A new report from the Council on Foundations and the Knight Foundation says the IRS process for granting 501(c)(3) status to news organizations is “archaic” and “obsolete” and suggests fixes.
The IRS is applying “an antiquated and counterproductive standard to a dynamic sector” in limiting the growth of nonprofit news outlets, erecting “serious and unnecessary obstacles to critical innovation,” according to a new report released this morning. The document — the result of a year’s study based at the Council on Foundations and supported by the Knight Foundation — calls for a number of changes in how the Internal Revenue Service decides whether a news outlet can qualify for 501(c)(3) status.
Nonprofit news outlets have been on the rise in recent years as traditional media have contracted and shed journalists, many of whom have gone on to create community news startups. That influx has led to an increase in applications for tax-exempt status at the IRS, where some organizations have waited years for approval. Both current and future nonprofit media outlets are at risk from “archaic,” “inconsistent,” and “obsolete” IRS guidelines, according to the report, “The IRS and Nonprofit Media: Toward Creating a More Informed Public.”