Ways to justify 501(c)(3) Tax exempt status:  (02-23-1999) Public Works and Recreation as a Charitable Purpose

In the general law of charity, the promotion of the happiness and enjoyment of the members of the community is a charitable purpose. Restatement (Second) of Trusts §374 (1959); IV A. Scott, The Law of Trusts § 374.10 (3d ed. 1967).

Maintaining public parks, public monuments, and other kinds of public works, and the providing community recreational facilities for the entire community furthers charitable purposes. See, Isabel Peters, 21 T.C. 55 (1953), acq. 1950–2 C.B. 6.

However, providing public parks and recreational facilities is not a per se charitable activity. They are charitable only if they provide a community-wide benefit.  (02-23-1999) Lessening the Burdens of Government

Reg. 1.501(c)(3)–1(d)(2) includes "lessening of the burdens of government" in the definition of the term "charitable." As stated in Rev. Rul. 85–2, 1985–2 C.B. 178, an organization is lessening the burdens of government if its activities are activities that a governmental unit considers to be its burdens; and the activities actually lessen such governmental burden.


The organization must demonstrate that a governmental unit considers the organization to be acting on the government’s behalf, thereby actually freeing up government assets — human, material, and fiscal — that would otherwise have to be devoted to the particular activity. This determination is based on facts and circumstances.  (02-23-1999) Urban Problems and Programs

Reg. 1.501(c)(3)–1(d)(2) defines "charitable" to include the promotion of social welfare by organizations designed to lessen neighborhood tensions; eliminate prejudice and discrimination; defend human and civil rights secured by law; and combat community deterioration and juvenile delinquency.

These purposes are particularly relevant to modern urban problems such as poverty, racial discrimination, and urban decay.  (02-23-1999) Combating Deterioration and Urban Decay

Reg. 1.501(c)(3)–1(d)(2) (iv) includes combating community deterioration in the definition of charitable purposes. Combating community deterioration involves remedial action to eliminate the physical, economic and social causes of such deterioration, including providing:

- housing assistance

- economic development

- prevention of deterioration

- planning and enforcement

- historic preservation

Organizations engaged in combating community deterioration generally achieve their purposes through assistance to others or through other activities that are not inherently "charitable" . Thus, determining whether an activity is charitable requires a multi-step analysis:

- identify the conditions the organization seeks to improve and determine if they are "community deterioration" in the charitable sense;

- identify the persons who will benefit from the organization’s activities, and determine if they are members of a charitable class;

- identify the organization’s activities and determine if some or all are inherently charitable activities, for example, education of the public;

- if the activities are not inherently charitable, determine how they achieve the organization’s stated charitable purposes; and

- identify who benefits form the organization’s activities, and determine if private benefits are consistent with exemption under IRC 501(c)(3), either because the recipients are members of a charitable class, or if not, because private benefits are incidental to achieving the charitable purpose.  (02-23-1999) Prevention of Deterioration

Activities to prevent deterioration may benefit a community in a charitable manner regardless whether the community is now or presently in a state of decline, provided the interests served are public in scope and not merely the private interests of a class of persons that do not constitute a charitable class.

An organization that preserved and developed the beauty of a city by planting trees in public areas, assisting municipal authorities in keeping the city clean, and informing the public of the advantages of these programs was held to be organized and operated exclusively for charitable purposes in Rev. Rul. 68–14, 1968–1 C.B. 243.  (02-23-1999) Health

Promotion of health has long been recognized as charitable, provided that it is not carried on in a proprietary manner and the class of beneficiaries is sufficiently large and indeterminate to benefit the community as a whole. Restatement (Second) of Trusts, §§ 368, 372 (1959); 4A Austin W. Scott and William F. Fratcher, The Law of Trusts §§ 368, 372 (4th ed. 1989).