as an institution, make sure they are in the context of the larger national — what this means for other papers and for journalism generally.”
(They asked me to share the donate link, which will probably become very familiar to Tribune readers once the paper figures out some infrastructure questions. The Tribune also received funding from the Google News Initiative to work on these items last month.)
Here’s The Salt Lake Tribune’s plan for securing 501(c)(3) status June 3, 2019
The Tribune announced the news this morning, just five months after it submitted its application to the IRS. (I reached out to the IRS for comment and will update if I hear back.) In June, we unpacked the various hoops the application would have to jump through with Nelson and media law expert Jeff Hermes, such as:
“Are you using commercial revenue streams such as advertising or subscription fees without attempting fundraising?”
The Tribune had offered up advertising as unrelated business taxable income to the IRS, meaning that it would be outside the purview of their tax deductibility, but the IRS didn’t issue any instruction on how to treat it. Subscriptions may become tax-deductible, but Fraser said they’ll have to figure out if that status would vary between digital and print subscriptions (since a print edition involves more business operations, like printing and distribution). So for now, TBD.
But the nonprofit newspaper will be able to attract a new mix of revenue streams, reliant on philanthropic giving, smaller donations from readers and supporters, and the endowment of the separate Utah Journalism Foundation. (Nelson said earlier this year that they were aiming to raise $60 million for that. Today she said she couldn’t share anything about the amount raised thus far. UJF grants will also go to other Utah news organizations besides the Tribune.)
Reminder: “Nonprofit” doesn’t mean “no business plan.” Nonprofit journalism, in general, has seen a remarkable boom over the past ten years, but the outlets still need to invest in their business and fundraising operations to sustain the editorial operations.
“We’ll be forthcoming about where that is but one thing that’s really important is to stress again that the purpose of this foundation is to help sustain The Salt Lake Tribune in perpetuity but also to make sure that we’re doing as good a job as we can with promoting and supporting independent journalism in the state,” Nelson said.
