The U-T San Diego for sale

SAN DIEGO (KUSI) – San Diego’s local newspaper, the U-T San Diego, is up for sale again. This makes the third time the paper has changed hands in the past three years.

Local philanthropist Malin Burnham wants to buy the Union Tribune newspaper and operate it as a non-profit, but any deal would have to be approved by the IRS.

Since the 1960’s the IRS has been skeptical of newspapers operating as non-profits.

In fact, only one newspaper in the country has gone form being private to non-profit, and that is one of Malin Burnham’s biggest hurdles.

KUSI asked Joel Weissler, a non-profit tax attorney and accountant in Mission Valley, about his advice to Burnham on getting approved from the IRS.

He said, “It can be owned by the charity but it has to be done as a taxable entity. It can be an advancement of a charitable purpose but he’s going to to end up with a model similar to what they have at the Tampa Times.”

The Tampa Bay Times is the only for profit newspaper in the country owned by a non-profit.

“A charity has to be substantially operated for a charitable purpose, and that’s a tough thing for a newspaper. Now there’s an argument that a newspaper should be allowed to be a charity because they’re endangered,” said Weissler.

Most newspapers these days are struggling to one degree or another, and Burnham has suggested he may not keep it as a daily newspaper.

“The news is important, and presenting the news, but we should be moving into the Internet for it, and presenting it that way,” Weissler added.

Similar to the Voice of San Diego , the first on-line non-profit news organization that does investigative pieces of interest to the community, and relies on donations.

Burnham would have ads and subscriptions.

“But that’s competing with other for profit enterprises and the IRS won’t allow that as within the charity itself. It’s going to have to be a business owned by a charity, not a charity itself,” said Weissler.

If most of the money goes to charitable purposes, as Burnham has pledged, that’s acceptable to the IRS.

If that line is crossed then it would not be considered a charity anymore.

Non-profits cannot endorse candidates, but they can endorse what candidates stand for if it fits their charitable purpose.

The other hurdle for Burnham is the bottom line.

“The biggest hurdle for a non profit that will give them additional scrutiny is what happens if the paper isn’t making money,” said Weissler.

“Charities are checked as to their activities, and if their activities no longer comply with providing for the public benefit they can be disqualified,” he added.

Weissler rates Burnham’s chances of getting the U-T, assuming he gets the investors, and the prices is right, at 50-50.

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