By paulgillin | January 30, 2009 - 8:14 am - Posted in BusinessModel, NewMedia, Solutions

The New York Times this week carried a well-argued op-ed making a case for turning newspapers into endowed institutions. The authors, which include a financial analyst and the chief investment officer at Yale University, suggest that newspapers endowed under Section 501(c)(3) of the I.R.S. code would enjoy the best of both worlds. They could continue to generate revenue from advertising but would enjoy the benefits of tax-free status as well as insulation from the vagaries of the market. The only thing they’d give up is the ability to support political causes.

The authors make a persuasive argument, but the devil is in the details. They suggest that the Times could cover its newsroom costs with an endowment of $5 billion, but getting enough people to sign checks to reach that total would take years. The National Association of College and University Business Officers lists just 18 academic institutions with endowments of more than $5 billion, and that tally has no doubt shrunk since the markets collapsed last fall. These institutions have large rosters of wealthy alumni whose affinity for their alma maters is stronger than is most people’s fondness for a newspaper. They’ve also been amassing their endowments for 100 years or more. While the Times might have a shot at generating that kind of loyalty, it’s a stretch to believe many smaller papers could successfully generate enough endowment to cover their expenses, and few have the time or resources to mount the necessary fund-raising campaigns.

Poynter’s Bill Mitchell points to a fascinating history at Online Journalism Review of earlier efforts to establish non-profit or reader-funded newspapers. This idea isn’t new; it’s been tested for nearly a century without notable success. In fact, Poynter Institute, the Church of Christ, Scientist and the Church of Jesus Christ of Latter-day Saints are the only three nonprofit institutions in the US that own daily newspapers, and all are struggling to keep their properties viable. Dorian Benkoil also takes up the question at Corante, but he argues that profitable journalism models are already emerging online and that we should focus on those. Judging by the lack of precedents, it seems likely that the endowment model will remain an interesting but unattainable goal.

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  1. February 9, 2009 @ 3:35 pm



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