A new report makes recommendations on how the IRS could modernize its rules to more easily grant nonprofit status to digital news start-ups. 

Although the IRS has a history of approving nonprofit status to journalism organizations, in recent years the process has become slow and inconsistent. The result is a growing frustration on the part of local news startups that are trying to fill a gap in providing news and information in their local communities.

“The IRS and Nonprofit Media: Toward Creating a More Informed Public,” highlights five key problems with the current IRS approach to granting nonprofit status including the fact that applications are processed inconsistently, that its approach undervalues journalism and inhibits many outlets’ long-term sustainability.

The report suggests that the IRS should evaluate whether the media organization applying for tax-exempt status is engaged primarily in educational activities that provide a community benefit, as opposed to advancing private interests. Additionally it recommends that news and journalism do count as “educational” under the tax-exempt rules.   

The report was released in conjunction with a panel discussion featuring journalism, legal and nonprofit leaders. Knight’s Senior Adviser to the President, Eric Newton, kicked off the discussion.

It was released by the Council on Foundation’s Nonprofit Media Working Group, and funded by Knight Foundation. Steven Waldman, a journalist and former senior adviser to the Federal Communications Chairman, chairs the group. The report followed the recommendation by the Federal Communications Commission that a group of nonprofit tax and journalism experts convene on the topic. 

The full report can be read at www.cof.org/nonprofitmedia. An executive summary is also available. 

By Elizabeth R. Miller, communications associate at Knight Foundation

Related links: “IRS should allow news to evolve,” by Steven Waldman in the USA Today, “Report: The IRS’s “antiquated and counterproductive” rules are hurting nonprofit news orgs” in Nieman Lab, “IRS Urged to Revamp How It Grants Charity Status to News Outlets” in the Chronicle of Philanthropy