Friday, January 30, 2009

Boola! Boola!

A few days ago The New York Times published an Op-Ed piece by the head of Yale's endowment fund arguing that the way to save newspapers in print was to convert them into nonprofit organizations. I responded with this letter and thought I would share it with you, because the Times passed. As always comments welcome.

“News You Can Endow” is ingenious but as a solution to the plight of newspapers in print it falls short from the public interest perspective for four reasons. First, the purpose of granting nonprofit status to an entity is based on the idea that its underlying mission and intent relates to charitable purpose. This taxpayer subsidized privilege is widely abused by far too many organizations able to ride on tax-exempt, tax deductible status but provide little practical charity in their operations in relation to their huge endowments. The focus here is clearly on building a sustainable business model. I don’t see any philanthropic motive. Therefore affording newspapers nonprofit status is inappropriate.

Second assembling a corpus of $5 billion forthwith can be done only through large gifts from a small number of individual and foundation donors. In its essence this is fundamentally undemocratic; in practice my experience is big donors do not stand to the side. They expect a voice and a seat at the table.

Next to equate “incremental income” from hard-copy sales and on-line subscriptions with tuition payments is a bit misleading. For most institutions tuition is anything but incremental. It is the revenue driver.

Finally who is to identify the”nation’s premier newsgathering organizations?” Those big donors will. That is scary.

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