Nonprofit Journalism and the 501(c)(3) Political Restrictions
Will a tax exempt newspaper violate the prohibition against campaign intervention if it endorses candidates, prints letters to the editor supporting or opposing a political candidate, or provides online space for readers to comment about candidates? That’s the question a small Bay Area newspaper wrestled with recently. The paper’s answer and the underlying reasons are worth thinking about.
Pleasanton, California is a small and affluent San Francisco suburb with a 2020 census count of about 80,000 people. The Pleasanton Weekly is the city’s hometown newspaper. It comes out every Friday, completely free of charge. There is an online version as well. The paper derives operating revenue primarily from advertisements. Like all local news, the paper focuses on the events and happenings around town. This fall and spring, for example, the Bankhead Theater at the Livermore Performing Arts Center will feature Chris Perondi’s Stunt Dog Experience, Yamato’s Drummers of Japan, and the Red Hot Chili Peppers amongst other acts. The Livermore is about 10 miles east of Pleasanton down Stanley Blvd.
Also like most local newspapers, the Weekly has really struggled ever since most people started getting their news fix online. Fewer advertisers buy space in print news and apparently don’t spend as much for online ads. So the Pleasanton Weekly converted to a nonprofit tax exempt organization. The managers are hoping that tax savings and deductible contributions will help it stay afloat. But the editors had to figure out what to do with the paper’s reporting about, and occasional endorsements of political candidates. Management also fretted about its historical practice of printing letters from readers who favored or opposed candidates. To be safe, the paper decided that it would make no more endorsements and completely discontinue printing letters from readers endorsing or opposing political candidates.
That will solve the problem, of course, but does the decision go too far for tax exemption? Probably not as far as endorsements are concerned. Endorsements are quintessential. I am still trying to come up with a good argument — other than the First Amendment — why exempt news should nevertheless be allowed to endorse candidates in the exercise of a venerated journalistic tradition. I can already make a stronger case for printing letters from readers advocating for or against political candidates. Letters writers don’t speak for the newspaper. In that case, though, the problem is that editors might decide to print letters only from readers supporting one candidate or another. Pleasanton, by the way, is a blue town; all of its elected politicians are Democrats.
There is precedent, peripheral perhaps, but still loosely analogous. A student newspaper can make political endorsements if the operation of the newspaper is part of a university’s educational mission and the circumstances don’t suggest the university is behind the scenes making the decision who to endorse. And a university can make its campus available for candidate rallies so long as it doesn’t discriminate amongst candidates who want to hold rallies on campus. So I am just not sure whether the Weekly is being prudent or way too cautious. Here is the paper’s thought provoking critical analysis. I hope the editorial board doesn’t mind that I am including the whole thing:
The Pleasanton Weekly’s parent organization, Embarcadero Media, went through a huge transition in January when the 44-year-old news group became a nonprofit news organization. Our reason behind the conversion could be likened to an emergency surgery — there was severe pain (financial), an urgent need and it was necessary for survival.
It’s no secret that the news industry’s advertising-based business model has drastically changed over the past few years because of the shift from print to digital. Like so many other media small groups, the pandemic quickened the pace of declining revenue for us. More and more news organizations across the country have been making the same change from for-profit to nonprofit status, and new nonprofits are launching. However, this is a fairly new trend, so there are few places to turn for best practices or even advice on the many questions we have. One particular issue many nonprofit news publishers are struggling with is the IRS policy of nonpartisanship and the confusing rules around “political engagement”.
As a journalism nonprofit, we are now subject to IRS rules that prohibit political engagement by 501(c)(3) organizations. That means our editorial board can no longer write endorsements of political candidates. The prohibition on endorsements also extends to reader opinion such as Letters to the Editor and online comments. Guidelines suggest that if such opinions are published, they must be provided in equal amounts to all candidates.
We can and will continue hosting candidate forums, writing editorials on ballot measures and compiling voter guide information such as candidate profiles and campaign finance records. Political advertising is exempt from the rules. Our editorial board wants to continue to provide space for different perspectives from readers, but the consequences for running afoul of the IRS policies are potentially catastrophic — we could lose our nonprofit status. Therefore, we have decided we will not allow comments about candidates on our online stories and will not run Letters to the Editor about candidates in our print edition.
We understand the disappointment this causes, but our vulnerability is too great. Being creative, but still coloring within the IRS-defined lines, our organization is considering a plan that would allow us to provide a platform for community members to express different perspectives and opinions about candidates without jeopardizing our 501(c)(3) designation. Because advertising is fair game, we could charge for political letters and publish them as “advertisements”, which would be grouped on a page of Reader Opinions.
As with political advertising, if the rates are the same for everyone, there is no perception of bias or “advocacy” on our part. But we do have to charge what we would charge an advertiser for the same space in the newspaper, which would be $100 per ad, to not appear to be subsidizing political advertising, which can get us into hot water with the IRS. Guidelines would be set as we do with all advertising. For example, each opinion would have “Paid Advertising” prominently displayed within each box.
As with Letters, there would be a word limit, a review of the text for accuracy and fairness, an author’s name required and a limit of submissions to one per author per race. This is not optimal, and we recognize that. But it’s either this or we refuse all opinion pieces in which candidates are mentioned because we won’t jeopardize our existence. Please reach out to our publisher, Gina Channell Wilcox, gchannell@pleasantonweekly.com, with your thoughts.
I would not so easily concede that the campaign intervention prohibition applies to letters to the editor, or that for each letter endorsing or opposing a candidate, the newspaper is obliged to print a letter with opposite sentiments. The same for online comments endorsing or opposing a candidate. So long as the editors are neutral in their selection and purely journalistic editing for publication of those letters (grammar, striking vulgarity, and word count), I would take the more aggressive approach of printing letters. I would jettison any effort at editing for “fairness” though. And online comments authored by readers don’t imply the paper’s endorsement at all. Explicit and strategically placed disclaimers would be best practice but I’m not even sure disclaimers are necessary. Most people know its the reader’s views in letters to the editor or online comments.
Selection and editing necessarily implies a certain minimal level of endorsement, I suppose. And there is no de minimis exception to the campaign intervention prohibition. But as a policy matter, printing selected letters seems better than a complete ban on readers’ political speech. A complete ban is inconsistent with the charitable purpose for which nonprofit news is granted tax exempt status.
And let’s not forget that the newspaper always has the First Amendment, a wild card that can end this whole debate immediately.
darryll k. jones