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American Journalism Review
Memo to IRS: Get Out of the Way  | American Journalism Review
 AJR  Features
From AJR,   October/November 2011

Memo to IRS: Get Out of the Way   

The tax collectors and their delay on ruling on tax-exempt status for fledgling nonprofit news outlets. Fri., October 14, 2011

By Rem Rieder
Rem Rieder ( is AJR's editor and senior vice president.      

Not to go all Tea Party on you, but those bureaucrats at the IRS really need to get a clue.

One of the true bright spots in journalism in recent years has been the rise of accountability reporting funded by foundations and other benefactors.

But according to a story in the Chronicle of Philanthropy, the IRS is taking its own sweet time in determining whether many of these new nonprofit organizations qualify for tax-exempt status. That's a life-and-death matter for the fledgling news outlets. Without the status, they can't accept money from foundations or tax-exempt donations.

According to the Chronicle, the San Francisco-based SF Public Press has been waiting 21 months for a decision. The Lens in New Orleans has been waiting over a year. So has the Investigative News Network, a coalition of nonprofit news organizations.

The groups have been told that the delay is due to the fact that a number of such applications are being considered together, and the IRS wants to be particularly careful because its rulings may well be precedent-setting, the Chronicle story says.

Well, sure, IRS, this is an important matter, so consider it seriously and get it right. But 21 months? Give me a break. Get some smart people together, think it through and make a freaking decision.

And some of these applications really don't seem like they require bringing Learned Hand back from the dead to make the call.

Michael Stoll, the founder of SF Public Press, told the Chronicle that he studied IRS regulations and "played it by the book": The new nonprofit "publishes only public-interest journalism, does not endorse political candidates, operates mostly with volunteers on a shoestring budget, and does not accept advertising or resemble a commercial operation in any other way."

As Mary Walton's AJR story detailed, the decline of investigative reporting at mainstream news outlets, with some wonderful exceptions, has been truly alarming. It's crucial that something rise up to fill the gap. Strong watchdog journalism is essential for a healthy democracy.

Now philanthropy-funded journalism is hardly a panacea. There's always concern that the donors have an agenda and the largesse has strings. And foundations tend not to fund things forever. Their priorities change over time. And they like to see the beneficiaries of their giving eventually stand up on their own. That's why many of the startups are frantically looking for other revenue streams.

But despite the caveats, there's little doubt that the nonprofits are making a difference, in a good way. Generously funded newcomer ProPublica, resurgent veterans the Center for Investigative Reporting and the Center for Public Integrity, local and regional outlets all are making important contributions to the pool of accountability reporting.

So, IRS, don't be an obstacle to this important movement. Get moving!
Don't make me bring this to Herman Cain.



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