Tico Times says it is testing a non-profit news model

The venerable Tico Times has taken a dramatic step to reinvent itself with a non-profit arm.

The weekly newspaper outlined the plan in an editorial this week in which it admitted that it has been forced to make drastic cutbacks due to less income.

“Our readers, to be sure, have also noticed the smaller size of the newspaper, fewer bylines, and reduced coverage. We’ve been forced to slash expenses at all levels of the organization,” the editorial said.

The column announced the formation of The Tico Times Association to “promote inter-American understanding, democratic values and civil liberties — especially freedom of expression and of the press.” The association also will do community work and seek money through fundraising and donations from philanthropic foundations. The newspaper did not say in which jurisdiction the association has been incorporated.

“This income will supplement earnings from advertising and the sale of newspaper and online articles and subscriptions, and will be used exclusively to support the newsroom, as well as for educational activities and projects in the community,” the editorial said of the association.

Although the concept is believed to be new in Costa Rica, there are precedents up north. In some cases the money goes the other way. Ms. Magazine founded the Ms. Foundation for Women that was supported by magazine profits. However, the magazine cut the foundation loose in 1987. Ms. Magazine is now owned by the Feminist Majority Foundation.

The St. Petersburg, Florida, newspaper also is owned by a foundation set up by Nelson Poynter, owner of the St. Petersburg Times, who at his death left his stock to the foundation. The Nation magazine also is run on a non-profit model. Hearst Corp. is considering converting the San Francisco Chronicle into a non-profit, online sources said.

A recent entry is the The Marin Media Institute in California, which purchased the weekly Point Reyes Light. Among the principals is a former publisher of Mother Jones magazine, also a non-profit.

Many newspeople who do not understand the relationship between news and advertising have long sought a viable way to publish articles without accepting advertising. Most journalism programs fail to provide training in the economic value of advertising.

The John S. and James L. Knight Foundation is actively sponsoring many small mostly online community publishing efforts, but the organization says it is not interested in covering operating deficits. The foundation also is supporting a master’s program at City University of New York that will train managers in both journalism and entrepreneurship.

The question of foundation support for a newspaper is the same for the advertising-supported model: Will the foundation influence news coverage. Commentators come down on both sides of this question.

Another good reason for a foundation is to convert any outside money used to cover current losses into tax-deductible donations. The Tico Times Association probably will begin the lengthy process to obtain non-profit status from the U.S. Internal Revenue Service.

Costa Rican laws, too, are complex. Having the status of a U.S. 501(c)3, non-profit is vital for obtaining outside, mostly U.S., funding.

The Tico Times did not release any financial data in the editorial. It recently announced that it was charging for some but not all online content. It also dramatically redesigned its Web site, which carries minimal advertising.

The major problem for print-based newspapers, including The Tico Times, is the cost of newsprint. For delivering the news nothing is quicker than the Internet. Internet readers also usually are higher income, too, and are much favored by advertisers. Delivery is expensive for print-based newspapers, a cost not shared by Internet publications.

With the arrival of e-readers and various hand-held telephones and computers, even the portability of printed newspapers is being challenged.

In the United States there is an effort to create a non-profit status for income-producing newspapers. A bill has been submitted in Congress to do that. The topic is much debated in journalistic circles as supporters of print-based publications seek to find a way to salvage them. Despite a constitutional bar to special laws about newspapers, there is precedence in the so-called failing newspaper act that allows endangered dailies to circumvent antitrust laws. The law actually has led to the elimination of daily newspapers in St. Louis, Missouri, and more recently Denver, Colorado.

Another challenge to the non-profit concept or the hybrid model being adopted by The Tico Times is the availability of charitable money. The economy is not what it used to be, and a host of journalistic enterprises have sprung up seeking charity.

Consultantes Río Colorado S.A., the parent firm of A.M. Costa Rica, will report to Costa Rican tax authorities this year income about 7 percent greater than for the 2008-2009 fiscal year. The online daily newspaper also is publishing more pages and has new pioneering efforts in 12 Latin American countries as well as a medical tourism Web site and a Web site based on exportations and international trade. The newspaper is free online Monday through Friday and receives income only from the sale of advertising.

The Costa Rican corporation does not accept donations or sell its privately held stock.

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