A New Approach to Helping Journalism Non-Profits at the IRS

Today, the Digital Media Law Project has launched a new version of its resources for journalism organizations seeking a Section 501(c)(3) tax exemption for the IRS. As a project, we have been concerned with non-profit journalism from the beginning, providing informational resources for news ventures seeking to form as non-profits. Since the launch of our attorney referral service, the Online Media Legal Network, in late 2009, about a third of our clients have been non-profit journalism organizations; more have been individuals or for-profits interested in starting a non-profit news venture. We have worked with more than forty groups to find counsel to assist them in applying to the IRS for recognition of tax-exempt status.

But the path to tax-exempt status has not always run smooth. From 2010 to 2012, the IRS was reevaluating its standards for journalism organizations, causing these organizations to face long delays while struggling to stay afloat without an exemption in place. In fact, the now-infamous IRS "BOLO" lists flagged "newspaper entities" for special scrutiny [PDF] as of  February 2011. Several journalism applicants were questioned by the IRS about various aspects of their operation, without understanding why the IRS was interested in those issues -- and sometimes those questions seemed to verge into areas that should have been irrelevant under federal law. To help applicants satisfy IRS scrutiny, in April 2012 the DMLP released a detailed guide to the agency's decision-making process for granting tax exemptions to journalism non-profits.

In late 2012, it appeared that the logjam at the IRS was beginning to break, with a couple of high-profile applications accepted after delays of more than two years, and a steady stream of additional applications granted since then. And yet, the process remains complex, and there is substantial confusion about both how to obtain Section 501(c)(3) status and what that status allows you to do. For that reason, Eric Newton of the John S. and James L. Knight Foundation reached out to the DMLP and offered Knight's support for the development of a video debunking some of the more common myths and misconceptions, which we're pleased to present here (thanks also to Dan Jones, Digital Media Producer for the Berkman Center, and Ogmog Creative):

It has also become clear to us that the journalism organizations which have the easiest time finding a lawyer to help with a Section 501(c)(3) application, and succeed most frequently at the IRS, are those that take the time to study the 501(c)(3) process and the agency's standards before they apply. For that reason, we have launched a new collection of resources to help news organizations prepare to face the IRS, including: a checklist to help journalists decide if Section 501(c)(3) status is right for them; an updated section of our Legal Guide on the Section 501(c)(3) application process; our detailed guide to IRS decision-making for journalism non-profits; and an archive of successful application materials from news organizations that have obtained their tax-exempt status.

None of these resources is intended to allow a journalism non-profit to go it alone; with all that has happened at the IRS, the agency process is too tangled for a news venture to expect success without professional assistance. These resources will help journalism ventures to better understand what the agency is looking for, so that they can adjust their operations properly and be prepared to work with an attorney. 

Non-profit journalism has the potential to address public information needs that are simply not profitable for a for-profit news organization to cover -- and there is no better time to launch resources intended to help bring information of public importance to light than the beginning of Sunshine Week. And at 1 p.m. Eastern on April 10, 2014, the DMLP will be holding a one-hour online session open to the public where you can ask questions about these resources and the application process; connection details will be posted on the DMLP homepage on April 10, so be sure to come back then.

The Digital Media Law Project is based at the Berkman Center for Internet & Society at Harvard University. The DMLP produces a wide range of legal resources for independe