The Communications Act, specifically 47 USC §397(6), states that a noncommercial educational broadcast station must be owned and operated by a public agency or a nonprofit private foundation, corporation, or association. Furthermore, 47 USC §397(8) defines “nonprofit” as an entity where none of the net earnings benefit any private shareholder or individual.
With all that aside, because Social Purpose Corporations have the capacity to generate profits and distribute them to shareholders or individuals, they do not meet the definition of “nonprofit” as outlined in paragraph 8 of section 397.
Both LPFM (Low-Power FM) and full-service NCE (Non-Commercial Educational) stations could possibly be licensed to a “Social Purpose Corporation” (SPC) in the United States. The FCC (Federal Communications Commission) does not specifically restrict the ownership or licensing of these types of radio stations to any particular type of legal entity, as long as the entity meets the eligibility criteria and complies with the relevant regulations.
An SPC is a type of corporation that is structured to prioritize social or environmental goals in addition to generating profit. As long as the SPC meets the FCC’s requirements for station ownership, including any non-profit or educational criteria that may apply, it can obtain a license for an LPFM or full-service NCE station. However, it’s important to ensure that the SPC’s activities align with the FCC’s rules for non-commercial stations, as these stations are subject to certain programming and advertising restrictions to maintain their non-commercial status.
In several states, such as California, Florida, and Washington, “Social Purpose Corporations” have been recognized. These entities combine elements of for-profit corporations with a social purpose, making them appealing to social investors and foundations. However, due to the for-profit element and the ability to engage in activities competing with traditional for-profits, Social Purpose Corporations are not eligible for tax exemption under §501(c)(3) of the IRS code. They can issue stock and distribute profits to shareholders.
The Communications Act, specifically 47 USC §397(6), states that a noncommercial educational broadcast station must be owned and operated by a public agency or a nonprofit private foundation, corporation, or association. Furthermore, 47 USC §397(8) defines “nonprofit” as an entity where none of the net earnings benefit any private shareholder or individual.
With all that aside, because Social Purpose Corporations have the capacity to generate profits and distribute them to shareholders or individuals, they do not meet the definition of “nonprofit” as outlined in paragraph 8 of section 397.
As a result, it is the conclusion of Nexus Broadcast that a Social Purpose Corporation would likely not be eligible to hold a license for a noncommercial educational broadcast station, including LPFM (Low-Power FM) stations.
It’s important to note that this advice should be confirmed with attorneys well-versed in FCC law and corporate law specific to the state in which the entity is intended to be incorporated. Even if a Social Purpose Corporation were permitted to be a licensee, it would not grant them permission to use an LPFM station for broadcasting commercial programming.
Please be aware that this response is based on an analysis of various regulations, statutes, and factual information and should not be construed as legal advice. Legal advice should only be provided by qualified attorneys, and any decisions made based on this information should be done at your own risk.