The Nonprofit Solution (Healthcare)? The Nonprofit Solution (Newspapers)!

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CB101945With the Obama Administration arguably waffling on healthcare reform by floating the idea of nonprofit coops (it’ll be a nonstarter — the Dems will double down and go it alone, allowing the devil-may-care GOP to exercise its time-tested preference for Americans to die at private industry’s hands), now comes another voice weighing in on the viability of the nonprofit business model — for journalism.

It comes via an editorial by James T. Hamilton, director of the DeWitt Wallace Center for Media and Democracy at Duke University’s Sanford School of Public Policy, in the Atlanta Journal-Constitution.

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After a relatively harmless and irrefutable review of the woes of the media — job losses, advertising went to the Internet, etc. — Hamilton writes about the effect of the industry’s decline on good-government watchdog journalism, and how essential it is that we have all the methods of peering into our government’s operations and dysfunctions that we had during flush times.

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He writes:

One possible solution to rescuing the watchdog function of the press is to allow newspapers to operate as nonprofits. If a newspaper were run as a nonprofit, this would allow people who valued the impact of its stories to donate and receive a tax deduction.

Additionally, Congress could speed the development of new forms of media organization, such as the low-profit limited liability (L3C) corporation. L3Cs are companies with low profits but high positive spillovers on their communities.

A newspaper run as a L3C could draw many different types of investors. Foundations interested in accountability coverage could make a program-related investment in the L3C and state up front they did not expect a high rate of return. Socially conscious investors who care about local news could also invest in the L3C and accept only a modest rate of return. With these two sets of investors accepting lower rates, a third set of investors in search of a market rate of return also could be willing to invest in a newspaper.

….To date, no newspaper has transformed into a L3C, in part because of uncertainties over how foundation investments in them might be treated.

….Newspapers have always been skittish about taking money from certain sources. They obviously don’t want to have the appearance of a conflict of interest in their coverage, especially if the reporting was about an investor. Similarly, asking the government to fund coverage of government would be very risky.

Exactly: the last paragraph is one reason why I’m skeptical of the idea.

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Another is that while Hamilton cites “Harper’s, Mother Jones, and The American Spectator and newly formed Web outlets that cover local news” as examples of news organizations going nonprofit, I’m unclear that there’s enough to evidence to suggest that American largesse can save more than a few publications here and there. If people are so willing to donate their money to, say, the Boston Globe, why wouldn’t they pay for content? Isn’t that really the issue right now — what the current and evolving psychology of the reader is?

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More than that, I’m not certain at all that the psychology of the reader involves getting news in print. What concerns me, finally, is that we seem to be in a period in which everyone, for perfectly understandable reasons, wants to posit themselves as experts, as philosophers, as seers, as visionaries, but rarely does anyone put empirical information on the table. How many people under 30, for example, would pick up a daily print newspaper if it was free or cost money or was run through a nonprofit business model? How many of those people would pay for content online? Shouldn’t a few of these issues be examined scientifically before we declare what business model will work best?

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For example, if “L3Cs are companies with low profits but high positive spillovers on their communities,” that’s great for the communities but how great will it be for jobs? Hamilton warns that in headcount-slashed newsrooms, “millions of stories won’t be written this year,” but how many would be written if many newspapers went the L3C route? Just how many jobs would be saved? And forget about saved for a moment — how about created?

I’m not saying nonprofit doesn’t or couldn’t work. I’m just saying media is no longer, and probably never really was, a one-size-fits-all proposition. Each publication is going to have to develop the approach/marketing that best suits it.

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