Request By:
Jerry L. Horn
Kincaid, Wilson, Schaeffer & Hembree
Attorneys at Law
Central Bank Building
Lexington, Kentucky 40507
Opinion
Opinion By: Robert F. Stephens, Attorney General; By William S. Riley, Assistant Attorney General
In your recent letter to Charles W. Runyan of the Attorney General's Office, it is stated that Big Brothers/Big Sisters of Lexington, Inc. is a nonstock, nonprofit, Kentucky corporation organized under the provisions of Chapter 273.161 through 273.390 of the Kentucky Revised Statutes.
According to Article III of its Articles of Incorporation, the corporation's purpose and objective is to organize a body of mature men and women to interest themselves in the welfare of underprivileged boys and girls whose physical, mental and moral development has been hindered or endangered because of inadequate parental supervision, bad environment or other conditions; to take a direct and friendly interest in such boys and girls and their respective families and to employ methods that will promote their physical, mental and moral welfare.
The property owned by the corporation serves as offices for the corporation's administrative staff, including a full-time executive director, three full-time social workers, three part-time social workers and a full-time secretary/receptionist. Files and records of the corporation are used on the property.
The staff interviews and screens adults and children for entry into the program and monitors the program.
The question is whether property owned by Big Brothers/Big Sisters of Lexington, Inc. is exempt from ad valorem property tax as an institution of purely public charity.
Section 170 of the Kentucky Constitution exempts from taxation, among other things, institutions of purely public charity.
In the case of Commonwealth of Kentucky, ex rel. v. Grand Lodge of Kentucky, 459 S.W.2d 601 (1970), the Court held that an administrative headquarters building which contained offices, records, conference rooms and other space to carry on the business of a charitable organization was exempt from ad valorem property taxation under Section 170 of the Kentucky Constitution. The Court stated it is not necessary for property to be directly employed in charitable work. It is sufficient that the ultimate effect of the use of the property is to accomplish the charitable purpose of the institution.
In Commonwealth ex rel. v. Issac W. Bernheim, 505 S.W.2d 762, (1974) the Court stated that charity is broader than relief of the need and poor and includes activities which reasonably better the condition of mankind citing the case of District of Columbia v. Friendship House Association, 91 U.S. App. D.C., 197, 198 F.2d 530 (1952). In the District of Columbia case, an organization which operated a residential settlement house, including classes and social activities for adults and children and day care of children, which charged moderate fees for its services based on an individual's ability to pay was exempted as a charitable institution.
In the recent case of Banahan v. Presbyterian Housing Corporation, S.W.2d, decided June 10, 1977, the Court in exempting housing, under the charitable provisions of the Constitution, which was built to accomodate elderly and handicapped persons for which they had to pay a rental rate less than the going rate stated that it is not necessary for it to be employed in charitable work. The effect of the use of the property is to accomplish the charitable purpose of the institution. Charity is broader than relief of the needy and poor and is anything which reasonably betters the condition of mankind.
Based upon the stated aims and objectives of Big Brothers/Big Sisters of Lexington, Inc. as evidenced by the Articles of Incorporation and the court's view that charity is anything which reasonably betters the condition of mankind, it is our opinion that Big Brothers/Big Sisters of Lexington, Inc. is an institution of purely public charity and entitled to exemption from ad valorem property taxation under Section 170 of the Kentucky Constitution.