With national donations platform, smaller publishers can seek tax-deductible donations

Malheur Enterprise readers pushed Publisher Les Zaitz to begin accepting direct donations more than a year ago.

But those donations had not been tax deductible. Using a new platform launched last week by the Local Media Association, Zaitz and other news publishers around the country are for the first time able to take advantage of a funding method pioneered by the Seattle Times seven years ago.

Federal law and IRS rules make tax-deductible donations too complicated for small outfits like The Enterprise. Though it has a national reputation for watchdog coverage, The Enterprise sells just a few thousand copies each week in Oregon’s rural southeastern corner and couldn’t afford the lawyering, accounting and programming a charitable donations system would require.

The Local Media Association’s COVID-19 Local News Fund takes care of almost all the tricky parts of the process and in its first week, The Enterprise reaped more than $3,000.

The set-up process took an hour, Zaitz said. Within eight hours, the Local Media Association had his system operating, ready to accept tax-deductible donations to keep the lights on at The Enterprise while the news staff reported on medical clinic closures and other coronavirus news.

Across the U.S., journalists have risked their own health covering the biggest catastrophe in a generation. Meanwhile, business reporters have chronicled the economic freeze that has some news companies furloughing and laying off staff, cutting wages and cutting the number of editions printed per week.

“I’m going to give readers every opportunity to help us stay alive,” Zaitz said. “This is about supporting a way to share information to our friends and neighbors.”

Matt DeRienzo, a veteran journalist on the team running Local Media Association’s platform, said the COVID-19 pandemic will re-set public attitudes about journalism.

“If anything good can come out of this (economic crisis) for journalism, it is that I think it will be further cemented that Journalism is an altruistic pursuit that is worthy of philanthropic support,” he said.

In the Pacific Northwest, The Malheur Enterprise, the online Salem (Oregon) Reporter, and Seattle’s The Evergrey, an email newsletter, are among the first group of publishers already using the platform. DeRienzo said 20 sites nationwide had already raised more than $1,000 in the first week. One hundred News Fund systems were being built Friday afternoon and he expects more than 200 newsrooms will eventually use the platform. Already, $110,000 had been donated to local newsrooms nationwide by 1,500 donors.

Here’s why the new platform is important.

Zaitz may do better than others because of his readers’ insistence he take donations. They offered so often that last year, Zaitz finally obliged them with a credit card donation button on the paper’s website. It generated a few hundred dollars, which is worth having in a small newsroom where the budget for columnists and freelancers may be less than $200 per week.

Then last fall, Malheur County officials refused to talk about the county’s plan to borrow more than $14 millon to build an industrial park. When the Enterprise sought public documents about it, the county charged more than $1,000 for copies. Zaitz paid, then launched a “Dollars for Disclosure” campaign. In a rural county of 30,000 residents with a poverty rate almost twice the national average, Zaitz raised $5,000 in six weeks through hundreds of small donations.

That was pretty good, but still not enough to pay the salaries and overhead it takes to put out the paper. It’s an ironic fact of newsroom life in the age of social media: Web traffic brings news outlets more readers than ever before, but Google and Facebook’s control of the digital ad market means publishers now see a small fraction of the ad revenue that used to underwrite journalism.

To encourage more individual gifts, news organizations need a way to make those gifts from individuals tax deductible. And, to tap into bigger donations from private foundations, newsrooms need a fiscal sponsor to process donations and ensure they are spent for public benefit.

“The Seattle Times and others have done this by creating their own 501(c)(3) or getting their own local fiscal sponsor, but it’s a little bit of an ordeal, especially for smaller news organizations,” DeRienzo said. For Project Homeless and the Investigative Journalism Fund, The Seattle Times partners with The Seattle Foundation to collect tax deductible individual donations and  grants from private foundations.

His team was already working on the system when the COVID-19 pandemic froze up advertising revenues. “It really was a catalyst to speed that up,” DeRienzo said. “We rolled this out in a very short period of time and we couldn’t be happier with the response.”