HARDWICK – The Hardwick Gazette’s seven month wait for the Internal Revenue Service (IRS) to approve its nonprofit status ended last week when publisher, Northeast Kingdom Public Journalism (NEKPJ) learned its application for tax exempt status had been accepted.
All donations to The Hardwick Gazette and NEKPJ dating back to the organization’s founding on December 19, 2023 can now be treated as tax deductible according to an IRS letter dated July 18.
“The process of approval has been a long and frustrating one,” said Gazette Editor Paul Fixx.
Early in 2023, former Gazette owners Ray and Kim Small began assembling a group of interested area residents to form the board of directors for a nonprofit organization founded for the purpose of continuing the publishing tradition that had begun in 1889. The Smalls’ decision to give the Gazette to a nonprofit entity came after a few difficult years during and after the Covid-19 pandemic when they stopped publishing a print edition.
During that time, the Gazette switched entirely to online digital delivery of the publication. That included a PDF document resembling a print newspaper. In addition, individual articles, community events notices and other local content which had been the Gazette’s stock-in-trade for over 130 years, were posted to a website.
The Small’s eliminated a dedicated reporter and began using community journalists to provide most of the paper’s content, though several columnists, sports reporters and a photographer continued to be paid.
At the same time, the Gazette’s advertising sales person, who had been paid commissions for selling ads to businesses, was converted to a salaried employee, then not replaced when the position became vacant. The significant drop in advertising revenue resulting from those changes, and the shifting priorities for businesses due to the pandemic, left a big gap in the paper’s revenues, said Fixx. “That undoubtedly helped the Small’s decide that it might be easier to fill the gap with a nonprofit model for the business,” he said.
Ray Small began assembling a board, but the effort didn’t begin in earnest until they began meeting with him in the fall of 2023 to develop by-laws for the new organization. During the month of December 2023, the board, working with the Small’s consultant Jim Flint, began learning about nonprofit publishing, said Fixx.
“It quickly became clear to the new board that the project was bigger than they had anticipated,” noted Fixx
The first for-profit legacy newspaper in the United States to transform to a nonprofit entity was the Salt Lake Tribune, which received its 501(c)(3) status in Oct. 2019. That was just over four years before the Gazette’s transition was underway, giving NEKPJ little in the way of long-term models to follow, said Fixx. He credited a playbook describing the process of the Tribune’s transformation as an invaluable resource that began to inform the Gazette board’s activities.
NEKPJ incorporated the new organization on December 19, 2023, as a Vermont public benefit nonprofit corporation. The new organization, now owned only by the community, then filed with the IRS for exemption from federal income tax on December 29, 2023. That status was important because it would qualify it “to receive tax deductible . . . gifts,” according to the IRS.
Upon filing that paperwork, a note on the IRS website said not to inquire about the status unless six months had passed without a response. That came as a surprise to the Small’s, their consultant and the new board, said Fixx. “Through an inquiry to U.S. Representative Becca Balint’s office, we learned there was a seven-month backlog before applications were even being looked at. There might then be a process of undetermined length to work through any questions arising during IRS review of the application.”
While the nonprofit board developed plans for the future of the newspaper, many factors resulting from the changes made during the Small’s tenure offered challenges, said Fixx. “It was clear a significant effort to rebuild news coverage that had long made the Gazette essential reading for community members would be required to help make a case to the community that donating to the organization would support sustainable local journalism.”
As that effort began, the board also began working to locate a fiscal sponsor, which would allow NEKPJ to receive tax exempt donations while paying a fee to the sponsor. After several unsuccessful attempts, that effort succeeded on May 28, when an arrangement was made with Montpelier’s Center for Arts and Learning, said Fixx. “Their Director Phayvanh Luekhamhan has been a real pleasure to work with. In the several months of our association with them, the grants and individual donations we’ve received have been essential to our success.”
Early in July, a letter arrived from the IRS requesting additional information to support the application, said Fixx. “Our response was sent on July 8. Roughly three weeks later confirmation of the tax exemption arrived in the mail. The entire process took almost exactly seven months, just as Rep. Balint’s office had led us to believe.”
Fixx says, “positive comments from the community lead him, staff and the board to believe their efforts have been paying off. That’s confirmed by data showing readership of the online PDF and website visits have more than doubled to over 1,200 people weekly in the last six months.” Even so, says Fixx, the Gazette was printing over 3,000 copies as recently as 2012.
A successful and sustainable future for the Gazette will require readers, individual donors, grant funding and advertisers, said Fixx. “Advertising in the paper has been growing, though still lags well behind print publications in the area. The IRS tax exemption will allow us to make more effective appeals to donors and organizations offering grants, but readers are an essential part of making the case to advertisers that the investment in advertising will yield benefits.”
“I think we’ve put the paper in a position that makes a sustainable future possible, though there’s still a lot more we can do and I hope a return to distributing a printed Gazette becomes possible within the next year.” said Fixx.
