Funding for Non-profit Media or Public Interest Activities
Part 7 of 7 – Canada’s Media in Crisis

By Nick Fillmore

February 15, 2010

Today – with the mainstream media failing to adequately serve the public in many parts of the country, and with multitudes of people fed up with how corporate media manipulate the news – is an opportune time for independent media projects to be established or refocused. The question is, as always: how to get financial backing for the work?

During the dozen years that I was deeply involved in fundraising, I found that money could be raised for most projects as long as they provided a unique service and met an important public need. The most successful project I have been closely associated with is the International Freedom of Expression eXchange (IFEX) (www.ifex.org), a worldwide network of free expression groups. A group of us from Canadian Journalists for Free Expression (CJFE) launched IFEX in 1992, and it is still going strong.

IFEX appeals to major donors from Western countries for a couple of reasons. It is the only network helping to co-ordinate efforts to protect the rights of journalists, and it is able to demonstrate that its activities bring results. Its staff members, recognizing that they had a valuable project, were able to approach donors confidently.

A group that launches, or even refocuses, an independent news media project – or raises money for just about any public-interest activity – will probably have success in fundraising if it does the proper research and targets a unique audience. It will need to demonstrate that it offers an important public service, such as providing in-depth coverage of local political, economic, and social issues not covered adequately by other media.

If a new group, or a media organization redeveloping an already existing service, follows those two guidelines, and if it is well connected to a reasonably prosperous community, it should be able to make a strong appeal to a wide range of funding sources.

Proper planning vital to success

Most necessarily, before launching a media project a group has to prepare a well-thought-out development plan. All too frequently a potentially worthwhile media project is launched by a small group of enthusiastic journalists who know lots about journalism, but not nearly enough about management and budgets.

A group would to be wise to not launch a project until the members are reasonably sure that they know where all of their funding will come from for the first two years of operation. With this funding base firmly established – and publicized in the community – others interested people will have confidence in the project and be inclined to make a donation or take out a subscription or agree to pay a user fee.

My advice is that independent media projects should be set up as non-profit corporations, and that they should generally follow the patterns and culture of running a non-governmental organization.

The kinds of projects that I discussed in Part 5 of this series all require different levels of funding. To ensure that the website or newspaper has as much editorial independence as possible, I would strongly urge that advertising revenue be kept to a limit of about 35 per cent of the overall project budget. Then, given this limited ad revenue, the group has to let the community know that it needs to gather other revenues from a wide variety of sources.

I’ll outline a few of these varied funding possibilities.

Support from “Guardian Angels”

A group would be wise to secure substantial start-up funding from one or more public-minded individuals. Perhaps people who have made a lot of money in Internet technology or entertainment would be interested in supporting a new media venture. It is unlikely that the federal government will grant charitable tax status to a website or newspaper that carries political or opinionated articles, but the feds might allow the project to receive funds by having the Guardian Angels’ donations pass through a group that does have charitable status, provided the funds are used for educational purposes that promote the public good.

Founding or sustaining memberships

Supporters of the project could pay annual membership fees. For instance, at a fee of $75, a total of 1,000 members would bring in $75,000 a year. The media group could sell memberships by introducing a number of incentives, such as listing the names of founding members on the website or in the paper, or making supporters eligible for a number of benefits, such as discounts at a bookstore.

Subscriber fees

If the project is a small newspaper, non-members could pay subscriber fees that would be less than membership fees. Very few Internet news sites are able to charge subscriber or user fees because information on most competing sites is free. Nevertheless, groups should explore different ways of possibly establishing a user-fee system, even if it is voluntary.

Advertising sales

Even if, as I’ve suggested, the group limits advertising to 35 per cent of the total revenue as a means of ensuring editorial independence, advertising will still be an important source of revenue. For a web-based news project, it would be wise to do some research early on as to how much advertising might be attracted; and keep in mind that you might decide that you do not want to carry certain kinds of advertising.

Foundation grants

Few Canadian foundations tend to provide support for media projects, but the establishment of an independent media outlet that serves the public good might strike a chord with a few of them. Grants also might come from U.S. foundations, which have a strong tradition of supporting media and could support projects in Canada.

Borrow a charitable tax number

Although a media outlet that comments on political issues will most likely not be able to obtain a charitable tax number, if the project publishes articles that are deemed to be of educational value it might be able to borrow the tax number of another organization and use that means to give donors tax receipts.

Internet fundraising

For an organization that learns how to utilize it effectively, the Internet has a huge potential for fundraising. The simplest method of using the Internet for fundraising involves sending email appeals to potential supporters. Another way is to occasionally display the progress of a fundraising campaign on your home page, a practice followed by Idealist, a U.S.-based interactive site where people and organizations can exchange resources and ideas to help promote their groups. See http://www.idealist.org/if/i/en/faq/430-18/21-74

But there are several other much more sophisticated fundraising techniques that can be made to suit the need of the particular media organization. Artez Interactive is one of a number of companies that works with non-profit groups to design and help carry out online fundraising programs. Anyone registering on their site can see the video “An Executive’s Guide to Online Fundraising.” See www.artez.com

Enterprise journalism fund

A special fund that pays for investigative and analytical journalism can be appealing to donors. Sources of funding might include foundations, church organizations, service clubs, unions, and individuals. It would be best to have donations put into a general fund so that donors do not end up having a conflict of interest, such as a labour organization paying for an investigation of labour laws.

Community events fundraising

Volunteers could carry out a number of activities to raise modest amounts of money. They might, to give a few examples, organize evening panel discussions on vital local issues, sponsor breakfasts with guest authors as speakers, hold fundraising dinners that honour local citizens who have made important contributions to their communities, and hold silent auctions or benefit concerts featuring popular musicians.

Labour venture funds

Another way to go would involve tapping into a Labour-Sponsored Venture Capital Fund (LSVC), which provides capital to small and medium-sized businesses while providing generous tax breaks to their investors. As international broker Morningstar says on its website: “In addition to providing financing, venture-capital firms often try to improve the chances of survival of the businesses they are investing in by helping the management. They may team up with the entrepreneurs to provide support and guidance in strategy, planning and day-to-day management issues. This is a crucial element in the process of transforming a more speculative idea or early-stage business into a profitable venture.”. See http://www.morningstar.ca/globalhome/industry/news.asp?articleid=ArticleID1320031231

Independent media deserves public support

I have explained in this series why I strongly object to giant corporations controlling nearly every aspect of the media in Canada. They filter and censor the news so that it reflects the interests and views of the corporate community. CBC news, which is funded in part by advertising, nevertheless reports the news in much the same way as does the corporate media.

All countries, and not just Canada, need to reduce the corporate community’s control over media by establishing public support programs that are available to both independent and corporate media. Programs could be established at all three government levels – federal, provincial and municipal.

Some people will balk at the idea of providing government funds to pay for part of the cost of operating media organizations. But the fear that government money is somehow corrupting the recipients or will cause them to roll over and play dead for government is corporate-induced fear-mongering. This critical tendency is much stronger in Canada and the United States than it is in many European countries, where there are many programs of support for the media. For me, if clear rules are established, if grants are open to all comers, and if a media organization receives a maximum of perhaps 20 per cent of its funding from various government programs, that form of funding is much less threatening to society than having news media controlled by giant corporations.

In Sweden, media subsidies are among the most liberal and the most effective in Europe. Karl Erik Gustafsson, a professor of media economics in Sweden, told the Columbia Journalism Review: “The subsidies are distributed by The Press Subsidies Council, an administrative governmental body, and are based on circulation and revenue data. The rules are automatic. They are in no way subjective. It’s an open system and every newspaper knows exactly what the subsidy will be this year and the coming year.” Since these subsidies have been in place, there has been a substantial reduction in newspaper closures, and Sweden has avoided the inevitable effect of the free market on the daily press: the one-newspaper town. See http://www.cjr.org/feature/the_uncle_sam_solution.php

Here are some of the ways in which governments could support the improvement of media in Canada.

Charitable donations from individuals

Updating the federal charitable tax laws to meet the real needs of the twenty-first century could be a first very helpful step to help improve journalism in Canada. When the forebears of our current charitable laws were created more than 300 years ago in England, churches were given special tax privileges – a status that still exists in Canada and one that many people would probably question. While a number of periodicals have a charitable tax status that allows them to provide cultural information, they are not permitted to take positions on politics – an outdated concept for sure. The rules need to be updated so that independent media organizations can cover politics – a fundamental discussion in any democratic society – and give contributors a tax receipt.

Various forms of support through the tax system

A number of European governments provide substantial funding and tax breaks to a wide variety of media organizations. The result is that, compared to Canada or the United States, the corporate media are healthier across the Continent. In Scandinavia and a few Central European countries, according to the Columbia Journalism Review (CJR), some newspapers receive lump sums from the government. Other press subsidies in Europe include corporate tax exemptions, grants for start-up ventures or technological innovations, state loans, grants for journalism research and training, and regulations requiring that government advertising appear in multiple publications. (In France, individual journalists enjoy a substantial income-tax deduction.) See http://www.cjr.org/feature/the_uncle_sam_solution.php

Tax on advertising

Several European countries also raise funds to provide media subsidies by placing a tax on advertising. The same kind of tax could be introduced in Canada. Most people are unaware that the billions of dollars in advertising from which both the media and the advertising companies benefit are tax-deductible for advertisers as a business expense. Statistics Canada’s latest figures for newspaper revenues show that in 2005 the total newspaper advertising revenues in the country came to $3.5 billion. See http://www.statcan.gc.ca/pub/63f0002x/2007051/figures/4053215-eng.htm This means that Canadian taxpayers indirectly help finance the mass media and its corporate agenda. If the federal government levied a 1 per cent tax on advertising, it would raise perhaps $2 million that could be distributed to both independent and corporate media.

Special program in France for teens Canada could establish a youth media program like the one operating in France. The French government puts tens of millions of dollars into media support every year, but it has the same problem that Canada has with young people not reading newspapers. Nevertheless it has taken action to try to lessen the problem: it gives every 18-year-old a one-year subscription to a newspaper of his or her choice. See http://www.editorsweblog.org/newspaper/2009/09/restoring_newspaper_readership_among_fre.php

Expand the CRTC’s small market fund

The federal government, through the Canadian Radio-television and Telecommunications Commission (CRTC), has set up a fund to support the production of local TV local programming in small markets hit hard by the recession. The fund, which initially will be supported with a 1.5 per cent levy on the revenues of cable and satellite companies, is available to all TV broadcasters in markets with a population of less than one million. See http://www.crtc.gc.ca/eng/news/releases/2009/r090706.htm

This fund could be expanded to include larger centres and pay for some of the cost of producing better quality local programming, including news and current affairs programming.

U.S. media critics advocate government support for independent media

For-profit media in the United States is in poor shape, especially given the closure of more than a dozen major newspapers. Two leading media critics, John Nichols and Bob McChesney, see this as a wonderful opportunity for government funds to be used to develop independent media outlets around the country. For more on this, see their February 2010 panel discussion provided by The Nation magazine: http://www.thenation.com/doc/20100215/nichols_video

The Canadian mass media have lost only one newspaper and two TV stations, but their ability to produce quality news has been seriously damaged. However, I can find no evidence that Canadian media critics are speaking out in favour of government funding for the media. Certainly the Canadian media establishment, which already benefits from Canada’s corporate-friendly tax system, has made it clear that it does not want government funding for editorial-related activities.

For its part, the Conservative government did initiate the program that assists small-city television stations that face financial problems. But it is unlikely that the Harper government would support the development of independent, non-corporate media. After all, Harper has a quite cozy relationship with most of the corporate media companies, and he realizes all too well that independent media would not be as kind to his administration’s proclivities as are the corporate media.

Even though politicians know that our news media are in a terrible mess and are not providing the information we need to move the country forward, government funding for media is not on the agenda of any of the federal parties at present. Groups and individuals need to provide all of the federal parties with ideas on how the news media could be improved through various funding programs – and then lobby the parties individually to have them put media on their agenda. If Canadians want their governments to support media ventures they will surely have to work long and hard to reach that important goal.

* * *

This is the last in my series of seven articles. I appreciate all of the many (almost all positive) emails I have received from readers. I am particularly pleased that many people have told me that the series gave them new insight into the operation of corporate media. I will continue to write on media issues and other topics, so you will be hearing from me in the future.

I would like to express my thanks to series editor Robert Clarke for his excellent work, patience and kind support.

Mr. Fillmore, formerly an editor and producer with the CBC for 18 years and involved in several print media projects, is a freelance journalist and media fundraiser based in Toronto. He’s a founding member of the Canadian Association of Journalists (CAJ) and Canadian Journalists for Free Expression (CJFE). He can be reached at: fillmore0274@rogers.com