|Credit: Nieman Journalism Lab|
At the beginning of this week, the Council on Foundations released a report urging the IRS to rethink their process on giving news organizations tax-exempt status.
Currently, for a news organization to be considered nonprofit, it has to distribute content differently than a traditional media outlet. The report states the way news and media have evolved now make it difficult for a nonprofit news organization to distinguish itself from traditional media outlets.
USA Today reports rules that were written for this IRS designation were created in the 1960s and 70s. The writer of these rules couldn't account for digital news distribution. The new report encourages the IRS to look at things like an organization's education value and if it is organized and managed as a nonprofit, instead of its distribution method. According to USA Today, past decisions regarding tax exemption for news organization have suggested anything related to journalism is inherently commercial. The Investigative News Network was told in 2009 they would only receive tax exempt status if the word journalism was removed from their statement of purpose.
This limiting of non-profits is causing their number to dwindle and according to a Poynter article, this could mean bad things for communities. Poynter says nonprofits help fill the gaps in reporting that have been created by a shrinking newspaper industry. Some nonprofit news organizations, such as the Chicago News Cooperative, have even cited their inability to be designated as 501(c) organizations as the cause of their closures. This is one of the biggest concerns expressed in the COF's report. The Federal Communications Commission Chairman said he hopes the IRS and Treasure department "will carefully consider the recommendations in this report."