Comments on: The economics of non-profit newspapers

By: sinergi

sinergi — Fri, 02 Apr 2010 17:46:22 +0000

There is a good chance that the L3C structure could solve the UBI problem mentioned in the first post.

the “L3C” — a low-profit, limited-liability corporation.

http://www.rjionline.org/projects/densmo re/stories/info-valet/stories/l3c/index. php

By: GingerYellow

GingerYellow — Wed, 31 Mar 2010 10:26:14 +0000

To be fair, I imagine it’s rather easier to run a non-profit paper without a large endowment in a small country like the UK (like the Guardian, which does admittedly run at a loss), where you can actually make money from newsstand distribution/subs as well as ads, than it is in the US. I can entirely understand the pessimism about print media in the US – I can’t begin to imagine what it must be like working for a publication that loses money with each new subscriber and has to hope that eventually advertisers will pay more.

By: DanHess

DanHess — Wed, 31 Mar 2010 03:52:11 +0000

An excellent analysis. It is worth noting that the right-leaning Washington Times has operated at a loss for three decades running. It was always a non-profit newspaper.

On the other hand I wonder if your typical paper that leans just a hair to the left of Che Guevara will have trouble finding sponsors. Most of the wealthy are not after all so fond of socialism.

By: Felix Salmon

Felix Salmon — Tue, 30 Mar 2010 18:28:01 +0000

thefinite, if that’s the case, how does the St Petersburg Times manage it?

By: thefinite

thefinite — Tue, 30 Mar 2010 15:34:17 +0000

I completely agree that funding newsgathering entirely from an endowment sounds ridiculous. There are plenty of long-running, successful nonprofits that fund their activity using ongoing contributions. The March of Dimes raises over $200 million every year in new gifts.

That said, under the current Internal Revenue Code, a newspaper couldn’t sustain itself with significant amounts of ad revenue. It’s considered unrelated business income (UBI). Too much UBI will cause you to lose your tax exemption. The tax code would have to change for nonprofit newspapers to take on significant levels of ad revenue.

The point is that unless the tax code changes, nonprofits will have to pay their way using contributions and subscriptions, but not ad revenue.