Feb 23, 2021 - Economy

Pandemic drives nonprofit media boom

Illustration of an open newspaper with a dollar sign cut out of the pages

Illustration: Annelise Capossela/Axios

A nonprofit consortium of nonprofit journalism organizations had a record 28% membership growth last year.

Why it matters: The COVID-19 pandemic has pushed some struggling newsrooms to embrace the nonprofit model, an arrangement that allows news companies to accept charitable donations while still being able to sell ads and subscriptions.

By the numbers: The Institute for Nonprofit News says it helped facilitate five newsroom conversions to nonprofit status last year.

  • INN now counts 309 nonprofit journalism groups as members as of February. Its 2020 member growth included 26 startups, which helped to create new news organizations in news deserts across the country.
  • The group's NewsMatch fundraising campaign, the largest grassroots campaign to support nonprofit news in the U.S., exceeded $5 million for the very first time last year, with a 34% increase in newsroom participants (261 in total).

The big picture: The trend is continuing into 2021, as more local papers face pandemic-driven advertising headwinds.

The Baltimore Sun, The Capital Gazette in Annapolis, and a few other smaller papers, are being sold to a Maryland-based nonprofit as a part of hedge fund Alden Global Capital's agreement to buy Tribune Publishing last week.

  • The nonprofit, called the Sunlight for All Institute, is a public charity formed by Stewart Bainum Jr., a former Maryland politician and hotel magnate.

Earlier this month, 14 New Jersey weekly papers announced they are being converted to nonprofits.

Be smart: Nonprofit journalism isn't a new trend, but more for-profit entities are trying to change their status to nonprofits in recent history.

  • The Philadelphia Inquirer and its sister websites were donated to the Lenfest Institute for Journalism, which is part of the Philadelphia Foundation and named after the outlets' owner.
  • The Salt Lake Tribune became a nonprofit so that it could start soliciting donations in 2019.

Between the lines: The nonprofit model has been challenged by IRS hesitation to categorize news companies, especially newspapers, as non-commercial entities.

  • "We explained to the IRS that their historic concern about newspapers being ‘commercial’ doesn’t reflect the current reality," said Meghan Biss, an attorney with the exempt organizations practice at Caplin & Drysdale who helped the Salt Lake Tribune pivot to a non-profit model in 2019.

The bottom line: "We have to subsidize reporting if we want democracy to survive," says Elizabeth Green, the CEO and co-founder of the non-profit local news company Chalkbeat. "Markets will not pay for all we need."

  • "It’s a classic public good problem: we all benefit from local news about public interest topics, even if we don’t pay for it," she said. "What advertising once subsidized now needs philanthropic support to thrive." 

Go deeper: Struggling media companies pivot to non-profits

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