Request By:
Mr. Ralston W. Steenrod
Stites & Harbison
600 West Main Street
Louisville, Kentucky 40202
Opinion
Opinion By: David L. Armstrong, Attorney General
You have requested our opinion on whether the Presbyterian Church (U.S.A.) and the Presbyterian Church (U.S.A.), a corporation, are entitled to an exemption from ad valorem property taxes pursuant to Section 170 of the Kentucky Constitution.
The Presbyterian Church (U.S.A.) (hereafter, the Church) is an unincorporated ecclesiastical association. The purposes of the Church are "the proclamation of the gospel for the salvation of humankind; the shelter, nurture, and spiritual fellowship of the children of God; the maintenance of divine worship; the preservation of the truth; the promotion of social righteousness; and the exhibition of the Kingdom of Harven to the world." The Church is governed by a General Assembly. The Church is divided into Ministry Units which are responsible for the various programs of the Church. Some of these units are religiously oriented, i.e., assistance to ministers and Church employees, assistance to individual congregations, etc. Others appear to be of a more expansive nature, i.e., social justice, world hunger programs, conservation of resources, etc.
There are also certain constituent corporations within the overall church structure. One such corporation is denominated the Presbyterian Church (U.S.A.), a Pennsylvania non-profit corporation (hereafter, the Corporation). The purpose of the Corporation is to hold title to all real and personal property for the Church and to make expenditures at the direction of the General Assembly. The Corporation is, in effect, the operating arm of the Church, receiving and investing income and making disbursements.
Section 170 of the Kentucky Constitution exemptions, inter alia, places actually used for religious worship and institutions of purely public charity. In Commonwealth v. Thomas, 119 Ky. 208, 83 S.W. 572 (1904) the court drew a distinctioin between a church and a charity, finding that churches were afforded a very limited exemption while charities were given an unlimited exemption. See, Sage's Ex'rs v. Commonwealth, 196 Ky. 257, 244 S.W. 779 (1922).
The definition of charity in Kentucky has undergone a historical broadening. In Trustees of Kentucky Female Orphan School v. City of Louisville, 100 Ky. 470, 36 S.W. 921 (1896) and Widows and Orphans Home of Odd Fellows of Ky. v. Commonwealth, 126 Ky. 386, 103 S.W. 354 (1907) the court quoted with approval the following definition from a Pennsylvania case:
"Whatever is done or given gratuitously in relief of the public burdens, or for the advancement of the public good, is a purely public charity. Where the public is the beneficiary, the charity is public, and where no private or pecuniary return is reserved to the giver or to any particular person, but all the benefit resulting from the gift or act goes to the public, it is a purely public charity; the word 'purely' being equivalent to wholly."
Episcopal Academy v. Philadelphia, 150 Pa. 565, 25 A. 55.
More recently, the court has defined charity as those activities which reasonably better the condition of mankind. Commonwealth v. I. W. Bernheim Foundation, Ky., 505 S.W.2d 762, 764 (1974).
It would appear, from the facts presented to us, that some part of the Church's activities qualify as charitable. The question that then arises is to what degree must the organization's activities be charitable in order to qualify for the exemption.
In Iroquois Post No. 229, Etc. v. City of Louisville, Ky., 309 S.W.2d 353 (1958) the court held that the organization was not entitled to the exemption as a charity since "the disbursing of charity is not the principal object" of the organization and that the organization's and that the orgainon's "principal activies centered "principal activities centered around promoting the interests and gratifying the wishes of its own membership. The dispensing of charity appears to be an incidental portion of its program."
In Commonwealth v. Grand Lodge of Kentucky, Ky., 459 S.W.2d 601 (1970) the court found that the organization was exempt since "the primary aims and functions are of an active charitable nature."
These cases do not lay down an exclusive test to determine the entitlement to the exemption, but appear to be the extreme limits for and against the exemption. We are afforded no guidance from the Kentucky courts on the gray area in between. In the absence of clear guidance from the courts, it is our opinion, based on the facts presented to us, that the Corporation is entitled to the exemption as an institution of purely public charity. Clearly, charity is more than "an incidental portion of its program."