No matter what you think about tax cuts for the rich or corporations, everyone seems to agree that our tax code is too complex. Understanding the IRS’ concrete guidelines and navigating the nuances of past IRS rulings can be a daunting undertaking.

For many journalists embarking on new nonprofit journalism efforts, negotiating this tangled web presents a significant roadblock to getting an organization up and running. To make matters worse, in recent months the IRS has blocked the majority of applications from journalism organizations as it studies whether to continue to allow such organizations to become nonprofits. The agency’s decision in this matter could send shockwaves through the journalism sector, even calling into question the status of journalism nonprofits that had previously received IRS approval.

In the long term, we need a political solution to eliminate this uncertainty and establish journalism as an activity eligible for nonprofit status. However, in the near term journalists need a new set of tools to help steer them through the IRS process. To that end, the Digital Media Law Project at Harvard University has just published a new in-depth guide to understanding IRS decision making around nonprofit journalism and publishing organizations. The product of months of poring over IRS memos and past court cases, the paper is meant to help journalists as they develop and submit their applications.

Jeffrey Hermes, the report’s author and director of the Digital Media Law Project, makes it clear that the IRS is working under a set of pre-existing laws and precedents. He writes:

Until and unless there is action in Congress to facilitate tax exemptions for journalism non-profits, news organizations seeking 501(c)(3) status must learn how to structure their operations to meet the existing standards applied by the IRS. To that end, this guide is intended to provide practical information regarding the standards that the IRS applies in determining whether to grant federal tax-exempt status to a non-profit organization under Section 501(c)(3).

In developing the report’s recommendations, Hermes focuses on how journalism organizations can best fit within the existing “educational” category in the tax code’s nonprofit section. “It is important to understand,” he notes, “that Section 501(c)(3) contains no tax exemptions that are specifically intended to benefit journalism organizations. Put another way, the fact that an organization is intended to benefit the public by sharing newsworthy information is not by itself sufficient to obtain Section 501(c)(3) status.” The majority of news organizations applying for nonprofit status have applied under the educational category. As Hermes notes, it is currently the best option.

The guide, which is available as both a PDF and an interactive website, is an important contribution to the field as journalists continue to explore and experiment with new models. However, it also makes troublingly clear why we need a longer-term solution to this issue.

For example, Hermes says that a news organization should “be careful if it mentions its journalistic mission in the statement of its purpose” because the IRS has ruled in the past that reporting the news is not in and of itself an educational activity. So for a nonprofit news organization, journalism can be a vehicle to achieving a mission but not the actual mission.

It is becoming increasingly evident that commercial news operations won’t or can’t supply the full extent of news and information our communities and democracy need. While numerous reports from public interest groups, foundations and even other government agencies have underscored the important role of nonprofit news, our laws and institutions have not adapted to journalism’s changing landscape. My hope is that this guide can help journalists navigate the less-than-ideal laws currently in place and focus more attention on the need to adapt those laws to spark a new era of nonprofit media in America.

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