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A $2-million donation to TVO is being hailed as a boost for the financially struggling media industry, but experts say it's unlikely to spur similar investments because the country's laws discourage philanthropic funding of news.

The endowment, from the Barry and Laurie Green Charitable Trust and Goldie Feldman, is intended to cover the costs of creating four local journalism hubs in Ontario, starting with Thunder Bay. The funding would also go to hiring at least four journalists and create internship opportunities, said John Ferri, TVO's vice-president of current affairs and documentaries.

Though it receives most of its funding from the provincial government, TVO is also a registered charity, and as such it can issue tax receipts for charitable donations. Most media outlets don't qualify for registered charity status for a number of reasons – namely because they're in the business of trying to make money. Without being able to provide a tax receipt, there's less incentive for foundations or big-pocketed donors to step in with funding for news organizations that have shed hundreds of jobs amid a steep decline in advertising revenue. But there are signs the federal government could ease that.

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The Public Policy Forum is assessing the state of the media industry at the behest of the federal government and is expected to offer recommendations.

Janice Neil, associate professor and chair of the Ryerson School of Journalism in Toronto, attended some of the forum's meetings and said the issue of tax-deductible donations was discussed frequently.

"So that is something that people believe would be a worthwhile change in Canada," said Ms. Neil, who used to work for TVO and whose husband is leading the forum's review.

The government could change the rules governing charitable donations with the stroke of a pen, said Adam Aptowitzer, principal at Drache Aptowitzer law firm, which specializes in law related to charities and non-profits. But that could open a Pandora's box on who should be entitled to such incentives, he said.

"Once they start playing with the definition of charity you're going to have everyone coming out of the woodwork, saying … certain organizations should be registered and certain organizations should lose their registered charity status," he said.

Ottawa could also impose some strict regulations on how media outlets operate if they want to be able to issue tax receipts for donations, Mr. Aptowitzer said.

There are precedents for philanthropic partnerships between news organizations in Canada that are not charities.

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In 2014, the Toronto Star created a one-year work and wealth reporting beat in collaboration with the Atkinson Foundation, which was started in 1942 by the newspaper's publisher. Last year, the J.W. McConnell Family Foundation granted $200,000 over two years to Vancouver-based Discourse Media for public-interest journalism.

Such business models present their own challenges. Christopher Waddell, an associate professor at the School of Journalism and Communication at Carleton University in Ottawa, said it's important to keep journalistic integrity intact when receiving money.

It can also be difficult to maintain a funding model based solely on the goodwill of others, he said.

"If the grants and donations don't materialize, then you're out of business."

Philanthropic donations to news outlets are more commonplace in the United States.

ProPublica, for example, is a non-profit corporation launched in 2007 with ongoing financial support from the Sandler Foundation. Between 1987 and 2012, 172 such not-for-profit digital-media outlets have been created in the United States, according to a paper by Sofia Ranchordas, an affiliated fellow of Yale Law School's information society project.

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Tax incentives make non-profit media companies a popular newsroom structure south of the border, where news outlets can apply for the right to receive tax-deductible donations from foundations and individual donors.

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