NPR and PBS Are About to Be Chased From Animal Farm For Donor Acknowledgments

The Flag Over Animal Farm

Last week, I told you that Marjorie Taylor Greene and her brand-new DOGE subcommittee has invited the heads of National Public Radio and the Public Broadcasting System to visit Congress and explain their “blatantly ideological and partisan coverage.” The Chairwoman expressed concern that NPR insufficiently reported on Hunter Biden’s laptop and that PBS insufficiently reported that Elon Musk rendered a Heil Hitler – not just once but two or three times during a campaign victory appearance.  She wanted PBS to explain that Musk is just an awkward doofus who struck his stiff right palm on his left chest and then extended  it into the air at a 65 or 70 degree angle.  Twice. I don’t understand what the concern is.  The best time to render a despot’s salute would have been after, not before, the election and that’s what PBS reported.  Anybody who wants to can find Hunter’s porno videos online without NPR’s help. 

Anyway, now comes word that Brendan Carr, newly installed FCC chairperson, has written to both networks about their objectionable efforts to propagate a “more just, verdant, and peaceful society.”  It seems that airing sponsor slogans or logos might actually violate FCC and IRS rules that prohibit nonprofits from operating unrelated advertising businesses.  Here is part of the letter:

I am writing to inform you that I have asked the FCC’s Enforcement Bureau to open an investigation regarding the airing of NPR and PBS programming across your broadcast member stations.

As you know, NPR and PBS distribute their programming through a network of approximately 1,500 NPR and PBS member broadcast stations. The relevant broadcast stations, which are licensed to operate by the FCC, are limited by the terms of their federal authorizations to operating as noncommercial educational broadcast stations- or NCES.

Federal law prohibits any NCE station from running commercial advertisements. More specifically, Section 399B of the Communications Act prohibits an NCE station from airing commercials or other promotional announcements on behalf of for-profit entities. For-profit entities that contribute funds to NCE stations may receive on-air acknowledgements, but the FCC has long held that these underwriting announcements are for identification purposes only. These announcements should not promote the contributor’s products, services, or businesses, and they may not contain comparative or qualitative descriptions, price information, calls to action, or inducements to buy, sell, rent, or lease.

I am concerned that NPR and PBS broadcasts could be violating federal law by airing commercials. In particular, it is possible that NPR and PBS member stations are broadcasting underwriting announcements that cross the line into prohibited commercial advertisements.

Legally, it all depends on what the law means by “prohibited commercial advertisements” and, as with most things, tax law has already been there, done that.  The FCC has it own set of similar rules that seem on all fours with the IRS rules. Here is the gist of the FCC rules:

In March 1984, we relaxed our noncommercial policy to allow public broadcasters to expand or “enhance” the scope of donor and underwriter acknowledgements to include (1) logograms or slogans which identify and do not promote, (2) location information, (3) value neutral descriptions of a product line or service, and (4) brand and trade names and product or service listings.  1984 Order at 263.  That action was taken as another step in our ongoing effort to strike a reasonable balance between the financial needs of public broadcast stations and their obligation to provide an essentially noncommercial service.  It was our view that “enhanced underwriting” would offer significant potential benefits to public broadcasting in terms of attracting additional business support and would thereby improve the financial self-sufficiency of the service without threatening its underlying noncommercial nature.  In this regard, we emphasized that such announcements could not include qualitative or comparative language and that the Order should not be construed as allowing advertisements as defined in Section 399B of the Communications Act.  Id.

We recognized in our 1982 Order that it may be difficult at times to distinguish between announcements that promote and those that identify.  For that reason, we expressly stated that we expect public broadcast licensees to review their donor or underwriter acknowledgements and make reasonable good faith judgements as to whether they identify, rather than promote.  1982 Order at 911.  We saw no purpose at the time, or at the time we adopted our 1984 Order, in fashioning rigid regulations or guidelines to ensure the noncommercial nature of public broadcasting, and we were concerned that such guidelines would inhibit public broadcasters’ ability to seek and obtain the funds needed to present quality programming and to remain financially viable.  It continues to be our view that the public broadcaster’s good faith judgement must be the key element in meeting Congress’ determination that the service should remain free of commercial and commercial-like matter. 

NPR and PBS are both 501(c)(3) charities.  And tax law too has exceptions for donor acknowledgements (“wink, wink”); those rules are articulated under the label “qualified sponsorships.”   Here is how the IRS describes what FCC rules also exempt:

Definition. — The term qualified sponsorship payment means any payment by any person engaged in a trade or business with respect to which there is no arrangement or expectation that the person will receive any substantial return benefit. In determining whether a payment is a qualified sponsorship payment, it is irrelevant whether the sponsored activity is related or unrelated to the recipient organization’s exempt purpose. It is also irrelevant whether the sponsored activity is temporary or permanent. For purposes of this section, payment means the payment of money, transfer of property, or performance of services.

Use Or Acknowledgment. — For purposes of this section, a substantial return benefit does not include the use or acknowledgment of the name or logo (or product lines) of the payor’s trade or business in connection with the activities of the exempt organization. Use or acknowledgment . . . may include the following: exclusive sponsorship arrangements; logos and slogans that do not contain qualitative or comparative descriptions of the payor’s products, services, facilities or company; a list of the payor’s locations, telephone numbers, or Internet address; value-neutral descriptions, including displays or visual depictions, of the payor’s product-line or services; and the payor’s brand or trade names and product or service listings. Logos or slogans that are an established part of a payor’s identity are not considered to contain qualitative or comparative descriptions. Mere display or distribution, whether for free or remuneration, of a payor’s product by the payor or the exempt organization to the general public at the sponsored activity is not considered an inducement to purchase, sell or use the payor’s product for purposes of this section and, thus, will not affect the determination of whether a payment is a qualified sponsorship payment.

The underwriter and qualified sponsorship exceptions are wide enough to cover just about anything we hear or see on NPR and PBS. We would be hard pressed to find an advertising violation on either network, though I have not performed a forensic analysis. When is the last time you watched or heard a Tesla commercial on either network? 

But compliance with law is not really the point, is it? Napoleon’s conquest and subsequent ruin of Animal Farm.  That is the point.  

darryll k. jones