Opinion ID: 1465764
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Heading Rank: 2

Heading: Organized Exclusively for Charitable Purposes

Text: The first elementwhether a corporation is organized exclusively for charitable purposescan be broken into two parts. First, we must determine for what purposes a particular corporation has been organized. We then must decide whether that purpose is, in fact, charitable. The trial court found that, [a]lthough the [Center] is organized and operated as a nonprofit corporation, its original purpose was not charitable. We understand this to mean that the purpose for which the Center is organized is not charitable. The town, in its brief, voices a similar understanding of the trial court's memorandum of decision: The trial court in the [present] case found that ... the delivery of health care to the elderly is not a charitable purpose. We thus examine the relevant law in light of this finding. [28] In determining the purposes for which a corporation has been formed, we begin by examining the entity's foundational documents. The purposes for which a corporation is organized are to be found in its charter.... Waterbury First Church Housing, Inc. v. Brown, 170 Conn. 556, 561, 367 A.2d 1386 (1976); accord Camp Isabella Freedman of Connecticut, Inc. v. Canaan, supra, 147 Conn. at 514, 162 A.2d 700; see also Isaiah 61:1, Inc. v. Bridgeport, supra, 270 Conn. at 86, 851 A.2d 277 (a corporation's charter reveals its purpose); H-C Health Services, Inc. v. Board of Assessors, 42 Mass.App. 596, 599, 678 N.E.2d 1339 (whether a taxpayer is a charitable organization ... depends upon the language of its charter or articles of association, constitution and by-laws, and upon the objects which it serves and the method of its administration... or, as otherwise expressed, upon the declared purposes and the actual work performed [internal quotation marks omitted]), review denied, 425 Mass. 1104, 682 N.E.2d 1361 (1997). The Center's purpose, as stated in its certificate of incorporation, is: a) To operate exclusively for charitable, educational and scientific purposes, all for the public welfare consistent with activities permitted to be performed by a corporation classified under [§]501(c)(3) of the Internal Revenue Code of 1986.... b) To develop, operate and maintain a chronic and convalescent care nursing home (i.e., skilled nursing facility) ... in accordance with applicable state and federal regulations ... and operate adult day care and other related programs.... Article I, § 4, of the Center's bylaws provides, as one of its stated purposes, [p]rimarily to fulfill the goals and aspirations of the Roman Catholic Church in its ministry and service to the elderly and to those who are ill located in the [d]iocese... regardless of their race, color, creed or religion. The Center's mission statement is to provide quality health care to [its] residents in a spirit of compassion, love and service, consistent with the Gospel of Jesus Christ. Having gleaned the Center's corporate purpose from its charter and related documents, we next must determine whether that purpose is charitable. The modern approach to defining a charitable use or purpose is rather broad and liberal. Almost fifty years ago, this court explained that [t]he definition of charitable uses and purposes has expanded with the advancement of civilization and the daily increasing needs of men. Mitchell v. Reeves, 123 Conn. 549, 554, 196 A. 785 [1938]. It no longer is restricted to mere relief of the destitute or the giving of alms but comprehends activities, not in themselves self-supporting, which are intended to improve the physical, mental and moral condition of the recipients and make it less likely that they will become burdens on society and more likely that they will become useful citizens. Bader Realty & Investment Co. v. St. Louis Housing Authority, 358 Mo. 747, 752, 217 S.W.2d 489 [1949]. Charity embraces anything that tends to promote the well-doing and the well-being of social man. [Id.] An institution is charitable when its property and funds are devoted to such purposes as would support the creation of a valid charitable trust. [29] Camp Isabella Freedman of Connecticut, Inc. v. Canaan, supra, 147 Conn. at 514-15, 162 A.2d 700; see also Isaiah 61:1, Inc. v. Bridgeport, supra, 270 Conn. at 76, 851 A.2d 277 ([i]n construing [§ 12-81(7)], we have embraced a broad definition of the term `charitable purpose' ); cf. Knox County Property Tax Assessment Board of Appeals v. Grandview Care, Inc., 826 N.E.2d 177, 182 (Ind. Tax 2005) (a charitable purpose will generally be found to exist if: 1) there is evidence of relief of human want ... manifested by obviously charitable acts different from the everyday purposes and activities of man in general; and 2) there is an expectation of a benefit that will inure to the public by the accomplishment of such acts [internal quotation marks omitted]). We had occasion to comment on the charitable nature of caring for the elderly in Waterbury First Church Housing, Inc. v. Brown, supra, 170 Conn. at 556, 367 A.2d 1386. Although that case did not deal directly with the provision of long-term health care for the elderly, our analysis of the corporate purpose of the plaintiff in that case is instructive. In Waterbury First Church Housing, Inc., the nonprofit plaintiff corporation's purpose was to provide rental housing and related facilities and services specially designed to meet the physical, social, and psychological needs of the aged, and contribute to their health, security, happiness and usefulness. (Internal quotation marks omitted.) Id., at 561, 367 A.2d 1386. We held this purpose to be charitable in light of the fact that in recent years large sums of public funds ha[d] been expended to provide low-income housing, and the [plaintiff corporation's] dedication to making private low-rental housing for elderly persons on fixed incomes a reality clearly [was] an effort to make it less likely that they [would] become burdens on society.... (Internal quotation marks omitted.) Id. Other jurisdictions that have addressed more directly the charitable nature of providing long-term health care for the elderly have found such a purpose to be charitable. See, e.g., Knox County Property Tax Assessment Board of Appeals v. Grandview Care, Inc., supra, 826 N.E.2d at 182 (Indiana courts have long recognized that providing care and comfort to the aged constitutes a charitable purpose); H-C Health Services, Inc. v. Board of Assessors, supra, 42 Mass.App. at 599, 678 N.E.2d 1339 ([t]he language of the charter of the appelleesdedication to the care of the elderly and the infirm, with no financial benefit permissibly flowing to private investorsis the language of a charitable organization, and the operation of a nursing home for the elderly and the infirm is the work of a charitable corporation); Wexford Medical Group v. Cadillac, 474 Mich. 192, 215-19, 713 N.W.2d 734 (2006) (nonprofit organization providing, inter alia, health care services to elderly constituted charitable organization); see also Evangelical Lutheran Good Samaritan Society v. Gage, 181 Neb. 831, 836, 151 N.W.2d 446 (1967) (nursing homes not operated for private gain recognized as charitable institutions); Catholic Charities of the Diocese v. Pleasantville, 109 N.J.Super. 475, 480-81, 263 A.2d 803 (App. Div.) (nonprofit nursing home deemed to be charitable institution), cert. denied, 56 N.J. 474, 267 A.2d 56 (1970); Hilltop Village, Inc. v. Kerrville Independent School District, 426 S.W.2d 943, 947 (Tex.1968) ([t]he decisions recognizing tax exemption are rested principally upon the conclusion that people in later years have special care and residential requirements, the alleviation of which is of social value; and that exemption should be allowed [when] such needs are being met by institutions not organized or operated for private profit). The trial court determined that the Center's original purpose was not charitable. We do not agree. Although the Center initially was operated in partnership with a for-profit entity, it is unclear whether its original purpose was noncharitable. The Center's original certificate of incorporation is not a part of the record, nor was any testimony elicited regarding whether the stated purpose of the organization was changed in the amendments to the certificate that were filed following the buy out of the for-profit partner. Therefore, to the extent that it is relevant, there is no evidence as to what the Center's original purpose was. What is certainly relevant is the Center's purpose during the tax years for which an exemption was claimed, and that purpose and mission, as stated in the corporate documents to which we previously referred, are most certainly charitable. The provision of long-term health care and spiritual support to the elderly in a nonprofit, nondiscriminatory manner and without regard to individual financial circumstances is a charitable purpose. [30] The trial court's conclusion that the Center's purpose is not charitable is incorrect as a matter of law and is based on a misinterpretation of our prior cases. Relying on, inter alia, United Church of Christ v. West Hartford, 206 Conn. 711, 539 A.2d 573 (1988), the court concluded that our cases do not support the Center's contention that [t]he delivery of health care to the elderly is a charitable purpose. (Internal quotation marks omitted.) In our view, United Church of Christ does not support such a narrow conception of what constitutes a charitable purpose. In United Church of Christ, we concluded that the plaintiff corporation's property, which was being utilized as an elderly housing complex; id., at 714, 539 A.2d 573; was not exempt from property taxes in part because each resident was required to pay an up-front fee of $73,000 for the privilege of occupying a unit. Id., at 720-22, 539 A.2d 573. Furthermore, residents were charged a monthly maintenance fee of $350, and were eligible to remain in their unit only as long as they could afford this fee and live without assistance. Id. The plaintiff corporation's purpose in United Church of Christ was to provide comfortable housing to those senior citizens who could afford the substantial fees and who were healthy enough to live without assistance. Id., at 722, 539 A.2d 573. The Center's corporate purpose of providing long-term care to the chronically ill elderly regardless of financial status is readily distinguishable from the purpose of the plaintiff corporation in United Church of Christ. Thus, in this context, the most we can draw from United Church of Christ are general principles regarding our modern conception of charity. In this respect, we articulated, consistent with our precedents, a very broad notion of the term charitable in United Church of Christ : This court has recognized that the definition of charitable uses and purposes has expanded with the advancement of civilization and the daily increasing needs of men.... It no longer is restricted to mere relief of the destitute or the giving of alms but comprehends activities, not in themselves self-supporting, which are intended to improve the physical, mental and moral condition of the recipients and make it less likely that they will become burdens on society and more likely that they will become useful citizens. (Citation omitted; internal quotation marks omitted.) Id., at 719, 539 A.2d 573, quoting Camp Isabella Freedman of Connecticut, Inc. v. Canaan, supra, 147 Conn. at 514, 162 A.2d 700. We continue to believe that this is the proper approach. In sum, therefore, we conclude that the present case is factually distinct in important ways from United Church of Christ and that, pursuant to the general principles outlined in that case, the Center's charitable nature is evident from the face of its corporate documents. [31]