Working Title

One thing I noticed about the publications we have researched is that many of them are similar. They start with some impetus of protest or community need.

The Crier of Port Hope wanted a better newspaper in town. Ward 9 Community News (the earlier name for Beach Metro Community News) was protesting the Scarborough expressway. Voice of San Diego wanted quality investigative journalism to keep city hall responsible.

It’s interesting to consider why Beach News is still publishing while the Crier folded. Port Hope stopped publishing after about a year and a half; at the Beach the founders left after a year or so but were replaced and the paper still publishes today. The manager at the Beach News explained the death of the Crier saying, “Oh, they burned out” — just as the first set of Beach News volunteers had.

That also shows the need to have broad support to keep thing going. When the seed grant for the Beach paper ran out, volunteer carriers canvassed their routes, asking for two dollars from each house. They collected $7,000. That points to one reason the newspaper has such a strong place in the community: its volunteer network.

Distribution costs them little, because they use volunteers (they pay a little to the drivers for gas money). Their distribution network also strengthens their ties to their community. Every person in the Beach is only two degrees from the paper, because it is delivered by their neighbour. That can be strengthening and stabilizing.

That also gives the paper a human face. If I disagree with something, there is someone I know whom I can tell.

There is a great value for a community venture in having a good network.

In considering different business models for news, that is how news is funded, it is necessary to look at financial information. Being exempt from tax is one reason that not-for-profit structures may be viable.

Also, not-for-profit publishers in the U.S. are eligible to receive tax-deductible donations. That’s not the case in Canada.

Online not-for-profit news organizations like the Voice of San Diego and MinnPost.com are in the IRS’s list of organizations that can receive charitable contributions.

Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986, is a list of organizations eligible to receive tax-deductible charitable contributions.
— Search for Charities, Online Version of Publication 78 IRS

In comparison, publications like the Tyee in B.C. request donations to funds held with a foundation that then offers grants for individual journalists to do work. It is a legal but roundabout way of funding operations and very restrictive.

When the Tyee was trying to raise funds for its provincial election coverage, contributions were not tax-deductible.

Political activity is not considered charitable by the Canada Revenue Agency.

The main reason why the courts rule out political purposes for charities is a result of the requirement that a purpose is only charitable if it generates a public benefit. A political purpose, such as seeking a ban on deer hunting, requires a charity to enter into a debate about whether such a ban is good, rather than providing or working towards an accepted public benefit.

It also means that in order to assess the public benefit of a political purpose, a court would have to take sides in a political debate. In Canada, political issues are for Parliament to decide, and the courts are reluctant to encroach on this sovereign authority (other than when a constitutional issue arises).
— 4. The difference between political purposes and charitable purposes Political Activities CPS - 022 CRA

In Canada, an organization needs to have approved and solely charitable objects to be able to issue tax receipts. The definition of what is charitable by common law comes from a 19th century court ruling Commissioners for Special Purposes of Income Tax v. Pemsel, 1891.

Pemsel categories include:

• purposes for the relief of poverty;
• purposes for the advancement of education;
• purposes for the advancement of religion; and
• other purposes beneficial to the community in a way the law regards as charitable.

— Guidelines for Registering a Charity: Meeting the Public Benefit Test CPS-024 Canada Revenue Agency

Here is a part of the actual ruling from 1891:

“Charity” in its legal sense comprises four principal divisions: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads.
— Commissioners for Special Purposes of Income Tax v. Pemsel, 1891 CanLII 21 (ON C.A.)

I haven’t found an explicit restrictions against news publishing as charitable in Canada. Many would says that since news contributes to the public good, it may be possible to consider it charitable.

The restrictions against political activity would narrow allowable content for the hypothetical charitable news publisher. This similar restriction exists in the U.S. for endowed institutions, as acknowledged in the Ackerman and Ayres piece.

The implication of this policy difference between these neighbouring countries may mean that a not-for-profit structure is far more attractive in the U.S. because it could rely on a more motivated base of donors. I expect we will find more support for the viability of the structure for news in Canada, just with a colder climate for donations.

AP announced today it will move articles from several non-profits on its newswire. It’s an attempt to ensure the presence of investigative pieces in our daily newspapers, news sites etc.

It’s a six month trial that will see AP moving articles from the Center for Public Integrity, the Investigative Reporting Workshop at American University, the Center for Investigative Reporting, and ProPublica.

This is a hopeful sign. We’ve been writing plenty here about the need to find someone to fund news, but there must also of course be a network to get that news out. It seems AP is committed to figuring out at least that piece of the puzzle.

A.P. in Deal to Deliver Nonprofits’ Journalism, New York Times, June 13

Last month I visited the Beach Metro Community News for their distribution day.

The newspaper, which covers a community in east Toronto, is incorporated as a not-for-profit and has a paid office and editorial staff but volunteer distribution. The day I was there is the day in their news cycle with the most activity. The papers were going to arrive from the printer late, so I had more time to talk to staff before things got busy.

Sheila Blinoff, the business manager, told me more of the history of the paper. She has worked in the organization for all but the first year of its existence.

Like other publications we have researched like the Crier and Voice, this newspaper started as a protest. In this case it was to fight a proposed Scarborough expressway, which was successfully stopped.

Throughout my interview with Sheila, two common themes emerged.

One was that though it is a not-for-profit, you need to run it like a business. At least as much money needs to be coming in as going out.

The second was the importance of volunteer appreciation. She told me about gifts they give their carriers each year and how she calls them on anniversaries of the start of their involvement.

The other thing I found interesting is that the operation’s finances are robust enough to be able to donate money to other community groups. Sheila told me that last year, out of revenue of about $800,000, they donated about $16,000 to various groups in their neighbourhood. That represents two per cent of money coming in.

Beach Metro Community News is an example, on a small scale, of what is possible in not-for-profit news. It is thriving, it serves and has a close relationship with its readers, and is under no pressure to grow profits for any owners or shareholders.

• On choosing a not-for-profit structure for news operations 18 Mar 2009
• My visit to the Beach Metro Community News part 1 8 May 2009

Magda e-mailed me last week and suggested we look at National Geographic as a not-for-profit publisher. I was unsure because we are studying the business of news publishing and that magazine doesn’t really publish news.

There are many other examples of non-profit magazines in Canada and the U.S. such as This Magazine, Walrus, Harper’s, and Mother Jones. Some do discuss current issues, but they all address a specific segment.

I can see how the model of magazine publishing is similar in that the question is how do you fund resource-intensive content (citizen journalists or unpaid bloggers don’t regularly do photographic deep sea diving or go on expeditions up the Amazon).

Many magazines have continued success despite the advent of digital content distribution. It may be because they have a unique niche and can attract a vertical of interest.

There could be a lesson there for news operations. Newspapers created value with their breadth and controlled distribution, but now many newspapers are full of commodified content: wire stories, classifieds, sports scores, horoscopes.

For many newspapers, local content is their unique offering. People I know have noticed a reduction in local stories in the paper where I work.

So it could be worth looking at that, but it is a huge extra chunk.

The news that billionaire David Geffen is considering buying the New York Times was big last week; the fact he’s considering turning it non-profit was buried in these stories.

From the Guardian:

A loss-making, old-technology newspaper would seem an odd vehicle for a colourful Californian showbusiness mogul. Geffen, shrewdly, is casting himself as a potential saviour of a US national treasure rather than as a business buyer - sources close to the billionaire say he wants to turn the NYT into a non-profit institution, preserving it in perpetuity.

Luckily for the Times, a professor has done an analysis of the paper’s various non-profit options, which she lists as setting up an endowment, seeking support from a foundation, purchase by an educational institution, and an angel investor. She’s not convinced by any of the options, but her analysis is interesting.

• Hollywood visionary who can step in to save America’s ailing national oracle, The Guardian, May 17
• Non-profit model for the New York Times?, Penelope Muse Abernathy, Duke Conference of Non-Profit Media

• Newspapers as endowed institutions 2 Mar 2009
• On a merger of Harvard and the Times 19 Feb 2009

In February, Ryan and I went to Port Hope to learn about the not-for-profit Crier of Port Hope. The idea for our book project arose from thinking about the Crier in the first place. It’s a story that many Canadian journalists know, because famous writer Farley Mowat was involved with the Crier, and because it was a direct affront to the shoestring operations Conrad Black’s Southam was running in many small towns in Ontario.

Before we went, we thought it amazing a group of community members got together to start a newspaper, each putting $100 in the middle of a table and running with it. But we found out Port Hope was a special place, and the Crier was hardly incongruous.

Now, we’re writing about our Port Hope experience for our sample chapter to go into our book proposal.

In the meantime, here’s are some photos from our Port Hope experience.

On our way to Port Hope, we met with John Miller, a professor at Ryerson University. He was involved in the Crier and, as a journalism professor, had some interesting perspectives on the significance of their grassroots, not-for-profit adventure.

The group had kept tremendous records. We went to the archives and spent hours wading through them.

The Beamish pub, where the paper was conceived of, upstairs in a community room. Members of the Local Newspaper Committee each slapped down $100 to take an ad in the local Southam paper arguing Port Hope needs a better newspaper. When their ad was rejected, they started the Crier with the money.