• All ventures should be equal
    December 06,2012

    Much has been made of the death of local news media, and I for one would have to agree. In an environment defined by its extremes it’s nice to have an outlet that shoots for a course of moderation without allowing its agenda to be tainted by national movements of one particular extremist stench or another.

    Mr. Snell of Montpelier wrote a compelling letter in this very newspaper on Nov. 14 that makes a case for the community value of The Times Argus, and I applaud him for that. However, in his letter he appears content to merely applaud the value a local paper offers and leaves it to the market to determine its survival. I would offer that is hardly enough. First and above all, we must provide a market that is fair, level and in which all competitors compete equally.

    In Vermont, with its limited number of local dailies, any change has a significant effect, and I would offer that the online commercial venture Vermont Digger has had an effect, for good or ill, that cannot be denied. In Vermont Digger we have what some might describe as a “new wave” of journalism; however, I would describe it as commercial journalism that exploits the existing tax code in new and interesting ways.

    While ventures such as The Times Argus operate as commercial entities, Vermont Digger uses its 501(c)3 tax designation as a “nonprofit” in order to not only minimize its tax burden, but also allow the venture to accept secret tax-free donations from certain entities to subsidize the revenue it receives from advertising and subscriptions. Please don’t misinterpret my use of the term “nonprofit;” “nonprofit” does not mean not profitable. The directors and employees of Vermont Digger are compensated at a competitive scale, and this is not your local soup kitchen. These are paid employees working in the field of their choice.

    They are, however, working for a company that manages to avoid overhead by exploiting a gaping hole in the tax code. By “nonprofit” I mean that Vermont Digger portrayed itself in such a manner to the IRS as to give the impression it was offering nontraditional journalistic benefit to the community. This representation is important as journalism itself is not one of the eight reasons for which a benefits organization can gain nonprofit status. To do so the organization must offer in its mission statement and application to the IRS for this exclusive tax status some benefit it will provide in the approved categories including education or literary benefit. The organization cannot merely repeat the services offered by commercial ventures that are taxed as commercial ventures, which is unfortunately what Vermont Digger appears to do.

    In order to gain this particular tax Nirvana, really the only constraint the organization must deal with is it must give up any blatant partisan bias. Unfortunately partisan bias, or freedom from such bias, is very much in the eye of the beholder and difficult to conclusively accuse an organization of.

    Once this exclusive 501(c)3 status has been established the organization is free to accept tax-free donations from all and sundry — comfortably avoiding not only revealing the donors but also without revealing what expectation of benefits such donors might have for their charitable giving. In fact, if one merely reviews the abbreviated list of major donors to Vermont Digger available on their front page, one has to wonder what benefit the marquee organizations receive for their investment when compared with their mission statements. There must be some benefit or their directors would be pounding assorted tables across Vermont demanding justifications for what would appear to be a misuse of monies.

    A case in point might be the High Meadows Fund. This particular organization, outside of being a sub-program of the Vermont Community Fund (another Vermont Digger donor), would appear to function as nothing more than a $100,000-a-year sinecure for Gaye Symington, and one has to ask exactly how subsidizing a local media outfit fits in with the organization’s mission statement to “promote vibrant communities and a healthy natural environment.” Unfortunately, Vermont Digger is not required to say and has yet to investigate. Perhaps these two facts are related.

    Regardless of your political persuasion, I would ask you to join me in using our power as citizens to ensure that all commercial ventures operate on a level playing field. The IRS offers a quick and easy-to-use application to file a complaint requesting investigation of ventures exploiting section 501(c)3 for unapproved purposes. It takes five minutes of your time and may enable the survival of local papers such as The Times Argus. The form is available at www.irs.gov, search for Form 13909, and can be submitted anonymously. It’s really not too much to ask that Vermont Digger play by the rules everyone else plays by.

    Patrick Cashman lives in Shelburne.

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