PPF welcomes budget measures that support Canadian journalism

Date: le mardi 27 février 2018

The Public Policy Forum welcomes the federal government’s response in today’s budget to the continuing degradation of news gathering capacity in Canada. The government’s pledge to spend $10 million a year for five years to fund “one or more independent non-governmental organizations that will support local journalism in underserved communities” is an important step in addressing a growing democratic deficit. The commitment is consistent with two of the recommendations in PPF’s 2017 report, The Shattered Mirror.

We are also pleased to see the government back another key recommendation from The Shattered Mirror – a re-examination of Canada’s philanthropic laws and regulations to encourage support for journalism, as is the case in other countries. Today’s budget reads: “Consistent with the advice laid out in the Public Policy Forum’s report on news in the digital age, over the next year the Government will be exploring new models that enable private giving and philanthropic support for trusted, professional, non-profit journalism and local news. This could include new ways for Canadian newspapers to innovate and be recognized to receive charitable status for not-for-profit provision of journalism, reflecting the public interest that they serve.”

There is still work to be done on both these budget announcements and in considering the fact that more news outlets are closing and more journalists losing their jobs. A distribution of revenues skewed heavily in favour of distributors who do not invest in journalism over those who actually produce news does not serve the public interest.

“For news consumers and people who care that our democratic institutions are being covered less and less, this funding could mean up to 150 more journalists – 10 or 12 per province and territory – covering local news. And that will make a difference,” said PPF President and CEO Edward Greenspon, who directed and wrote much of The Shattered Mirror. “This funding can be seen as a down payment on facing up to an existential crisis that is much bigger than local news: The decline of the authentic and verified journalism system that is meant to inform public debate alongside the rise of fake news, disinformation and hate that’s meant to confuse and divide us.”

Government policy has supported the delivery of news and information since before Confederation and we believe it has an important role today.

We are pleased to see a number of recommendations from The Shattered Mirror reflected in today’s budget. In particular:

We recommended funding The Canadian Press to manage local and regional civic-function journalism on a non-profit basis. We estimated this could cost up to $10-million a year. The full text of the recommendation is below.
We recommended a similar arrangement for improving coverage in underserved Indigenous communities, to be run by APTN.
We recommended Canada review outdated philanthropic laws and regulations to allow non-profit news organizations producing civic-function journalism to qualify as recipients for support from philanthropic foundations, and to overhaul the rules around policy advocacy by charities to allow for non-partisan civic-function journalistic activity. The full text of the recommendation is below.

In The Shattered Mirror, released on Jan. 26, 2017, we expressed the hope that the report would “stimulate a necessary debate and some carefully calibrated action to preserve a foundational social good.” We recognize this is a complex area of policy-making given the vital role an independent media plays in our democracy and the financial pressures on fulfilling that role.

Much more needs to be done by government, business and civil society to ensure Canadians have access to news they can trust to make informed decisions about their civic lives.

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Recommendations from The Shattered Mirror:

Recommendation No. 3: Remove obstacles to philanthropic financing

OBJECTIVE Open a new source of potential financing to Canadian news organizations, easing the philanthropic sector’s ability to assist journalism, especially non-profit models, and bringing Canada in line with practice in the United States, Germany and other countries. Philanthropy-supported media are less likely to support highly partisan and counterfeit stories given the structures of foundations.

RECOMMENDATIONS a) Amend Canada’s charity laws and regulations to allow non-profit news organizations producing civic-function journalism to qualify as recipients for support from philanthropic foundations and, in some specific cases, become charities themselves. b) Overhaul the rules around policy advocacy by charities to allow for non-partisan civic-function journalistic activity. • We have been led to understand through our research that, if charity rules were reformed and clarified, some Canadian foundations would look favourably on supporting journalistic enterprise, digital news startups and perhaps several of the broader initiatives contained in further recommendations in this section.

FISCAL IMPLICATIONS Revenue neutral other than the possibility of taxable deductions to donors, should some journalistic organizations become registered charities.

NOTES Canada’s existing charity laws are based on the priorities and mores of 19th-century England as articulated in an 1891 decision by the British House of Lords. The so-called Pemsel case set out four acceptable categories for charity–relief of poverty, the advancement of education, the advancement of religion and certain other purposes beneficial to the community. More than a century later, society has evolved remarkably, but the rules, at least in Canada, have remained static. Is the advancement of religion of any greater social import in the 21st century than the advancement of information vital for democratic choice? Is journalism not education? Should public policy not reflect this? Twenty-first-century Canadian journalism is badly in need of new sources of financing. In the course of our research, several philanthropic foundations expressed interest in investing in journalism, but felt inhibited by the state of charity laws and rulings from both courts and the Canada Revenue Agency (CRA). There appear to be two distinct but related barriers. First is the requirement that foundations donate only to qualified recipients, i.e. registered charities. 87 Second, foundations feel chilled by rules limiting so-called political activities (really, policy advocacy) and the interpretations in recent years by the CRA. We note that in his 2015 mandate letter, Prime Minister Justin Trudeau instructed Minister of National Revenue Diane Lebouthillier to: “Allow charities to do their work on behalf of Canadians free from political harassment, and modernize the rules governing the charitable and not-for-profit sectors, working with the minister of Finance. This will include clarifying the rules governing ‘political activity,’ with an understanding that charities make an important contribution to public debate and public policy. A new legislative framework to strengthen the sector will emerge from this process.” The minister has appointed a panel to examine this matter. As part of this review, the panel should consider the ability of philanthropy to support civic-function journalism and of individual Canadians to be able to donate to qualifying journalistic charities.

Recommendation No. 7: Establish a local mandate for The Canadian Press

OBJECTIVE Create a professional, open-source news service to supplement waning local and regional coverage of civic-function news with trustworthy news from an organization with high journalistic standards. Ensure this news is available for the widest possible dissemination.

RECOMMENDATIONS a) Civic-function journalism is being steadily degraded across the nation. We recommend that The Canadian Press (CP), which has a 100-year history of generating and sharing news coverage in both official languages and the infrastructure to distribute it, establish a second, non-profit service to fill these gaps. This service, CP-Local, would be distinct from CP’s existing subscription service, with a separate editor and staff. It would be financed by the Future of Journalism & Democracy Fund, including an annual management fee paid to CP. b) The news produced by this second service would be published under a Creative Commons copyright licence, which would make it available for commercial use by any organization or individual with appropriate attribution. CP-Local would hire 60 to 80 journalists across Canada to supplement coverage of courts, legislatures and city halls. It would be run by a separate management team and would be expected not to duplicate coverage areas of the main Canadian Press service. CP would share an interest in not undermining its paid-subscription service. Generally, the news of CP-Local would be unlikely to move outside a given region. CP-Local’s core services would be augmented by contracts with community groups or municipal governments that recognize journalism as a social good and want to ensure it is available to the residents of their community. These clients would have to sign long-term contracts (three to five years) with CP-Local, and would exercise no control over editorial decisions, including the hiring and firing of journalists. As a footnote, CP was subsidized by the Canadian government as it built its communications infrastructure in the early 1920s.

FISCAL IMPLICATIONS Working with CP, we estimate the costs of CP-Local at $8 million to $10 million a year, which would come from the Future of Journalism & Democracy Fund. Supplementary funding would be generated from service contracts with individual municipalities.

NOTES This recommendation has been discussed at length with Canadian Press management over the past several months. There is some sentiment within CP for it to be part of an act of Parliament so that, once established, it could not be altered by the executive alone. There is already a Canadian Press act on the statute books. Other news agencies, such as Agence France-Presse (AFP), receive some form of state payment while those of Portugal’s Agência Lusa, ANA in Greece, EFE in Spain and AGI in Italy feature boards of directors with representatives from governments, media organizations, journalists, unions and civils-society groups. In the case of AFP, a 1957 law stipulates that the agency “gather and provide, continuously and in several languages, exhaustive, accurate, objective and impartial coverage of what is happening in the world. It must be fully independent and have a global reach.” In 2015, AFP received €100 million from the French state to finance its so-called “missions of general interest.” That constitutes slightly more than one-third of its revenue. We would hope that such a service would mitigate against the creation of “official” journalistic enterprises run by the communications departments of municipalities.