Comment about charity status

A surprising number of people read the Globe and Mail, and James Adams's piece on Saturday concerning charitable tax status for magazines. If you were not among them, here is the text (please pardon the abnormally long post):

We want your tax dollars:

'Idea magazines' claim they stand little chance against the niche-market glossy. Is charity status the only hope for a good Canadian read?

By JAMES ADAMS

Globe and Mail, Saturday, October 29, 2005 Page R6

If we give up on the image of you or I curling up on our couches for an hour or two to get into a magazine, well, I think we're giving up a lot.

-- Ken Alexander, publisher of The Walrus

Last week's announcement that Saturday Night magazine was going "on hiatus," perhaps forever, has prompted renewed discussion about the health of Canadian magazines that focus on "issues and ideas rather than things and people," as one publisher describes it.

The ruminations have included speculation on whether one of the country's more prominent issues-and-ideas magazines, Toronto-based The Walrus, will finally obtain the charitable status it's been strenuously seeking from the federal government since late 2002 and thereby avoid (or at least postpone) what has befallen Saturday Night.

A decision was expected out of Revenue Minister John McCallum's office last week. But so far, all Walrus founder, publisher and editorial director Ken Alexander has been saying is that "discussions are ongoing; very good progress is being made" and an announcement should be coming "very soon."

Charitable status for The Walrus Foundation would place the magazine -- which published its first issue in the fall of 2003 and now has a circulation of about 50,000 -- on a par with the roughly 70,000 hospitals, international relief agencies, churches, dance troupes, medical research organizations, museums, political parties and other not-for-profit operations that are allowed to receive donations and give tax breaks in return.

It's not a new gambit for Canadian periodicals. The Canada Revenue Agency has, on a case-by-case basis, given charitable status over the years to a potpourri of not-for-profit magazines overseen by foundations and deemed by Ottawa to have a strong educational thrust (as opposed to being purely "commercial" or "informational"). Among those so blessed are The Beaver, Opera Canada, Canadian Art, This and Canadian Geographic.

The Walrus was banking on receiving such status months ago, not least because its foundation has promised that, in addition to producing a magazine 10 times a year, it will sponsor educational conferences, seminars, literary evenings, debates and outreach programs. Moreover, Montreal's Chawkers Foundation, established in 1988 by Alexander's father, Charles, had earmarked $750,000 from its reported 2003 asset base of $5.8-million to help with The Walrus's start-up, the expectation being that charitable status was just around the corner.

But since that hasn't happened, The Walrus finds itself, on the eve of its second anniversary, in a quandary typical of many not-for-profit magazines that, as one publisher puts it, are driven by "a psychographic rather than a demographic." It has good but not great circulation, especially when compared to such for-profit, consumer-targeted publications as Chatelaine (715,000 paid circulation), Canadian House and Home (250,000) and Gardening Life (95,000). According to the well-regarded magazine consultant D. B. Scott, "50,000 is barely enough to get you paid attention to by advertisers." Moreover, with federal aid packages such as the Canadian Magazine Fund and the Publications Assistance Program only going so far, The Walrus is experiencing revenue shortfalls -- so much so that this summer Alexander was forced to announce he'd be paying freelancers 30 to 60 days after publication, instead of the usual "upon acceptance" or "upon publication."

Magazine publishing in a sprawling country with a population of just under 33 million has always been difficult, not least because Canadian titles, which now number close to 2,500, occupy only about 18 per cent of available rack space. U.S. titles, of course, dominate the remainder: For every Flare we produce, there's their Vogue, Allure, W and Bazaar, for every Walrus (or Saturday Night), a New Yorker, Atlantic Monthly, Harper's and Mother Jones. Still, considerable money can be made in the True North -- the English and French editions of Chatelaine, for instance, grossed an estimated $60-million for Rogers Publishing in 2003 -- but only, it seems, if a magazine's "editorial policy is defined solely in demographic terms," according to one industry veteran.

"It's no mean feat," said another, "for a periodical in this country to get a circulation of 1,000." It's also possible for a magazine to score more than one-million paying readers, something the Canadian edition of Reader's Digest has done pretty consistently. The tricky part appears to be sustaining something with a circulation between 6,000 and 60,000.

Two non-profit magazines watching The Walrus situation with keen interest are Maisonneuve ("Eclectic Curiosity") , which has been published out of Montreal since 2002, and Vancouver's Geist ("Canadian Ideas, Canadian Culture"), founded in 1990. Like The Walrus, each has a decidedly quirky, wide-ranging sensibility and appearance that can't be grasped in a quick flip-through at the newsstand -- a fact reflected, perhaps, by their respective circulations: 10,000 to 15,000 for Geist, a quarterly; 12,000 for the bi-monthly Maisonneuve.

They too have applied for charitable accreditation in the past and both have been refused, Maisonneuve as recently as last March. However, emboldened by The Walrus's efforts, both Maisonneuve's founder-editor Derek Webster and his counterpart at Geist, Stephen Osborne, say they'll be renewing their call for charity status in the months ahead, especially if The Walrus prevails this fall.

Maisonneuve, in particular, wants to triple its circulation within the next five years to attract more advertisers (right now, advertising accounts for about 15 per cent of revenue) and is currently undergoing an editorial review to see if its content should be more national, or more centred on Montreal, or "more of an urban magazine focused on Toronto and Montreal."

Webster originally published Maisonneuve twice yearly, spending $50,000 to produce its inaugural issues. Some of that money came from his father, Norman Webster, a former editor-in-chief of The Globe and Mail and Montreal Gazette, and, from 1979 to 1987, the proprietor of Saturday Night. Webster currently oversees the activities of the R. Howard Webster Foundation, which last year reported assets of $109-million and disbursed a total of $5-million to an estimated 200 organizations. Presumably, Maisonneuve's foundation could tap into that largesse if it gets charitable status.

This, however, is a big if, according to Scott. Yes, he acknowledged, the debacle of Saturday Night "may provide some leverage in discussions with Ottawa that certain kinds of magazines could use charitable status." But the business of the Canada Revenue Agency "is getting money, not giving it out," he said, and in the last five years, it's made a point of "clawing back on giving out charity numbers rather than increasing them."

Scott estimates there are more than 1,000 magazines in Canada with circulations of less than 10,000 "and at least half of these are deserving of charitable status." The problem is that most of them are labours of love, produced by staffs sometimes numbering no more than three. "They barely have the capacity to run a magazine, let alone a charitable organization that would meet the educational criteria Ottawa requires," he said. If The Walrus Foundation gets charitable status, "it's going to be a one-off thing, more of a rule change" than any sweeping overhaul of the Canadian magazine regime.

For Geist's Osborne, the collapse of Saturday Night was entirely predictable. Admittedly, by being inserted 10 times a year in the National Post, the glossy avoided "the huge sums going into subscription support, often as much as the revenue" that most commercial magazines spend. However, because Saturday Night was part of a for-profit corporation (St. Joseph Media), its revenue stream came almost entirely via advertising -- "a mistake," Osborne opined.

The publishing mandates of magazines like Geist, Maisonneuve and The Walrus require "a diversity of writing styles, artistic agendas and contributors," he added, whereas the Style at Homes and WeddingBells of this country require a more formulaic approach. That diversity, in turn, calls for the availability of an equally diverse range of financial instruments, especially if the country wants sophisticated, well-researched stories written by well-paid contributors and published in readily accessible magazines. As Maisonneuve's Webster noted: "It's hard to get a genuine magazine culture going in this country if everything is operating out of a basement."