Since the advent of the Internet, numerous digital news organizations have had difficulties remaining operational as commercial entities and the number of not- for-profit1 startups has grown. An important challenge for these news organizations is whether the legal systems in which they operate provide a conducive environment for charitable media and whether it can help explain their development. The legal qualification of news organizations as charities and the conferral of tax-exempt status are necessary to gather the necessary public support for their activities. However, in a number of jurisdictions, non-profit media outlets are often confronted with long-established legal frameworks that do not include journalistic activities within the concept of ‘charitable status’. These news organizations thus face significant delays and uncertainties during the process of obtaining tax-exempt status.
This report contributes to the evolving debate on not-for-profit news start-ups by examining legal systems that determine whether charitable and tax exempt status and a variety of benefits associated with them can be granted. This report compares and contrasts policies, and assesses how such policies affect both the development of startups and existing news organizations that would like to become charities and gain tax-exempt status. It also provides an overview of best regulation practices in an attempt to tackle legal and societal challenges that need to be addressed.
The study draws on the regulatory systems in five countries: Australia, Canada, Ireland, the United Kingdom (England and Wales), and the United States. We selected each of these countries on the basis that they share Anglo-influenced legal traditions. They are nevertheless subject to a mix of federal, state/provincial/territorial, and local regulation. The goal of this report is to gain a better understanding of the legal settings for charitable and tax exempt status for news organizations and challenges that may hinder their development.
Drawing from the national cases, this report finds that not-for-profit media with charitable status exist more in the UK and the US than in Australia. Not-for- profit media entities have not significantly appeared in Canada and Ireland, with the exception of a few media outlets associated with other organizations that have charitable status. The primary hindrances to achieving charitable status for media organizations have been definitional, procedural, political, and commercial. The most significant hindrance has been the legal definitions of charitable purposes and the abilities of media organizations to meet those definitions. Some charitable/tax exempt news organizations exist in various forms in each country including charity-owned and controlled journalism in which charitable organizations own or control non-charitable journalism-producing organization. The national case studies also show the presence of some hybrid legal structures allowing journalistic-related organizations to receive gifts/grants (e.g. foundations, government aid, and educational structures).
This report summarizes the issues raised by the respective countries to evaluate the potential for not-for-profit news. It also explores how it may be possible for startups and existing news organizations to become charities and gain tax- exempt status.
Picard, Robert; Belair-Gagnon, Valerie; Ranchordás, Sofia.
The impact of charity and tax law/regulation on not-for-profit news organizations.
The Reuters Institute for the Study of Journalism, University of Oxford and the Information Society Project, Yale Law School.
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