Public Interest Journalism Needs DGR Status to Attract Philanthropic Support

World-wide concern around “fake news” and significant editorial jobs losses in Australia have brought into focus the role philanthropy might play in the future of independent journalism – a role that is being explored in a Senate inquiry where tax incentives are under the microscope.

According to one of the 60 submissions to the Senate inquiry on the Future of Public Interest Journalism, tax deductibility for independent journalism centres would provide incentives for individuals and philanthropic groups to donate to the production of quality journalism in Australia.

The submission by Dr Bill Birnbauer, a retired lecturer in journalism at Monash University, said a recent US study found only a small handful of Australian not-for-profit news organisations had been granted deductible gift recipient (DGR) status by the Australian Tax Office and that news organisations faced seemingly challenging obstacles in gaining such status.

“The eligibility criteria for DGR status do not fit well with the purpose and functions of news organisations. News organisations have difficulty securing charity status and obtaining DGR status is many times more difficult, the study said. This may well discourage the creation of news organisations,” Birnbauer said.

He said the study noted that philanthropic support for news organisations in Australia had been scarce.

“Given the diminished resources of Australian media to hold power to account other measures to bolster democratic processes should be considered,” he said.

“The ABC, particularly Four Corners, The 7.30 Report, Background Briefing and a number of other programs can do only so much.

“Fairfax Media and News Corp have retained a small number of investigative journalists while cutting other areas, but more needs to be done to assist the scrutiny of powerful interests.”

Birnbauer said editorial cuts had reduced the number of journalists working in specialist areas such health, education and urban affairs meaning less monitoring of those areas.

“Investigative journalism is much talked about by media organisations but is limited to a handful of reporters within media organisations because it cannot readily be monetised. It is expensive to do, takes a long time, sparks legal action and upsets powerful interests,” he said.

“It takes a big commitment by media organisations; just five major US media organisations provide about 50 per cent of all the investigative journalism. The societal benefits can be huge: lives saved, corruption exposed, environments improved, governments and corporate interests held accountable.”

Birnbauer said tax deductibility would provide incentives for individuals and philanthropic organisations to donate to not-for-profit media outlets producing quality journalism.

“In order to qualify for such status, not-for-profit media organisations should be properly constituted with boards and should be staffed by journalists who adhere to the MEAA’s [media union’s] code of ethics,” he said.

“Conditions for tax deductibility would include that the centres adopt normal journalistic practice and make editorial decisions independent of funders.”

He said there were significant differences, apart from tax deductibility, between the United States and Australia that could not be ignored.

“The United States has a far greater number of foundations and they are substantially bigger,” he said.

“US donors to not-for-profit media include the Bill and Melinda Gates Foundation ($41 billion), the Ford Foundation ($12 billion), the Knight Foundation ($2.4 billion), William and Flora Hewlett Foundation ($8.6 billion), the MacArthur Foundation ($6.3 billion), Open Society Foundations ($5 billion), Rockefeller ($4.1 billion) and Carnegie ($3 billion).

“There are also cultural differences. Americans and foundations tend to more strongly support democracy and institutions whereas Australians are wonderful donors when it comes to natural disasters, hospitals and human interest issues.

“The availability of tax deductions for donors and tax relief for journalists and others who establish not-for-profit centres dedicated to public interest journalism has the potential to increase the sum of quality journalism in Australia, enhance our democratic processes and better serve the community.

“I believe legacy and digital media in future would enter collaborative partnerships with not-for-profit investigative and public interest centres, ensuring a wider distribution and impact of their stories.”

Birnbauer made a number of recommendations in his submission around determining the suitability of applicants for DGR status that the ATO should consider:

• the history and background of the applicant as a journalist, particularly their adherence to professional and ethical standards;
• the applicant’s ability to produce investigative and public interest journalism;
• whether the organisation has editorial processes that create stories that are in the public interest and educate audiences rather than covering news of popular interest;
• introducing a commitment that funding sources, including publication of the identities of donations of more than $1,000, be published on the not-for-profit’s website;
• A commitment to publish on their websites information about spending and revenue, as provided each year to the ATO and/or the Australian Charities and Not-for-Profits Commission; and
• individuals and organisations that advocate particular causes should not be granted DGR status under any media category. Anonymous grants or funding from political and other entities where the source of the funding is not transparent should be banned.

Birnbauer was a reporter and editor at The Age newspaper between 1977 and 2008. He recently received his PhD for research into not-for-profit investigative reporting in the US. He is a board member of the Public Interest Journalism Foundation which also made a submission.

In May 2017 the Senate established the select committee to inquire into the future of public interest journalism in Australia.

The chair of the committee, Labor Senator Sam Dastyari said at the time that the inquiry was “well timed”, and “recent events demonstrate that there are big challenges for the future of Australian journalism, and that there is a role for government and policy makers to create a vibrant, free and independent industry”.

Dastyari said the inquiry would cover a broad spectrum of issues including corporate structures, taxation, competition policy and “fake news”. The inquiry has received 60 submissions.

A Senate submission from Schwartz Media, the publisher of the Monthly magazine and the Saturday Paper, agreed with the concept of establishing tax incentives.

“Any funding mechanism to support public interest journalism must be independent of government,” the submission said.

“The most obvious means is via the tax system. Introducing a system of tax incentives or deductions related to public interest journalism is one way of ensuring independence from government.”

The submission recommended that organisations eligible for tax-deductible investment and support should qualify on certain grounds including that “a minimum of 75 per cent of [a media organisation’s] total revenue was derived from sales, subscriptions, advertising revenue or other individual or philanthropic donations”.

The Senate committee is due to present its final report in December 2017.