Decline of newspapers renews idea of nonprofits

NEW HAVEN, Conn. — As sharp revenue reductions put the future of many U.S. newspapers in doubt, one idea gaining attention is the conversion of newspapers into tax-exempt nonprofits supported by large endowments.

Although viewed by many as a long shot at best, such a radical change could be a savior for the industry and its vital role in a democracy.

That's why the endowment model is drawing renewed attention as newspapers impose massive layoffs, scale back home delivery and make other drastic cuts to counter plunging advertising revenue amid a recession that has compounded struggles from the migration of readers to the Internet.

David Swensen, who managed one of the world's largest endowments as chief investment officer at Yale University, said endowments "would enhance newspapers' autonomy while shielding them from the economic forces that are now tearing them down."

"By endowing our most valued sources of news we would free them from the strictures of an obsolete business model and offer them a permanent place in society, like that of America's colleges and universities," he wrote in a recent opinion piece in The New York Times.

But first, the idea must overcome skepticism from the very newspapers that stand to benefit. Critics say endowments also could beholden newspapers to their large donors, and giving newspapers tax-exempt status could restrict them from endorsing candidates and running editorials on pending legislation.

On a more practical level, skeptics question whether the millions and millions of dollars needed to create such endowments could be raised during the worst recession in decades.

Four newspaper companies, including the owners of the Los Angeles Times, Chicago Tribune, The Philadelphia Inquirer and the New Haven Register, sought Chapter 11 bankruptcy protection in recent months, while the Rocky Mountain News published its last edition Friday. Newspapers in Seattle and Tucson, Ariz., are threatened with closure if buyers aren't found, and the San Francisco Chronicle also faces closure or sale if it can't slash expenses.

Newspapers are having to rethink every aspect of their operations, including their for-profit existence, given their inability to generate enough revenue from their Web sites to offset the losses in print.

More nonprofits aimed at boosting investigative journalism are entering the field, including ProPublica and ventures started in the past few weeks at Boston University and the University of Wisconsin.