How this Frankenbusiness will be organized.

How this Frankenbusiness will be organized.

The Inquirer, Daily News and Philly.com go nonprofit: 4 things to know

The 85-year-old H.R. “Gerry” Lenfest attended a formal announcement of his gift at the National Constitution Center on Tuesday morning — here’s a few takeaways.

Clarification appended.

Philadelphia’s largest newsrooms have gone nonprofit. Now what?

In a move that excited the journalism community even as it elicited shrugs for “what it all means,” today the owner of the Philadelphia Inquirer, Daily News and Philly.com donated those news assets — plus $20 million — into a new nonprofit structure aimed at managing them. The 85-year-old H.F. “Gerry” Lenfest attended a formal announcement of his gift at the National Constitution Center on Tuesday morning. Here are four takeaways; the Inquirer story on the deal is here.

It’s about taxes, at least in part

The main revenue stream Lenfest’s donation and nonprofit status opens up for the newspapers is this: Becoming an attractive grantee for foundations that give large sums for reportage around their pet projects. The newspapers have accepted grant money in the past; during the 2015 mayoral primary, the William Penn Foundation gave $350,000 to the papers for coverage, for instance. (Interestingly the journalists whose hire was covered by the grant are now looking for work.) But Lenfest made clear during today’s announcement that those donations will be tax-deductible in the future. It means the new “Institute” will also be seeking large donations, both in Philadelphia and nationwide.

Importantly, Lenfest also noted that the process will save the company from paying taxes. The structure is slightly more complicated than this! While the newsrooms remain for-profit, and so does their governance, the overall gifting will be received and disbursed by the new non-profit, tax-advantaged Institute. And since the new publisher just sent some 46 journalists packing because of business challenges, any break you can get is worth taking.

Grants come with strings, and competition

Lenfest mentioned foundations long tied to journalism giving during today’s announcement: The Knight Foundation, the Ford Foundation, the William Penn and Wyncote foundations among them. These outlets already have many, many people already asking them for their money. Just in Philadelphia, the following publications already compete for grants, from some of those very same foundations: Al Dia, WHYY/NewsWorks/PlanPhilly, the Public School Notebook, and even Billy Penn itself. (What up, Knight Foundation?) Nationally, the Philadelphia Media Network is now competing with the Tampa Bay Times, which is a nonprofit, as well as NPR, ProPublica, the Texas Tribune, and a host of other nonprofit newsrooms.

Those gifts also mandate how that money is used. The oft-cited Ford Foundation grant dedicated an eye-popping $1 million to the Los Angeles Times is earmarked to “focus on the Vietnamese, Korean and other immigrant communities, the California prison system, the border region and Brazil.” That’s a significant chunk of a newsroom’s budget.

They need business help

Today’s announcement was heavy on the journalism significance but short on the whole how-we’re-going-to-stop-losing-money thing. Publisher Terry Egger admitted, almost as an aside, that the donation and nonprofit status change doesn’t solve the company’s problems. Egger did say that although more people read PMN’s content than ever before — something like 2.2 million people per month — most aren’t paying for it. Egger was pretty sure the paper needed to get paid for its content. That sounds a bit like a paywall, which did not work out so well for the place last time it tried it.

Historic, unprecedented — and unproven

Aside from the weird emotional undertone at the announcement — PMN spokeswoman Amy Buckman called it the most emotional press conference she’d ever attended — much has been made about the historic nature of Lenfest’s move. That’s largely because nothing else in the country is set up that way. There’s a reason for that: It might not work. Of course, the only concrete thing this does is get Gerry Lenfest out of the newspaper business, one that (he admitted today) he never expected to be in. As to whether or not it’ll work, time — and how well they’re able to hustle for donor dollars — will tell.

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