The money managers at Yale propose the idea, modeled after a financially successful university with a large endowment. (Perhaps they have Yale in mind.) Steve Coll seconds it, and Matt Yglesias offers his thoughts. One potential consequence is that this might kill off the newspaper editorial as we know is, since a 501(c)(3) can't endorse candidates or legislation. On balance that doesn't seem like such a bad thing. There isn't any shortage of free opinion on the internet.
But how would the newspapers generate their endowments? Williams College, which Steve Coll picks on, has what I presume are a lot of nostalgic alums. Does the New York Times have equally nostalgic readers? (Or maybe a harder case: Does the Cleveland Plain Dealer?)
That question got me thinking about the fate of newspapers that are already sort of structured like this. One is the St. Petersburg Times in Florida, which is owned by the non-profit Poynter Institute for Media Studies. (Or rather the Poynter institutes owns the company that publishes the Times, but close enough.) By most accounts the St. P's Times is a wonderful newspaper, but its non-profit owner doesn't seem to have an endowment that can keep the news gathering afloat till the end of time. One Wednesday, the publisher annoucned that Poynter's other big media holding, Congressional Quarterly, was up for sale.
Another possible model is my former employer: The Guardian, which is owned (through its publisher) by the CP Scott Trust. Apparently the trust was established to avoid payment of the British equivalent of the estate tax, which is lovely genesis story for a liberal newspaper. The trust has been around for more than 70 years and from 3,700 miles away appears to be doing fine.