Court Opinion

ID: 9746408
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:14:32.26533+00
Date Added: 2024-06-11T07:25:12.862431
License: Public Domain

*464DANA, J.,
dissenting.
[¶ 18] Because I believe that the benefit (if any) CCCS accords its clients’ creditors is incidental to CCCS’s charitable and benevolent purpose, I respectfully dissent.
[¶ 19] The Court concludes that CCCS’s business is' not conducted exclusively for charitable and benevolent purposes because of the large quantity of money CCCS returns to creditors. I disagree with this conclusion for two reasons. First, it is not clear the money CCCS returns to creditors actually represents a benefit to creditors. Second, assuming that it does, this benefit is incidental to CCCS’s dominant charitable and benevolent purpose.
I. BENEFIT
[¶ 20] CCCS’s payments to creditors on behalf of its clients are not clearly a benefit to creditors. It is true that from 1995 to 1999, CCCS facilitated payments to creditors totaling $60,474,260; however, these payments represent only a portion of the money already owed these creditors. In facilitating payment arrangements for clients, CCCS asks creditors to make “concessions,” to which they frequently agree. These concessions include accepting minimum monthly payments that represent the client’s “best effort,” reducing interest rates, and stopping both late fees and over-the-credit-line fees. Many “firing line” collectors view CCCS as taking away their ability to bring accounts current and are reluctant to work out arrangements with CCCS despite upper management’s public support for CCCS. Creditors appear to support CCCS for three reasons: (1) guilt over impersonally granting credit to many customers who are not financially worthy; (2) political and public relations reasons; and (3) recovering some money that might otherwise be lost in bankruptcy-
[¶ 21] It can be inferred then, that CCCS is returning less revenue to creditors than clients actually owe. It is not clear, however, whether creditors are receiving more or less than they could actually collect on their own (after the costs of collection). Regardless, if there is any monetary benefit to creditors, it is significantly less than $60,474,260 because creditors would likely have recovered a substantial portion of that amount without CCCS’s intervention.
II. INCIDENTAL BENEFIT
[¶ 22] Even if some portion of the payments CCCS facilitates are a benefit to creditors, CCCS is entitled to a charitable tax exemption because the benefit is incidental to CCCS’s charitable and benevolent purpose. Although exemptions to taxation must be strictly construed, and those entitled to a charitable exemption must be organized and conducted exclusively for benevolent and charitable purposes, this rule of construction has not prohibited us from entitling organizations to charitable tax exemptions when an organization’s activities confer only an incidental non-charitable benefit. See, e.g., Town of Poland v. Poland Spring Health Inst., Inc., 649 A.2d 1098, 1100 (Me.1994); Maine AFL-CIO Housing Dev. Corp. v. Town of Madawaska, 523 A.2d 581, 584 (Me.1987); Maine Med. Ctr. v. Lucci 317 A.2d 1, 2 (Me.1974); Ferry Beach Park Ass’n of Universalists v. City of Saco, 127 Me. 136, 138, 142 A. 65, 66 (1928).
[¶ 23] Here, the record provides ample evidence to support the Superior Court’s determination in the declaratory judgment proceeding that the benefits (if any) creditors receive are incidental to CCCS’s charitable and benevolent purpose. CCCS’s stated mission is to provide budget counseling and debt counseling for *465Maine families that are experiencing financial distress. To realize its mission, CCCS provides financial counseling and develops action plans for all clients, numbering between six and eight thousand per year. CCCS facilitates payments to creditors for only approximately one-third of its clients. Other clients are either provided action plans they can administer themselves or referred to other agencies for assistance in exploring options like bankruptcy. CCCS administered debt management plans are CCCS’s last alternative for its clients. The payments CCCS makes as a conduit for one-third of its clients are, therefore, incidental to its overall purpose of providing budget counseling and debt counseling for Maine families.
. [¶ 24] Because the Court focuses on the relationship between CCCS and the creditors of one-third of CCCS’s clients, it overemphasizes the role of this relationship, supporting an interpretation of the relationship as central rather than incidental to CCCS’s primary purpose. Consideration of CCCS’s total activities, however, reveals the incidental nature of these payments and properly places the role of this portion of CCCS activities in context.
[¶ 25] Two-thirds of the consumers CCCS assists do not use CCCS as a payment facilitator. CCCS also provides a large number and wide variety of educational programs to clients, schools, and businesses. In fact, consumer education is a “mandate” of CCCS’ service. In 2000, it provided approximately 850 educational programs, 600 of which it provided to schools.4 CCCS also counsels first-time homebuyers, provides reverse mortgage counseling for seniors, and supplies educational materials for the State.
[¶ 26] CCCS is distinguishable from other “non-profit” credit counseling services that do operate for the purpose of benefiting creditors. It is accredited by the National Foundation for Credit Counseling (NFCC) through a year and a half long process and is re-evaluated every four years to insure that CCCS “clearly [is] in all respects in business to aid the consumer.” This process involves compliance with eight policies, including a policy of placing clients on debt management plans only when it is in the clients’ best interest and will not result in the client paying “indefinitely.” Compliance with NFCC policies demonstrates CCCS’s consistent prioritization of its clients’ interests above creditors’ interests. NFCC accreditation is meaningful. Organizations have lost their accreditation when they refused to handle payments to creditors who would not fund them because NFCC believes “[the organization] cannot be benefiting the consumer if [it is] trying to negotiate deals that are otherwise in their best interest so that [they] can make money.”
[¶ 27] Here, the magnitude of payments CCCS provides creditors may tempt one to conclude that the payments are central to CCCS’s purpose. When, however, the relationship between CCCS and creditors is placed in its proper context, it is evident that the benefit (if any) to creditors is incidental to CCCS’s primary charitable and benevolent purpose.
[¶ 28] The Court also fails to consider two key factors in the exemption analysis: whether CCCS alleviates a public need that government would otherwise have to fulfill, and whether CCCS’ services are open to the “indefinite public.” Whether an organization fulfills a public need is key to the exemption analysis because it relates directly to the broader justification *466for the exemption, the quid pro quo for public services rendered. See Episcopal Camp Found. Inc., 666 A.2d at 111 (Glassman J. dissenting) (citing Y.M.C.A. of Germantown v. City of Philadelphia, 328 Pa. 401, 187 A. 204, 210 (1936); Poland Spring Health Inst., Inc. 649 A.2d 1098; Maine AFL-CIO Housing Dev. Corp., 523 A.2d 581; Camp Emoh Assoc. v. Inhabitants of Lyman, 132 Me. 67, 166 A. 59 (1933); City of Bangor v. Rising Virtue Lodge, 73 Me. 428 (1882)).
[¶ 29] The Superior Court found that “by educating and assisting persons laboring under significant consumer debt, CCCS is alleviating a public need that otherwise might require various forms of governmental assistance and intervention.” The record reveals facts sufficient to support the Superior Court’s conclusion. Witnesses testified that the counseling CCCS provides first-time home buyers fulfills a pre-qualification requirement for á State program, reverse mortgage counseling for seniors is offered as part of a federal program, and CCCS provides both educational programs for the State and State access to all of CCCS’s materials for use in State programs. Moreover, CCCS often refers clients to a wide variety of other agencies for assistance, including CAP agencies for fuel assistance, the Volunteer Lawyers’ Project for legal assistance, Ingraham Volunteers for suicide counseling, and agencies for substance abuse counseling. It develops proposals that clients submit in small claims court, the majority of which, according to testimony, are ultimately accepted (thereby lessening the burden on judicial resources). Finally, CCCS provides budget counseling to all its clients, and appears to be the only organization in Maine providing this type of service (A.46).5 In other states, these kinds of financial counseling services are often provided by multi-service charities (like Catholic- Charities and the United Way) because financial difficulties are often related to other problems, such as substance abuse and domestic violence.
[¶ 30] Similarly, the Court has not addressed what we have determined to be an essential feature of a public charity, whether it is open to the “indefinite public.” Rising Virtue Lodge, 73 Me. at 434 (“The essential features of a public charity, are, that it is not confined to privileged individuals, but is open to the indefinite public.”). The Superior Court found that CCCS demonstrated that it intended to benefit an indefinite number of people and the record sufficiently supports this conclusion. Credible testimony indicated that no one has ever been turned away for inability to pay fees and at least twenty-five percent of counseling sessions require no fees.
[¶ 31] For these reasons, I would affirm the judgment granting CCCS declaratory relief. I would also affirm the Superior Court’s decision regarding the 80B appeal and abatement for the tax year 1998. Although seemingly inconsistent, such a conclusion is supported by our limited standard of review and the apparent sufficiency of the evidence with respect to the Board’s finding for the tax year 1998.

. CCCS charges a modest, maximum $100, fee for programs it provides businesses but provides schools with free educational programs.

. Testimony indicated that in the 1970s,-the State provided this type of service through the University-of Southern Maine Extension Service.