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Charitable exemption provided for fledgling charity organizations in Minnesota.

A fledgling organization may, for a reasonable time after its inception, qualify as a purely public charity based on its plans and organizational structure without having yet provided charitable services, according to the Supreme Court of Minnesota. The court said, "in such circumstances the organization would qualify for a property tax exemption."

Skyline Preservation Foundation was incorporated as a nonprofit corporation in Minnesota to acquire a decommissioned cathedral, to preserve it as a landmark, and to develop it as a community center devoted to entertainment, recreation, and education. Skyline was deeded the title to the cathedral in 1996 by Care & Share, Inc., which had acquired the cathedral from the Roman Catholic Church in 1990. Skyline applied for a tax exemption for the property to the county assessor, but the request was denied. The tax court upheld the assessor's decision on the basis that Skyline lacked evidence of actual current operations.

The appellate court said that a new organization that has not yet provided charitable services may nevertheless qualify as a purely charitable institution by demonstrating clearly that its planned operations are compatible with several qualifying factors, such as whether the entity involved is supported by donations and gifts and whether the recipients of the "charity" are required to pay for the assistance received. But, the court also said that to retain exempt status over time, an organization must demonstrate progress toward implementing its plans and that eventually it will be ongoing institution of purely public charity. The tax court decision was reversed.

Skyline Preservation Foundation v. County of Polk

Supreme Court of Minnesota

February 8, 2001

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Publication:Appraisal Journal
Article Type:Brief Article
Geographic Code:1U4MN
Date:Oct 1, 2001
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