In a letter to Hispanic Journal, USHCC CEO George Herrera explained the chamber’s rationale for getting into the media business. “A business magazine is a natural extension of our television programming,” Mr. Herrera wrote, referring to the chamber’s syndicated TV show Hispanics Today. “The agreement approved by the board at the [September] meeting had its genesis quite some time ago, as the USHCC has always been interested in having an opportunity to have editorial participation. Acting in its most prudent fiduciary capacity, the board approved what they considered to be a good business deal as well.”
USHCC Chairwoman Elizabeth Lisboa-Farrow also sees the decision as a business strategy. Hispanic Publishing, publisher of Hispanic magazine and Vista magazine, “will invest their own money, so it’s a no-risk opportunity for the chamber,” she told Hispanic Business. “The chamber made a business decision. It will continue to support all Hispanic publications. The USHCC is always going to support Hispanic companies, but that doesn’t negate what we do as a national organization. ...Our position is to represent all our members and have a relationship with them all.”
Ms. Lisboa believes the new magazine will be an adjunct, not a competitor, to Hispanic Journal and other Hispanic magazines. “The fact that we are putting out a publication doesn’t mean we don’t support [other publications],” she says. “They are all important ways to tell our story through as many media as possible. There is not a monopoly in telling a story through whatever medium you can.”
Even the appearance of an advocacy organization going into competition with its members “is a tricky situation,” says Daniel Borochoff, president of the watchdog American Institute of Philanthropy. “But nonprofits have a right to compete. The question is, should their [profit-making] be subsidized by nonprofit tax treatment? They have to show a public benefit commensurate with that tax saving.”
The marketplace makes the proposition even trickier because a nonprofit may enjoy “unfair competition with the other group,” Mr. Borochoff says. For example, if the YMCA opens a facility in an upscale neighborhood, it will compete directly with the area’s for-profit health clubs. But tax-exempt status gives the YMCA an operational advantage on the bottom line.
Anne Pasmanick, director at the Union Institute’s Center for Public Policy, says that for the most part, a nonprofit’s earned income must be focused on the organizational mission. Profit-making activities “are generally mission-related,” she says. (See accompanying story, "Accountable to Whom?")
Problems arise when a nonprofit competes with its members, Ms. Pasmanick acknowledges. In the instance of a magazine, the flash point occurs when members perceive that the organization has special leverage to get advertising dollars unavailable to commercial publishers. Creating conflict “is a risk the nonprofit takes, although it should be concerned it is upsetting certain members,” she says.
The USHCC has a special need to find revenue streams beyond its membership. Technically, a chamber of commerce is a business league, a type of nonprofit called a 501(c)(6) by the Internal Revenue Service (IRS). Under IRS rules, such a nonprofit organization must be primarily engaged in activities or functions that are the basis for its exemption, and the organization’s support must come primarily from membership dues and other activities that are substantially related to its exempt purpose. But according to the chamber’s Form 990, the equivalent of a tax return for nonprofits, membership dues account for only 9.2 percent of the USHCC’s income. Corporate sponsorships contribute 17.1 percent, the annual convention and other events bring in 64.6 percent, while “advertising” and “television income” add 8.9 percent.
Most Popular Stories
- Twitter Names Woman to Board
- NSA Tracks 5 Billion Cellphone Records a Day
- Nelson Mandela Dies After Momentous Life
- Nelson Mandela Dead at 95
- W.H. Corrects Itself on Unclegate
- Pope Francis Says He'll Fight Child Sex Abuse
- Yemen Attack Kills 52
- Fast-Food Workers Want $15 an Hour
- Roybal-Allard Tours Gordon Brush Plant
- Aspen Contracting Adding 300 Jobs