(February 19, 2022) Charity funded journalism has become a tool to mitigate the crisis faced by Canada’s news media for most of the 21st century. Big platforms like Google and Facebook are swallowing up an ever-greater share of advertising revenue. The collapse of classified sections in newspapers both big and small has cut off vital revenue streams. The subscription base is shrinking as fewer households pay for their daily or weekly news. All these problems and more have been captured by report after report, including the Public Policy Forum’s “Shattered Mirror,” released in 2017.
In 2019, the federal government announced its response to the crisis. It introduced the Canadian journalism labour tax credit; a tax credit for digital news subscriptions; and it opened up a pathway for not-for-profit journalism to become a charity and receive tax incentives.These measures represented $595 million in subsidies over five years. In 2020, the federal government’s Local Journalism Initiative was launched, introducing an additional $50 million over five years.
According to the federal government’s website, there are now five “registered journalism organizations” (RJOs) in Canada – RJO being the official designation that makes it possible to offer tax incentives in return for financial support. Before becoming an RJO, however, publishers and owners must apply to become a Qualified Canadian Journalism Organization. The QCJO designation makes the companies and nonprofits eligible for a subsequent RJO application as well as a host of other support programs. As of this year, there are about 100 QCJOs listed on the federal government’s website.
The COVID pandemic caused the news media’s prospects to spiral downward yet again. Several more federal support programs were introduced in 2020, complementing those previously announced, as well as the Canada Periodical Fund, which had already been in place for decades.
Here, then, is a full list of federal programs (some temporary, some permanent, some scheduled to last five years) that supported the news media in the fiscal year 2020/21:
- Canada Periodical Fund
- Labour Tax Credit
- Digital Subscription Tax Credit
- Charitable Status
- Canada Emergency Wage Subsidy (COVID response)
- COVID Recovery Fund
- COVID Special Measures Top-up
Jonathan Bradley reported extensively on the latter three sources of funding for Canadaland in September and December of 2021. He noted there was nothing to prevent a news organization from applying for multiple funding streams and, indeed, many did exactly that. According to its most recent annual report, Postmedia, owner of over 200 newspapers across Canada including the National Post, has received $63.3 million through the Canada Emergency Wage Subsidy since the program was introduced in April, 2020. Postmedia also received support through the labour tax credit, totalling $9 million over 2020 and the first three months of 2021. In two phases of the COVID emergency support, Postmedia received $946,140 and $355,871 respectively. Postmedia also received $1.3 million through the Canadian Periodical Fund in the same fiscal year. That is a total of four streams of federal support for the company.
In short, a lot of money has been spent. Much of it would not have been available just three years ago. But is the funding having the desired impact?
What is the goal of federal funding?
Christopher Waddell, former professor of journalism at Carleton and a veteran of the industry, explored the impact of the new federal measures in his June 2020 article for The Philanthropist. He has seen little over the last eighteen months to make him revise his initial assessment that “the shift to charitable status is more difficult than it may seem and possibly not worth the effort.”
Waddell is critical of the federal government’s multiple funding streams and tax incentives, including charity funded journalism, which he says lack an overarching objective. The funding does not require news media organizations to accomplish anything specific, not even to manage the transition to a more robust digital strategy. The federal funding is, in his view, mostly about subsidizing the mainstream industry.
He nevertheless sees a glimmer of hope in the charity funded journalism model for news media organizations focussed on specific issues around which it would be possible to build communities of support. “People who give are more likely to give to projects, not operating costs,” he said.
Start-ups find their niche
Start-ups might not quite be the best word to describe all the news organizations that shared information with The Charity Report, yet in stark contrast to the Postmedia-owned papers or the Globe and Mail, they all have their roots firmly in the digital-first landscape of the 21st century and so look and act quite differently to the incumbents.
Among the news media organizations interviewed, The Narwhal and New Canadian Media have become qualified donees. The RJO application process takes well over a year and a lot of paperwork. The Independent Advisory Board on Eligibility for Journalism Tax Measures, created in 2020, is responsible for making non-binding recommendations on the status of QCJOs and RJOs, but the ultimate decider is the Canada Revenue Agency.
The Narwhal started in 2018 as a nonprofit dedicated to covering environmental news. Headquartered in B.C., it has its strongest support in that province. As it grows and prospers, it has expanded to other regions and recently opened bureaus in Ontario and the prairie provinces. In March 2021, The Narwhal became the first English language RJO in Canada. The designation was retroactive to October of the previous year, leaving staff scrambling to issue tax receipts for 2020.
Arik Ligeti, director of audience, describes the considerable efforts made to use the RJO for the continued growth. In 2021.The Narwhal conducted an end-of-year campaign, reminding potential donors they had until December 31 to make a gift and be eligible for a tax receipt. The campaign was highly successful, resulting in gifts from 300 individuals. The Narwhal’s revenues for 2020/21 were composed of 38% reader donations, 44% grants and contracts, and 18% government sources.
He describes the tax receipt as merely a “cherry on the top” for most donors, who are happy to give regardless of any financial benefit but acknowledges that RJO status might be “a bigger factor for major donors” – whether they be private individuals or foundations.
Canada’s National Observer, founded in 2015 by Linda Solomon Wood, has carved out space for itself as a watchdog on the country’s progress, or lack of it, on climate change. In the last fiscal year, it received 48% of its revenue from subscriptions, 40% from government grants and 12% from philanthropic organizations or private donations. Given the enormity of CNO’s central preoccupations – energy and climate – Solomon Wood says that doubling or even tripling her revenues would go a long way to ensuring the company can create even more impact.
“There is a sense of urgency,” says Solomon Wood. A “dream donor” would give, say, $5 million over three years to make it possible to scale their work “so it reaches more people and empowers them with the information and inspiration they need to meet and navigate the challenges of the climate emergency.”
New Canadian Media, based out of Ottawa, is one of Canada’s only national news media sources that represents and reports on immigrant communities. Publisher George Abraham sees opportunities in the new charitable status given that it represents an expansion of what he has been doing from the beginning. “We serve a public good, both in terms of the unique journalism we do and the raising of hundreds of new voices from newcomers to Canada,” he says. The effective date of New Canadian Media’s RJO status was May of 2021 but, like The Narwhal, confirmation took several months to be communicated. This will be the first full year that Abraham can use the new status to drive fundraising efforts. He estimates that, at the moment, New Canadian Media’s funding comes 95% from government sources with the remainder coming from memberships and advertising.
Taproot, co-founded by Karen Unland and Mack Male in 2016, is the only news media organization approached by The Charity Report that is focussed exclusively on local news. It reports on Edmonton civic, business, arts and community news. It is funded, in part, through paid memberships. A unique attribute of Taproot is that its umbrella company, Taproot Edmonton, provides businesses and other organizations with information-curation services. What is now its B2B (business-to-business) arm has become the largest slice of the overall revenue pie at 60%, while memberships and sponsorship bring in 12% and 28% respectively.
Interestingly, Taproot has not sought QCJO status. Karen Unland wrote last year: “We had qualms about the idea of designating some media outlets as QCJOs, because it risks attaching an air of illegitimacy to those who don’t qualify for reasons that have nothing to do with the quality of journalism they produce.”
Whatever one’s opinion of the federal government’s major funding injection since 2020, it seems quite apparent that it is not the panacea for the industry’s woes, least of all for the legacy media incumbents, who continue to lay off employees despite tax incentives to keep them. In April 2020, Postmedia announced temporary layoffs of 50 staff and 30 permanent layoffs following the closure of 15 community publications in Manitoba and Ontario. The following month it implemented layoffs of 40 unionized employees. That same spring, Torstar eliminated 85 jobs. These are two of Canada’s biggest news media companies and there is no evidence the downsizing trends will abate.
In Canada’s current media landscape, it appears that the smarter bet would be on the start-ups.
Laurence Miall is a contributing editor for The Charity Report.