Why Fighting for Hard-Hitting, Nonprofit News May Mean Taking on the IRS

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When we think about journalism coming under attack by the government we rarely think about the Internal Revenue Service. We think about the persecution of whistleblowers, over classification of documents, increasing secrecy and surveillance, and an utter disregard for Freedom of Information requests. We think about threats, harassment and detainment of journalists here in the U.S. and abroad.

But we don’t usually think about the tax man. This week, a new report revealed a serious and troubling set of factors within the IRS that is threatening the growth of nonprofit journalism in America.

For more than three years, the Internal Revenue Service has been holding the future of nonprofit journalism in its hands as a debate played out inside the agency about the future of news in America. Nonprofit journalism has long been part of the fabric of American journalism, but in recent years there has been a spike in interest in nonprofit news. As the economic downturn, years of media consolidation and the rise of the Internet have challenged commercial media it is becoming increasingly clear that we cannot rely on the market alone to provide the full extent of critical transparency journalism America—or other nations—needs.

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In response, interest in nonprofit news has been growing exponentially. According to David Kaplan director of the Global Investigative Journalism Network the number of investigative reporting organizations has grown from 39 to 106 worldwide in the last five years. By my count, that is likely even a conservative estimate.

In the US, a spike in applications from journalists seeking nonprofit status raised red flags at the Internal Revenue Service. While the agency has long approved a range of nonprofit journalism organizations, they seemed to be reconsidering whether journalism could be classified as an educational or nonprofit activity.

In the meantime, nonprofit journalism organizations were stuck in a bureaucratic limbo, some waiting as long as three years. While not as active a threat as censorship or secrecy, neglect can have powerful consequences. Whereas the extra-legal financial embargo US credit card companies put on WikiLeaks stops people from donating to the organization, blocking a newsroom from getting its nonprofit status can jeopardize its ability to seek grants or undermine its independence by forcing it to rely on a third party fiscal sponsor. In this case, the delay has created uncertainty and doubt amongst funders and journalists, and forced a few newsrooms to close their doors.

In their new report, the nonprofit media working group of the Council on Foundations highlights a series “worrisome actions by the IRS, which flow from the agency’s application of an antiquated analytic approach to a very dynamic sector.” Updating the agency’s out-of-date guidelines won’t be an easy task, but the new report goes a long way to beginning to map out what needs to change. Moving swiftly to ensure these changes are put in place will be critical to the long-term sustainability of nonprofit news and should be part of the fight for those of us supporting transparency journalism.

This IRS issue is a reminder that the threats facing journalism are many and diverse, and that nonprofit journalists like those we support at the Freedom of Press Foundation are particularly at risk right now as the sector grows. In fact, one of our grantees – the non-profit Bureau of Investigative Journalism – has struggled with this same issue in the UK. To gain similar tax advantages in the UK to those granted to non-profits in the United States, a UK non-profit needs to gain "charitable" status. A year ago, the agency that grants such status in the United Kingdom rejected the Bureau of Investigative Journalism’s application for a second time.

You can read more about the Bureau's work here. You can also donate to their new investigative project through our website.

Josh Stearns is the Journalism and Public Media Campaign Director at Free Press and on the board of directors here at the Freedom of the Press Foundation.

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