Community Benefit Test for the Welfare Exemption
Under the welfare exemption, property used exclusively for religious, hospital, scientific, or charitable purposes owned and operated by community chests, funds, foundations, limited liability companies, or corporations organized and operated for religious, hospital, scientific, or charitable purposes is exempt from taxation if certain requirements are met (see Revenue and Taxation Code section 214). Where charitable purposes are involved, one such requirement is that the organization's claimed charitable activities must be found to benefit persons within the geographical boundaries of the State of California. This requirement is commonly known as the "community benefit test." In general, the community benefit test is met if all of the facts and circumstances demonstrate that the charitable activities performed by the nonprofit organization confer some "meaningful," "important," or "significant" benefit to persons within the geographic boundaries of the State of California.
| Date | Description of Task |
|---|---|
| 07/06/07 | Chief Counsel memo transmitting issue of policy change to the Board |
| 07/27/07 | Staff to release letter to Welfare Exemption claimants affected by policy change inviting them to interested parties meeting |
| 09/04/07 | Staff to release letter to interested parties inviting them to an interested parties meeting |
| 09/19/07 | Staff to meet with interested parties to discuss possible changes to Board policy |
| 11/02/07 | Deadline for interested parties to provide additional comments/suggestions |
| 11/15/07 | Project delayed pending further information from interested parties. |
| 01/11/08 | Legal Department Memorandum, submitted to the Board for its 1/31/08 public meeting, seeking guidance regarding the intent for the proper definition of "community" in the interpretation of the "community benefit test". |
| 01/31/08 | The Board considered definition of "community" as it pertains to the welfare exemption and deferred consideration until its March meeting. |
| 02/28/08 | Legal Department Memorandum, submitted to the Board for its 3/19/08 public meeting, seeking guidance regarding the intent for the proper definition of "community" in the interpretation of the "community benefit test". |
| 03/19/08 | The Board considered the definition of "community" as it pertains to the welfare exemption and voted to retain the current definition of "community". |
| 05/02/08 | Staff to release a letter with the Board's decision on the definition of community test for the Welfare Exemption. |
| 09/20/11 | Discussion of welfare exemption community benefit requirement for nonprofit organizations that perform charitable activities both within and outside California |
| 12/07/11 | Staff to release a letter to clarify the administration and application of the community benefit test to a charitable organization's claimed charitable activities for purposes of the welfare exemption. |