Pulitzer Prize-winning weekly first in US saved by Vermont L3C formation

first_imgLegal developments concerning a Pulitzer Prize-winning weekly newspaper published on the California coast but formed in the state of Vermont is offering hope for beleaguered newspapers throughout the country.  The newspaper, the Point Reyes Light, incorporated in May as an L3C, a Low profit Limited Liability company authorized under Vermont law.  The first-in-the-nation L3C statute was approved by the Vermont legislature and signed into law by Governor Jim Douglas in 2008.“We believe that this is the first newspaper in the country to incorporate as an L3C, and it gives hope to other papers facing their possible demise due to lower advertising revenues and competition from the web,” said Kim Butler, a business law attorney in the Lebanon office of Downs Rachlin Martin PLLC, who advised the owners on the law.  “According to the owners, it is unlikely that this newspaper will ever make a substantial profit.  Rather, it is organized and run for the benefit of its readers and the journalism profession.  The L3C structure provides for that.”The Light was awarded a Pulitzer Prize in 1979 for investigative reporting, but had struggled financially since it was sold in 2005 by long-time editor and publisher David V. Mitchell, who retired.  The Light is now owned by the Point Reyes Light Publishing Company L3C that in turn is owned by Marin Media Institute, a nonprofit corporation governed by a board comprised of journalists, writers and educators.  Its directors include West Marin County residents Corey Goodman, a biotech entrepreneur, and Mark Dowie, the former publisher and editor of Mother Jones magazine and a noted investigative journalist.Butler was connected with the paper through client Warren Bingham, a respected media consultant and former operator of the Stinehour Press, a high-quality fine printing company in Vermont’s Northeast Kingdom, which also fell victim to a changing publishing industry a couple of years ago.The concept of the L3C was developed by Robert Lang of the Mary Elizabeth and Gordon B. Mannweiler Foundation, and Marcus Owens, former head of the IRS Tax Exempt Organization Division.  In a collaborative effort involving a panel of experts assembled by them, Lang and Owens crafted an entity that is specifically designed to facilitate low-profit investing by private foundations in socially responsible businesses whose primary mission is charitable.  In 2008, they worked with the Downs Rachlin Martin lobbying team in Montpelier and with the Vermont legislature to make the concept a reality.As an L3C owned by a nonprofit corporation, the company has more options available to it to keep the presses rolling, according to Butler.  The paper can accept grants from nonprofit organizations as well as program-related investments, or PRIs.  Under IRS rules, private foundations and donor-advised funds must give away five percent of their assets each year.  The PRI is an allowed contribution.  Under the rules,  a PRI must be made in a company that significantly furthers one or more charitable or educational purposes.  The company may not have as a significant purpose the production of income or the appreciation of property, and the company may not exist for political purposes.Although the L3C might not be the answer for every newspaper, it may provide hope for some, according to Michael Donoghue, executive director of the Vermont Press Association.  “Newspapers continue to be the number one source of news and advertising for Americans, but some newspapers are struggling, some have even been forced out of business, and many have to re-think their business model,” he said.  “We need more creative thinking from papers like the Light to keep local journalism strong and investigative reporting alive.   Newspapers are essential in trying to ensure democracy, open government, transparency and for keeping communities informed on news, weather, sports, features, public notices and more.”Downs Rachlin Martin PLLC is a full-service law firm with more than 60 attorneys and six offices in Vermont, New Hampshire and New York. DRM provides legal services to local, national and international clients in practice areas that include bankruptcy and business restructuring, business law, captive insurance, energy and telecommunications, family law, health law, intellectual property, labor and employment, litigation, real estate and land use, environmental law, tax law and trusts and estates. The firm represents clients in legislative, regulatory and public affairs through the Government and Public Affairs group. DRM is the law firm member for Vermont of Lex Mundi, the world’s leading association of independent law firms.Source: Downs Rachlin Martin. 6.29.2010##last_img

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