The truth about NPR’s funding — and its possible future

It was tendentious — and inaccurate — for Elon Musk to identify NPR on his Twitter platform as a “government-affiliated” news organization. NPR may have its biases, notably in its story selection, but to class it in the same category as the New China News Agency or, in their day, Pravda or Tass, is both argumentative and absurd. If that were the case, it’s hard to believe the current White House would countenance longtime NPR congressional correspondent Mara Liason’s regular appearances on Fox News.

At the same time, however, it is misleading for NPR to assert, in rebutting Musk, that it receives but 1 percent of its funding from the federal government. The reality is more complex — and should raise questions for those who care about the future of “public media.” 

NPR may receive little direct federal funding, but a good deal of its budget comprises federal funds that flow to it indirectly by federal law. Here’s how it works: Under the terms of the 1967 Public Broadcasting Act, funds are allocated annually to a non-governmental agency, the Corporation for Public Broadcasting, overseen by a board of presidential appointees. That corporation, in turn, can choose to support original programming produced by public television or public radio — but, by law, must direct much of its $445 million funding (scheduled to top $500 million next fiscal year) to local  public television and public radio stations across the country, via so-called “community service grants.” 

Here’s where things get tricky. Local stations, if they want to broadcast “All Things Considered,” “Fresh Air” and other programming produced by NPR or competitors such as American Public Radio, must pay for it. Indeed, in its consolidated financial statement for 2021, NPR reported  $90 million in revenue from “contracts from customers,” a significant portion of its $279 million and much more than 1 percent. Such revenue was exceeded only by corporate sponsorships, which totaled $121 million. One can think of these funds as federal grants that have been sent from Washington — but returned to it.

What’s more, local stations are actually required by law to do so. The 1967 act specifies that, of funds they received from the Corporation for Public Broadcasting, “23 percent of such amounts shall be available for distribution among the licensees and permittees of public radio stations solely to be used for acquiring or producing programming that is to be distributed nationally and is designed to serve the needs of a national audience.” 

In other words, if a local public radio station decided it no longer wanted to carry “Morning Edition,” it would not have the discretion to use some portion of its federal grant to support, for example, local newsgathering.

There’s no doubt that the Public Broadcasting Act created a valuable national news source. As the commercial networks have reduced their staffs, one must look to NPR for foreign correspondents, for example. Absent the act’s requirement to support national programming, it may well never have developed. Ironically, radio was an afterthought for those crafting the act. That NPR has gained greater public visibility than public television, in recent years, would have surprised the Lyndon Johnson administration.

That local stations are mandated to buy national radio programming should not be confused in any way with the idea that NPR is “government-affiliated.” It actually finds itself in a programming marketplace; local stations may have to use federal funds for national programming but they retain discretion as to whether they want to pay for “Weekend Edition” or “Wait, Wait … Don’t Tell Me!”

For those who believe in public media as an important source of news and entertainment, however, the future of this overall funding model looks dim — and not because of looming budget cuts. Indeed, the Trump administration tried to zero out funding for the Corporation for Public Broadcasting and got nowhere. A more difficult challenge stems from technological change. It has become possible — indeed, commonplace — to access NPR programming directly from NPR itself, on a smartphone. This sort of access, known as “over the top,” means listeners can bypass local stations altogether.

The question then arises as to the future of local NPR affiliates. There can be an important role for them — notably, in establishing or expanding local newsrooms, partnering with struggling local newspapers or otherwise filling the voices of so-called “news deserts.” Doing so, however, won’t be easy if their funding model requires them to buy national programming that one can get freely on a phone.

Broadly, this changed technological landscape cries out — as I’ve argued in a recent paper for the American Enterprise Institute — for revision of the Public Broadcasting Act, passed at a time long before the internet and when there were but three commercial television networks. No one should want a revised act to be an excuse for Congress to tell NPR what sort of programming it should run or how it should cover the news. But that doesn’t mean the current funding model should continue, unchanged.

Howard Husock, a senior fellow in domestic policy at the American Enterprise Institute, served as a member of the Corporation for Public Broadcasting board of directors, 2013-2018, appointed by President Barack Obama.