May 13, 2020

The Institute for Nonprofit News is updating its donor transparency recommendation for members of the INN news network to make it easier for nonprofit newsrooms to let users know about any government financial support as well as donations.

INN’s donor transparency policy was written with philanthropic donors in mind, for disclosing charitable contributions. As nonprofits, we do this through annual 990 tax filings that are open to the public, and INN also recommends that our members post all major donors on their news websites so they are easier for the public to find.

We’ve updated this to a broader Donor & Financial Transparency statement. The change was prompted by the Paycheck Protection Program loan program run by the Small Business Administration. Many news organizations applied for PPP loans to avoid laying off journalists during the pandemic. At INN, we received a PPP loan and helped hundreds of nonprofit newsrooms apply for theirs.

INN is recommending that news organizations post all major revenue sources, not just donors, as a best practice supporting editorial independence and public trust. We added a few lines that news sites can use to let readers know that a nonprofit news site is exempt from paying some taxes and may get some government funding:

As a 501(c)(3) nonprofit that operates as a public trust, we do not pay certain taxes. We may receive funds from standard government programs offered to nonprofits or similar businesses.

INN also recommends that news organizations receiving PPP loans include a notice in every story about the program, along the lines of “This news publication received a Paycheck Protection Program loan through the U.S. Small Business Administration during the coronavirus crisis.” Consumers can decide themselves if they think any differently about the coverage as a result. Examples contributed by INN members are included now on our transparency policy page.

Journalists are cautious about taking government funds. We must avoid giving the government influence over news coverage or creating even the appearance of a conflict of interest. Conflicts could easily arise out of funding that could favor individual news outlets or be steered to media in some states vs. others.

But this doesn’t mean news media never take part in broad government support programs. Federal financial support of news has been common for decades, through broad structures designed to prevent favoritism or influence. These include U.S. Postal Service discounts for periodicals, government legal advertising in newspapers and subsidies for public broadcasters through the Corporation for Public Broadcasting. Even the 501(c)(3) tax exemptions are a kind of structural support of charitable trusts, including news nonprofits.

The PPP loans are part of a broad program available to all small businesses. There was no easy way for the government to approve loans for media whose coverage it favored over those it disliked. While the program has plenty of problems and merits scrutiny, its structure didn’t pose particular conflicts for news businesses.

We do, however, believe it’s important to tell the public about these funds.
INN’s standards are based on a principle shared by the investigative journalists who formed the INN consortium in 2009: that it is important for any individual consuming the news to be able to learn who is paying for that reporting. It goes beyond making sure the newsroom is independent of any financial influence. That is fundamental, and some news publishers hold that if funding is anonymous, that is sufficient. Their thinking is that if a newsroom doesn’t know who pays for its operations, it must be independent because there is no way for the funder to exert influence.

There are two added considerations that led INN to favor broader public disclosure. One is that the public doesn’t really have any way to know if funding is truly anonymous to a newsroom. In virtually all cases, credible news organizations make sure the news staff does not know the identity of such donors, but disclosure removes doubt. And publicly disclosing a news organization’s financial backers adds another level of transparency. It’s a matter of trust. It helps the public know what a news organization stands for. In our view, that’s a key way the public can tell the difference between a legitimate news organization that is trustworthy, another that may be fine but raise doubts in a reader’s mind because it doesn’t disclose who funds it, and yet others that may post “newsy” stories that actually are intended to persuade someone to take a position or advance a cause.

Two trends in philanthropy are increasing the pressure on news organizations against disclosing donors: charitable giving is shifting toward individual donors, who often want to maintain anonymity just to preserve their personal privacy. And more donations are being made through Donor-Advised Funds (DAFs). The donors behind DAFs sometimes are named, but often not. INN asks members to adopt a best practice of publicly disclosing all donors giving $5,000 or more a year. Members apply these guidelines in various ways, but generally practice transparency in their funding.

INN believes journalists increase their credibility by being open about who pays for the reporting, and we encourage all members to openly discuss and disclose all their major sources of funding.