In historic shift, The Salt Lake Tribune gets IRS approval to become a nonprofit

(Paul Fraghton | Tribune file photo) The Salt Lake Tribune's office building is at The Gateway in downtown Salt Lake City.

The Salt Lake Tribune is now a nonprofit, an unprecedented transformation for a legacy U.S. daily that is intended to bolster its financial prospects during a troubling time for journalism nationwide.

The IRS approved the shift in a letter dated Oct. 29, deeming The Tribune a 501(c)(3) public charity. That means supporters can start making tax deductible donations now.

The move from a for-profit model was spurred by Tribune owner Paul Huntsman, who, in agreeing to turn Utah’s largest paper into a nonprofit, is giving up his sole ownership.

“The current business model for local newspapers is broken and beyond repair,” said Huntsman, who also serves as The Tribune’s publisher. “We needed to find a way to sustain this vital community institution well beyond my ownership, and nonprofit status will help us do that. This is truly excellent news for all Utah residents and for local news organizations across the country.”

[Want to know more? Go to sltrib.com/donate to read some frequently asked questions.]

The Tribune, a Pulitzer Prize-winning newspaper, will seek donations large and small, coupling them with revenue from advertising and subscriptions and a separate foundation. The Utah Journalism Foundation is creating an endowment to fund independent journalism in Utah, with The Tribune being a big beneficiary.

Those in the journalism industry have kept a close eye on The Tribune’s efforts, seeing it as a potential path forward for other struggling news outlets.

"This is an important decision that recognizes local news as a public good, something that strengthens the community," said Alberto Ibargüen, president of the John S. and James L. Knight Foundation, a nationwide leader in journalism philanthropy. "The model pioneered by The Salt Lake Tribune gives community leaders another way to build a sustainable future for local news, so citizens can get the trusted information they need to engage constructively in our democracy."

Other U.S. newspapers, such as The Philadelphia Inquirer and the Tampa Bay Times, draw support from nonprofits, and newspapers including The New York Times and Seattle Times benefit from foundations. No other legacy newspaper has made the full switch to nonprofit status.

Huntsman, who bought the paper in 2016, will transfer his ownership of The Tribune to a public board of directors, to be fleshed out in the months to come. Huntsman is the chairman of that board and has promised a strict “firewall” between its members and the newsroom, a move to protect The Tribune’s journalistic independence. He also has promised to reject contributions from people who want to direct or influence news coverage.

[Read also: Paul Huntsman: Join me in supporting the new nonprofit Salt Lake Tribune]

Jennifer Napier-Pearce will continue to serve as The Tribune’s editor. She says readers will likely notice little change to The Tribune’s journalism.

“We’ll still have [editorial cartoonist Pat] Bagley, we’ll still have sports analysis and we’ll still have all the hard-hitting investigative reporting Tribune readers have come to expect and rely on from The Tribune,” Napier-Pearce said. “The integrity of our reporting and our values as a news organization won’t change, but we will engage with the community in new ways and ask for their support.”

Some journalism observers wondered if the IRS would require The Tribune to jettison sports coverage or restaurant reviews to become a nonprofit, arguing that those stories might not fit under the educational mission spelled out in the tax law. That didn’t happen.

The IRS accepted The Tribune’s application without limitation. That means The Tribune will continue to provide its full breadth of coverage on politics, the arts, religion, environment, sports, opinion and more.

The Tribune will, however, stop any endorsements of political candidates going forward as required by the law governing nonprofits, but the editorial board, which is separate from the news staff, will continue to opine on the big issues of the day. The change has no bearing on columnists or cartoonist Bagley.

While all cash donations will be tax deductible, there will be no immediate changes to digital or print subscriptions, though it is possible that digital subscriptions will become tax deductible in the future. Print subscribers won’t see any changes to their billing or the delivery schedule, but their payment won’t be tax deductible because of business arrangements involving advertising, circulation, printing and delivery.

The IRS’ quicker-than-expected action means The Tribune will need a few weeks to expand its donation options, including offering monthly contribution plans.

“We were told by our lawyers that approval could take until the first quarter of 2020 or longer since this is a first-in-the-nation application,” said Fraser Nelson, Tribune vice president of business innovation. “Needless to say, we’re extremely grateful to the IRS for allowing this transition to move forward.”

All money donated to The Tribune will support the newsroom, Napier-Pearce said, which like just about every newspaper in the United States has seen staff cutbacks as advertising revenue has dried up or shifted to big online players like Google and Facebook. In 2011, The Tribune had a staff of 148, but through a series of layoffs, most recently in 2018, the staff now stands at about 60.

By relying on the support of readers and seeking new nonprofit partnerships, Napier-Pearce said, she hopes to expand The Tribune’s offerings in the months and years to come.