Karin Dryhurst

Another Bailout Misnomer

The abused moniker “bailout” has been misused yet again—this time to describe a bill to allow newspapers to function as nonprofits.

Matt Bandyk at U.S. News compares the bill to the government bailout of the financial industry, likening tax-exempt status to the billions of dollars funneled into banks.

This comparison lacks any measure of authenticity.

The bill would allow newspapers to operate as nonprofits, under 501(c)(3) status for educational purposes. Calling the legislation a newspaper bailout disregards the fact that nonprofits already operate under this status, typically in a public good capacity much like journalism.

Nonprofit news organizations also already exist, from the St. Petersburg Times and Mother Jones in print to MinnPost and the Voice of San Diego online.

The San Francisco Chronicle profiles Mother Jones this week as a role model for nonprofit news.

"In times like this (the nonprofit model) has made us more resilient," said co-editor Clara Jeffery.

Many opponents of the nonprofit model appear to be of the strict free market mindset, arguing that only market pressures can allow editors to decide the worthiness of content. If that were true, investigative journalism would have fallen to entertainment and gossip years ago.

Half of Mother Jones’ funding comes from contributions, with 15 percent provided by advertising and 35 percent provided by circulation. For-profit models also have these revenue streams with the exception that the contributions come from investors who expect growing monetary dividends rather than a public good.

Bandyk clearly doesn’t understand the proposal. He also cites that 501(c)(3) status for educational purposes prohibits political endorsements—and argues that an editorial page without endorsements can’t be taken seriously. Endorsement in this case refers to the practice of endorsing a candidate for office, such as when The New York Times editorial board endorsed Barack Obama for president.

I would rather have an editorial page that provides deep investigation and analysis of the issues than one that tells me who to vote for.

Nonprofit news organizations will not be a panacea for the media’s struggles, as the bill’s sponsor recognizes. And the nonprofit model will not allow newspapers to ignore the inevitable transition to the Web.

As The New York Times noted in its profile of Mother Jones, nonprofit status does not mean insulation from the market. The Poynter Institute and nonprofits of all stripes have had to cut back in the recession.

But as I have argued before, democracy requires the oversight provided by investigative journalism, which as a commodity fails to pull the profits investors demand. In the changing media landscape, an array of models will need to work together to provide both investigative and human interest content.

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Posted at 11:48 AM, Mar 27, 2009 in Media
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