Property Used For Charitable Purposes, And Not Held Or Leased Out For Profit

19.1. Charities must be operated on a not-for-profit basis, must directly benefit society, must be for the benefit of an indefinite number of people, and must be exempt from federal income taxes under 26 U.S.C. §501(c)(3) or 501(c)(4). Moreover, in order for the property to be exempt, the primary and immediate use of the property must be for one or more exempt purposes.

19.2. The beneficiaries of a charity may be limited to a class of beneficiaries bearing a rational relationship to the purpose of the charity.

19.2.1. For example: A charity for the purpose of assisting persons suffering with cancer may limit the class of beneficiaries to cancer victims and their families. Despite the limitation of the class, beneficiaries constitute an indefinite class, and society is generally benefited by the charity.

19.2.2. Charities for combating heart disease, tuberculosis, or multiple sclerosis may likewise limit the classes of beneficiaries receiving their bounty.

19.3. A purported charity may not, however, limit the class of beneficiaries in such a way as to violate the definition of a charity.

19.3.1. For example: A purported charity may not limit the class of beneficiaries to members of a particular family. Such a classification would not constitute an indefinite number of people and society would not be generally benefited by such an organization.

19.3.2. Property of a non-profit community dramatic corporation or children's theatre is exempt as a charity for the promotion of educational welfare.

19.4. Payment of reasonable salaries or wages to administrative staff and employees of a charitable organization will not constitute disqualifying private gain if such salaries or wages closely approximate typical pay rates for comparable positions and are not for the purpose of siphoning-off earnings of the organization.

19.5. Realization of a surplus, or of positive net earnings, may not constitute a disqualifying private gain. So long as any such surplus or earnings are used in furtherance of the charitable activities of the organization, no disqualifying gain can be said to inure to the benefit of any private person.