A bill reintroduced to the US House of Representatives seeks to make it easier for news organisations to register as nonprofits, as well as to exempt them from paying tax on ad revenue.
Introduced in February by Democratic lawmakers Mark DeSaulnier, Eleanor Holmes Norton and Jamie Raskin, the “Saving Local News Act” would explicitly make the “publication of written news articles” a tax-exempt purpose.
The bill stalled in Congress last time it was introduced in 2021, which DeSaulnier attributed in part to frostiness between some politicians and the press.
“One of the things is that it’s hard to explain we’re talking about local news,” DeSaulnier told Press Gazette this month.
“People who run for office… a lot of the individuals don’t like having a third party reporting on what they do. So there is that sort of cultural thing of ‘why should I help people in the press? They don’t always write good things about me’ — and it’s like, no, no, that’s not their job!”
Non-profit status seen as a way to put more reporters on the beat around America
The reintroduction of the Saving Local News Act was welcomed by press freedom organisation PEN America and the Newsguild journalists’ union, with the president of the latter saying: “We must fight against the loss of more local news outlets, which threatens our democracy. Supporting more non-profit local news organisations that will put quality reporting and good jobs in journalism above profits is an important step in doing that work.”
Non-profit status is seen by some in the media as a better guarantee of quality and independence than being for-profit — a model which, critics say, incentivises management to cut on-the-ground reporting staff, to the detriment of the journalism produced.
Some non-profit news organisations are prospering in the US at present: prominent non-profit Propublica this week won a Pulitzer Prize for its reporting into the relationship between Supreme Court Justice Clarence Thomas and a real estate tycoon, the nearly 50 year-old outlet Mother Jones now draws three-quarters of its $16.8m revenue from reader donations and in 2022 Press Gazette spoke with the News Revenue Hub, a consultancy for small non-profits, about its work helping 70 clients around the country to become sustainable.
However, in August The Texas Tribune, a well-regarded, 14-year old non-profit, had to make its first-ever layoffs. Another, The Center for Public Integrity, laid off most of its union members in March amid what The New York Times described as “dire financial straits”. And in the UK Open Democracy, a finalist for the 2023 British Journalism Award for news provider of the year — and the only contender that was not a national newspaper or broadcaster — had to make steep cuts in March, laying off its entire news team.
But DeSaulnier told Press Gazette he thought exempting non-profits from tax on their advertisements would make for a “healthy” business model.
Among the small local publishers he had spoken with, “even if they weren’t non-profits, they didn’t make a lot of money — it was the Alden Capitals and the Hearsts of the world who were making 15%, 20% after tax profit”.
He said that to date, when newsrooms have applied for non-profit status, “because it was sort of a new model… and because of First Amendment issues, their lawyers didn’t really know how to handle it, so it became more problematic”.
“It’s not that somebody’s making a tonne of money,” he said, “it’s just it’s more sustainable to spend more money on actual journalism.”
Those in favour of for-profit journalism argue that profit is the best guarantee of independence. Asked about that, DeSaulnier said: “Profit is a fair determinant to be considered, but it’s not the only one.”
Earlier this month New York state passed the Local Journalism Sustainability Act, allotting up to $30m a year in tax credits over the next three years to newsrooms in the state to subsidise journalist salaries.
Local journalists used to ‘inoculate a lot of the bad behaviour’ of local politicians
DeSaulnier is not a journalist, having worked as a restaurateur before entering local politics. But he said his professional and political career had impressed upon him the need for robust local journalism.
“It was the fact that you had a reporter in that front row every week when the city council met,” he said. “It inoculated a lot of the bad behaviour, knowing that there was a professional reporter who knew what people’s relationships were and could communicate that in a way that was digestible to the average citizen.”
He said that the well-documented decline in the number of local journalists in the US had been “fundamental to our struggles in American democracy — because people make opinions and vote on information that is not accurate, and they don’t learn the craft of citizenship the way it was learned at the local level”.
Asked whether that decline had also meant there was no longer “inoculation” against bad behaviour, as he had put it, DeSaulnier said “people trust local electeds more than they do federal electeds,” which he thought was because “they don’t hear anything bad about their locals [so] they think they’re doing fine.
“My personal experience is that the quality of people running for office at every level in the United States, but particularly at the local level, has decreased. It’s become less a person who’s active in the community and more a person who has political opinions and ambitions.
“And then, because you don’t have that reporter in the front row, not only are people less aware and less practised, less knowledgeable, but there’s a lot more corruption, because nobody’s reporting on it.”
Asked about the bill’s prospects of success this time around, DeSaulnier said: “I’m making some progress, at least, in my conversations there.
“This is going to be a big push for me the remainder of this term. To be perfectly honest, the strategy is more next term — in that if we Democrats get control, it makes it exponentially easier for me to do.
“And of course, we have to keep the White House, because if Donald Trump becomes president, he has very little interest in helping people who don’t write flattering things about him.”
He said he was not necessarily optimistic about succeeding in “this place and this time”, but added: “Just because something isn’t possible shouldn’t inhibit you from trying to do it, because by you starting, it starts pushing towards that.
“I think it will happen — it just won’t happen on the timeframe I would like it to happen. So I can’t get frustrated. You have to stick with it.”
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