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Would You Pay For News In Return For Tax Credits?

May 9, 2022

by:

Joe Patti

There was a story last month on Nieman Lab looking at how successful a tax credit for digital news subscriptions has been in Canada. The intent was to help news organizations stay in business and according to the article, there is a similar bill being considered in the U.S.

Unfortunately, the number of people taking advantage of the program, which allows you to write off 15% of your subscription, has been pretty small. Only about 1% of Canadian taxpayers claimed a credit and some news organizations didn’t apply to be part of the program.

Some news orgs that may have qualified have declined to apply. A number of those that were deemed qualified Canadian journalism organizations have pitched the tax credit to existing subscribers, and used it as a perk to entice new ones.

At The Logic, … information on the tax credit was sent to all existing subscribers and advertised to potential subscribers, …

The end result was “negligible,” Skok said.

Rather than prompting new subscribers to sign up, Skok said, “the people who would have subscribed anyway are using the credit.” Skok suggests that subscribers weren’t swayed because they wouldn’t see the benefit until tax time and because the 15% credit was too low to change many minds on paying for news.

That doesn’t bode well for the corresponding bill proposed in the US which covers 80% of the subscription cost, but requires a multi-year commitment.

…cost of a local newspaper subscription or donation to a local news nonprofit in the first year, and 50% in the subsequent four years. So in order to earn the full $250 credit, you’d have to spend at least $312.50 on subscriptions or nonprofit news donations in the first year, or $500 in the following four years.

That’s a lot more than what most Americans pay for local news currently. Just 20% of people living in the United States say they pay for online news of any kind,…

However, the news outlet doesn’t need to be digital print media. It could be a local television or radio station as well so presumably NPR and PBS stations could benefit by seeing larger donations over multiple years.

Unfortunately, since this is a tax credit, people in lower income brackets who don’t pay taxes wouldn’t benefit if they made an attempt to support local news outlets.

What caught my eye in the article about the US bill is that it incentivizes small businesses to increase their advertising. My first thought was that this would benefit arts organizations until making the obvious realization that most arts organizations don’t pay taxes. On the other hand, it might allow arts organizations to promote activities which generate taxable unrelated business income and bolster an additional income stream.

A tax credit of up to $5,000 for small businesses that buy ads in their local publications. Small businesses could use this tax credit to advertise with local news sites, newspapers, television, or radio. As with the tax credit for individuals, local businesses would foot 20% of the costs the first year and 50% in the following years. So a local business could quintuple their current advertising in Year 1 and double it in Years 2 through 5 at zero net cost. Under the Senate bill, to qualify as “small,” businesses must have no more than 50 employees.

From what I can tell, the House version of the bill went to Ways and Means committee last June. Unless it got wrapped up in another bill it may be languishing there.

As great as this bill, which has bipartian support, may sound in terms of reviving local journalism, the article notes that most local news outlets have been bought up and drained of assets by hedge funds. So a lot of the money would end up being channeled to large corporations despite the limits on employees in the bill’s definition of local news entity.

On the other hand, the opportunity to garner greater support may see the emergence of new news outlets on the local level.

Advocacy, Business Models, Working In The Arts

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Art Reflects Life. So Should Your Mission Statement

May 4, 2022

by:

Joe Patti

Scott Walters made a Twitter post yesterday that suggested organizations start their existence with a Quality of Life Statement rather than Mission Statement or Values Statement. Intrigued about where he was going with this, I popped over to his blog post on the subject. He starts with a brief criticism that non-profit mission statements are usually so broad they are meaningless and pretty much interchangeable with those of other organizations.

He moves quickly into discussing the concept of quality of life statements (QoLS) proposed by Shannon Hayes. Hayes focus is mostly on use of QoLS by individuals and families to determine how they want to conduct their lives and relationships. Walters does a good job of showing how answering the questions Hayes suggests for developing these statements can be applied to arts organizations.

For example:

2. “List the people that you want to populate your daily life.

…I sincerely believe that, if this question had been discussed long ago, the 6-day/8-performance week of most professional theaters would never have happened. The current theater world is notoriously hostile to families and extremely difficult on relationships. It can be very difficult to just have a life outside the theater. How might your theater support growth and happiness of members’s whole lives, not just their artistic lives?

3. “Describe the home and land surrounding you as you want it to be

…For instance, are kids welcome to hang out at rehearsal, even if they are not quiet like a mouse? Is there a theater cat? When a spectator opens the door, how are they greeted? What about after the show–is there a place for the spectators to gather to have a refreshment and talk about the show? Do the performers join them? If an audience members encounters a company member at the grocery store, how do you want them to talk to each other? How is that embodied by the way you lay out your space?

There are five points in total that Walters cites and comments on similarly. Now as we move into a next normal environment and recognize the need to do better in serving our community and meeting diversity, equity and inclusion, even established arts organizations would do well to use these questions as guides to their introspection.

While QoLS are focused on a family/organization’s internal members, Walters implication that the resulting conversations should inform external facing statements of mission and values that reflect the specific existence of the arts organization is valid. Even if you don’t go through the practice of answering questions to develop a quality of life statement, a mission statement should grow from the reality of who you are rather than from a boilerplate form.

Art(ist) Education, Business Models, State of the Arts, Working In The Arts

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Spend, Not Give Donations?

May 3, 2022

by:

Joe Patti

The folks on the Non-Profit Happy Hour Facebook group posted a link to a Ohio State University (I’m sorry, THE Ohio State University) post which claims that charities should not use the word “give” when requesting donations.

They say it is a matter of feeling in control of how a donation is used. According to an analysis of the responses by 2700 people who participated in seven studies, people would rather give their time rather than money. This conflicts with charities’ general preference for monetary donations.

Overall, the study found that people prefer giving their time to nonprofit organizations rather than their money, because they feel more personal control over how their time is used, according to Malkoc.

“It is not possible to separate ourselves from our time, the way that we can from our money,” she said. “When you give your time, it is still a part of you. You are still living through it.”

The suggestion they make is that using the word “spend” provides people with a greater sense of control and therefore makes them apt to donate greater amounts.

People approached for a financial donation offered more than twice as much when they were asked to “spend” their money ($94) than when they were asked to “give” their money ($40).

And here’s why: Participants were asked several questions that measured how much control they would feel over their donations. Results showed that people who were asked to spend their money reported feeling more control than those who were asked to give their money.

[…]

When given control, people were nearly equally interested in giving, whether it was time or money.

“If nonprofits gave more control over how donations are spent, or made donors feel like they were spending their money rather than giving it, that may alleviate some of the disconnect people feel about financial gifts.”

Having read this, I believe there would have to be a good deal more work done on messaging and terminology employed to give people a sense of control rather than using a term like “spend.” The sense of donations being a transactional relationship is already a big problem in terms of the belief non-profits need to be run like a business; conceiving results achieved in terms of return on investment; large donations providing access, perqs, influence, and naming rights; the last of which many organizations have been trying to disentangle themselves.

Not to mention the growing prevalence of donor advised funds which provide tax benefits and a high degree of control without the obligation to disburse.

It seems like employing terms like “spend” will only exacerbate current problems and serve to entrench the use of restricted giving. While there are ways to give donors a greater sense of control over how their money is spent and technology available to facilitate the process, I would be concerned that this would mean staff would be further diverted from providing core services to underserved communities.

The model the study seems to be suggesting feels like it would be along the lines of the ubiquitous TV ads that told you that for $4/month you could purchase a meal for a child and that you would receive a packet with updates about the child. As a donor to this program, you feel a high degree of control over how your money is being spent.

The better solution is probably to employ broader, more consistent messaging emphasizing unrestricted giving without the expectation of expensive benefits. People absolutely do deserve a sense of assurance and control. You don’t want to give to con artists who are going to run off with your money. But that can come from providing easier access to information attesting to the legitimacy of the charity.

While there are websites that provide that sort of analysis, people aren’t widely aware of them as resources. The metrics these sites have traditionally employed have been problematic. There has been a tendency to focus on overhead ratio as a measure of effectiveness. There are probably a lot of diversity, equity and inclusion issues with what data is used and how it is analyzed too. Ultimately, a complete overhaul over a long term will be necessary.

Audience Relations, Fundraising, Volunteers

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They’re Back! But Not Because They Waited For The Audiences To Return

May 2, 2022

by:

Joe Patti

Apparently the pandemic was good for classical music stations. In a story on the Current site, the general manager WDAV in Charlotte, NC had a hard time believing his station had achieved number one market share for the first time ever.

WDAV wasn’t alone, a number of other stations had similar successes. But before you assume that the value of classical music suddenly became apparent to people in a “if you play it, they will come” sort of way, it didn’t happen in a vacuum. Stations have been working to frame the music for their communities.

But by emphasizing long-held values of classical radio — to be soothing, to clear the mind, to remind people of aesthetic beauty — stations rose to the occasion to provide refuge from a world that felt scary and uncertain. That has translated into ratings records, strong fundraising and a reminder of the value of classical stations to local arts organizations.

“We heard from a significant number of listeners thanking us for being a place that was normal for them,” said Brenda Barnes, CEO of KING FM in Seattle. WDAV’s Dominguez and leaders at WXXI in Rochester, N.Y., and the USC Radio Group, which consists of KUSC in Los Angeles and KDFC in San Francisco, all said they heard the same from their listeners.

WDAV also got out into the community with their Small Batch music series where they had classical musicians perform at a local microbrewery. Will Keible, the station’s director of marketing and corporate support cited the intimidating environment of a formal concert hall and not wanting to passively wait for people to find them on the radio dial as drivers for their partnership with the brewery.

Other stations cultivated stronger relationships with the artists in their areas. The article also talks about how WXXI had reached out to ensembles and chamber groups in New York’s Finger Lakes region during the pandemic requesting recent performance recordings which they broadcast as part of a 10 week series. Many stations like WXXI have recognized the need to provide programming by musicians and composers of color and that has also helped to broaden their appeal.

“We are changing our library and our rotation cycles so that … you’re hearing representation from all different composers and performers all the time,” said WXXI’s Ruth Phinney. The station also profiles classical musicians of African descent on its website. “We’ve actually had classical musicians contact us and say, ‘I’m a classical musician, I’m not on your site yet. Can you put me on there?’”

Arts Facilities, Arts in an Age of Technology, Audience Relations, Building Public Will For Arts And Culture, creativity, Marketing/PR, State of the Arts

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