Ola v. YMCA of South Hampton Roads, Inc.

PRESENT: All the Justices

ADIJAT JASSIMA OLA, AN INFANT, BY HER
MOTHER AND NEXT FRIEND CHANTAE CHAPMAN
AGBOOLA, ET AL.
OPINION BY
v. Record No. 050139 JUSTICE G. STEVEN AGEE
November 4, 2005
YMCA OF SOUTH HAMPTON ROADS, INC.

FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
Charles E. Poston, Judge

Adijat Jassima Ola, an infant who sues by her parents and

next friends, appeals from the judgment of the Circuit Court of

the City of Norfolk sustaining the special plea in bar of

charitable immunity by the Young Men's Christian Association of

South Hampton Roads ("YMCA") to Ola's motion for judgment

alleging negligence. For the reasons set forth below, we will

affirm the judgment of the trial court.

I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW

On April 4, 2002, Ola was abducted and sexually assaulted

in a bathroom on the YMCA premises. At the time of the assault,

the parties stipulated that Ola, then 13, "had used the YMCA's

swimming pool and was using the bathroom." Ola filed a motion

for judgment alleging the YMCA negligently failed to prohibit

her assailant, a nonmember of the YMCA, from entering the

premises, failed to provide adequate staffing, and failed to

repair a broken lock on the bathroom, resulting in her attack

and injuries.

1
 The YMCA filed a special plea in bar of charitable

immunity. In support of its plea, the YMCA presented evidence

of its not-for-profit status, charitable mission and related

activities. It was stipulated that Ola's family, including Ola,

were YMCA members with a subsidized membership prior to and at

the time of the assault. The YMCA contended that, as a

beneficiary of the organization's charitable activities, Ola

could not recover from it for her injuries.

The parties agreed to proceed on the plea in bar based on

an extensive stipulation of facts and exhibits. After a hearing

ore tenus, the trial court sustained the YMCA's plea of

charitable immunity in a letter opinion dated September 10,

2004, which was incorporated in its final order. We awarded Ola

this appeal.

II. ANALYSIS

A. The Scope of Charitable Immunity

The doctrine of charitable immunity "is firmly embedded in

the law of this Commonwealth and has become a part of the

general public policy of the State." Memorial Hospital, Inc. v.

Oakes, 200 Va. 878, 889, 108 S.E.2d 388, 396 (1959). It is

grounded in the public policy that the resources of charitable

institutions are better used to further the institution's

charitable purposes, than to pay tort claims lodged by the

charity's beneficiaries.

2
 When a portion of the responsibility [for charity] is
borne by the gifts of the philanthropic-minded, so
much of the burden is removed from the public. If a
portion of those gifts is diverted to the payment of
tort claims, without restriction, the spirit and
intent of the gifts are, at once, nullified and that
much of the burden is again cast upon the public.

Hill v. Leigh Memorial Hospital, Inc., 204 Va. 501, 507, 132

S.E.2d 411, 415 (1963).

Virginia has favored a limited form of charitable immunity

which exempts charitable organizations from some, but not all,

tort liability. See Weston v. Hospital of St. Vincent, 131 Va.

587, 610, 107 S.E. 785, 792-93 (1921). A charitable institution

is immune from liability to its beneficiaries for negligence

arising from acts of its servants and agents, but only if due

care has been exercised in their selection and retention.

Bailey v. Lancaster Ruritan Rec. Ctr., Inc., 256 Va. 221, 224,

504 S.E.2d 621, 622 (1998). That immunity does not extend,

however, to invitees or strangers having no beneficial

relationship to the charitable institution. Thrasher v. Winand,

239 Va. 338, 340-341, 389 S.E.2d 699, 701 (1990). Further, the

shield of charitable immunity does not extend to liability for

acts of gross negligence or willful and wanton negligence.

Cowan v. Hospice Support Care, Inc., 268 Va. 482, 488, 603

S.E.2d 916, 919 (2004).

To establish charitable immunity as a bar to tort

liability, an entity must prove at least two distinct elements.

3
The absence of either element makes the bar of charitable

immunity inapplicable. First, the entity must show it is

organized with a recognized charitable purpose and that it

operates in fact in accord with that purpose. "In conducting

this inquiry, Virginia courts apply a two-part test, examining

(1) whether the organization's articles of incorporation have a

charitable or eleemosynary purpose and (2) whether the

organization is in fact operated consistent with that purpose

. . . ." Davidson v. The Colonial Williamsburg Foundation, 817

F.Supp. 611, 613 (E.D. Va. 1993).

Second, assuming the entity has met the foregoing test, it

must then establish that the tort claimant was a beneficiary of

the charitable institution at the time of the alleged injury.

See, e.g., Straley v. Urbanna Chamber of Commerce, 243 Va. 32,

33, 413 S.E.2d 47, 48 (1992); Thrasher, 239 Va. at 339, 389

S.E.2d at 700.

Thus, in order to determine whether an entity is entitled

to charitable immunity, the court first examines the powers and

purposes set forth in its charter. Danville Community Hosp. v.

Thompson, 186 Va. 746, 753, 43 S.E.2d 882, 884 (1947). If an

organization's charter sets forth a charitable or eleemosynary

purpose, there is a rebuttable presumption it operates as a

charitable institution in accordance with that purpose. Oakes,

200 Va. at 883, 108 S.E.2d at 392. However, if the manner in

4
which the organization actually conducts its affairs is not in

accord with the charitable purpose, then the presumption may be

rebutted and the bar of charitable immunity does not apply.

Danville Com. Hospital, 186 Va. at 753, 43 S.E.2d at 884.

Our prior decisions have established a number of factors

that are indicative of whether a charitable organization

operates in fact with a charitable purpose.1 These factors are

not exclusive and the presence or absence of any particular

factor is not determinative. In the final analysis, whether an

1
(1) Does the entity's charter limit the entity to a
charitable or eleemosymary purpose? See, e.g.,
Oakes, 200 Va. at 883, 108 S.E.2d at 392.
(2) Does the entity's charter contain a not for
profit limitation? Id.
(3) Is the entity's financial purpose to break even
or earn a profit? Id.
(4) Does the entity in fact earn a profit, and if so,
how often does that occur? Id.
(5) If the entity earns a profit (a surplus beyond
expenses) must that be used for a charitable
purpose? Id.
(6) Does the entity depend on contributions and
donations for a substantial portion of its
existence? See, e.g., Weston, 131 Va. at 590,
107 S.E. at 786.
(7) Is the entity exempt from federal income tax
and/or local real estate tax? See, e.g., Bailey,
256 Va. at 225, 504 S.E.2d at 623.
(8) Does the entity's provision of services take into
consideration a person's ability to pay for such
services? See, e.g., Oakes, 200 Va. at 883, 108
S.E.2d at 392.
(9) Does the entity have stockholders or others with
an equity stake in its capital? Id.
(10) Are the directors and officers of the entity
compensated and if so, on what basis? Id.
See also Davidson, 817 F.Supp. at 614.

5
entity operates as a charity turns on the facts of each case and

not on the particular type of institution. Davidson, 817

F.Supp. at 614.

B. The Trial Court's Findings

In sustaining the YMCA's special plea in bar, the trial

court undertook the analysis described above, first determining

that the YMCA was a charitable organization operating in

accordance with its charitable purpose, and then examining Ola's

status as a beneficiary of the YMCA's charity.

The trial court first noted the YMCA's articles of

incorporation clearly express a charitable purpose "to put

Judeo-Christian principles into practice through programs that

build a healthy body, mind and spirit for all." This and

related statements of charitable purpose in the YMCA's

organizational documents established the rebuttable charitable

presumption,2 and therefore the trial court then examined the

2
For example, Article II, Section 3 of the YMCA's By-Laws
provides:
In giving effect to its ideals and values, the
Association offers to those who participate in its
programs opportunities for experiences that will help
them:
A. to develop self-confidence and self-respect
and an appreciation of their own worth as individuals;
B. to develop a faith for daily living based upon
the teachings of Jesus and thereby reach their highest
potential as children of God;
C. to grow as responsible members of their
families and citizens of their communities;

6
actual operation of the YMCA to determine if that operation was

consistent with the presumption. The trial court found from the

evidence

that the YMCA has no stockholders; that it is a non-
profit corporation; that no private individual
receives any return from its operation; that
charitable contributions form a substantial part of
the organization's revenues; that its goal is to
maintain financial stability; that any property or
profit must be used for charitable purposes; that it
is exempt from federal and state income and property
taxes; that those who are able to pay are expected to
pay, but those who are unable to pay are not pressed
for payment and they are provided services free of
charge, and that no one is refused admittance to
become a member of the YMCA.

Based on these factual findings the trial court concluded

that the YMCA "[m]easured against the factors Virginia courts

have found indicative of charitable status for purposes of

charitable immunity . . . must be characterized as

'charitable.' "

The trial court then addressed Ola's contention that the

YMCA was similar to the recreation center in Bailey v. Lancaster

Ruritan Recreation Center, Inc., 256 Va. 221, 226, 504 S.E.2d

D. to appreciate that health of mind and body is
a sacred gift and that physical fitness and mental
well-being are conditions to be achieved and
maintained;
E. to recognize the worth of all persons and to
work for interracial and intergroup understanding;
F. to develop a sense of world-mindedness and to
work for worldwide understanding; and

7
621, 624 (1998), where the defense of charitable immunity was

denied. Ola argued the YMCA's swimming pool component was

analogous to the swimming pool operated by the recreation center

in Bailey. She pointed out that even though the recreation

center had an articulable charitable purpose, "its overriding

purpose was to own and operate a private swimming pool for the

exclusive use of its members and thus did not qualify as a

charitable organization."

In contrast to the situation in Bailey, the trial court

found the YMCA "provides more charitable benefit than the mere

operation of a swimming pool" including "a vast array of

charitable programs . . . ." The trial court noted that unlike

the recreation center in Bailey, "the YMCA does not hold a vote

to determine its members, it is exempt from all property and

income taxes, [and] its charter contains a not for profit

limitation." The trial court thus found Bailey distinguishable

and not controlling authority for this case.

Having determined the YMCA to be a bona fide charitable

organization operating as such, the trial court next discussed

Ola's status as a beneficiary of the YMCA's charity at the time

of her injuries. The trial court determined that because Ola

was using the YMCA swimming pool just prior to the attack and

G. to develop their capacities for leadership and
how to use such capacity responsibly in their own

8
paid a discounted membership fee, she had "accept[ed] the

benefits of [the YMCA] and enter[ed] into a relation which

exempt[ed the YMCA] from liability for . . . negligence . . . ."

Ola's argument that her payment of a fee, even though at a

reduced rate, barred her from being considered a beneficiary of

the YMCA's charity was specifically rejected by the trial court:

[S]ince Ola would not have received the benefits of
YMCA's services without the charitable gifts made to
the institution, she was clearly a beneficiary of
YMCA's charitable benefits at the time she suffered
her injuries.

We find the trial court's analysis well reasoned and amply

supported by the evidence.

C. The Charitable Presumption

The YMCA's articles of incorporation unequivocally reflect

its nonprofit, charitable status as a nonstock corporation.

Article II(A) mandates that the YMCA "shall be operated

exclusively for one or more charitable, religious, educational

and scientific purposes." Article II(B) then provides:

The Young Men's Christian Association we regard as
being in its essential genius a worldwide fellowship
united by common loyalty to Jesus Christ for the
purpose of developing Christian personality and
building a Christian society. The mission statement
for the corporation is to put Judeo-Christian
principles into practice through programs that build
healthy body, mind, and spirit for all.

(Internal quotation marks omitted).

groups and community life.

9
 Under the YMCA's charter, it cannot "carry on any

activities not permitted to be carried on by a corporation

exempt from Federal income tax." The YMCA's property is

dedicated "to charitable purposes" even upon dissolution, when

all YMCA assets must be distributed to a nonprofit fund "which

is organized and operated exclusively for charitable purposes

and which has established its tax-exempt status under Section

501(c)(3) of the [Internal Revenue] Code." While the YMCA

reserves the right to compensate directors or others for their

services, the charter specifically states that "[n]o part of the

net earnings of the corporation shall inure to the benefit of

. . . its officers [or] directors."

The trial court found, and Ola does not dispute, that the

charitable purpose and nonprofit structure set out in the YMCA

charter established the rebuttable presumption that the YMCA is

a charitable organization. We find no error in the trial

court's conclusion.

D. Actual Operation as a Charity

Ola argues, however, that "because of its manner of

operation[,]" the YMCA "is not a 'charitable institution.' " In

effect, Ola argues the presumption that the YMCA is a charitable

organization is rebutted by its actual operation. Ola avers

that, like the recreation center in Bailey, the YMCA operates as

a private health club; it is staffed by paid employees, open

10
only to dues-paying members, and carries liability insurance for

situations like Ola's attack. Further, Ola points to the

stipulated facts that the YMCA operated at a surplus for four of

the previous five years (1999-2003), and its budget contained no

separate expenditures for charitable activities.

Ola also contends that the trial court erroneously relied

on the fact that 29% of the YMCA's income comes from public

donations and that many of its workers are unpaid volunteers.

Ola maintains that these financial and personal contributions

are not "a relevant factor in determining whether the YMCA

itself is a charitable institution." Rather, she argues, "the

determinative factor is the manner of the YMCA's operation and

its charitable contributions to others."

We agree with the trial court that Ola has not rebutted the

presumption that the YMCA is a charitable organization operating

in accordance with its charitable purpose. Ola's contention

that the YMCA operates only as a private health club is without

merit. The YMCA's activities go far beyond the operation of its

athletic facilities. The stipulated facts demonstrate that the

organization also operates a childcare program, teen leadership

programs, literacy programs, parenting programs, wellness

programs, and makes its facilities available to local community

groups in order to promote its stated values throughout the

community. As particularly applicable to Ola, under the "We

11
Build People" campaign, the YMCA "[a]ssist[s] families with the

cost of membership" and "[e]nable[s] children to gain confidence

in the water while learning . . . swimming skills." The YMCA

staff is trained, not only to staff its facility and administer

its programs, but also to promote and communicate its core

values to all who participate in YMCA programs.

The fact that these programs, as well as the discounted

memberships to needy families or individuals, are not separately

accounted for as line items in the YMCA's financial statements

was explained by Susan Ohmsen, the YMCA's Chief Financial

Officer. Like other charities, the YMCA must adhere to the

accounting rules established by the Financial Accounting

Standards Board which are commonly termed as GAAP (Generally

Accepted Accounting Principles).3 Under GAAP, the YMCA is

required to "record its expenses according to function." The

practical effect of this GAAP requirement in the financial

statements is that charitable expenditures are "embedded in

every expense line."

Further, a charitable organization may carry liability

insurance and retain its charitable immunity. As we noted

above, a charity's immunity is not absolute, and suits by

3
Since 1973, the Financial Accounting Standards Board has
been the designated organization in the private sector for
establishing standards of financial accounting and reporting,

12
invitees or strangers for negligence will not be barred by the

doctrine of charitable immunity. Thus, it is often prudent and

an exercise of fiduciary responsibility for a charitable entity

to carry liability insurance for protection in the appropriate

circumstance.

Additionally, the fact that the YMCA generated an

operational surplus in some years does not strip it of its

charitable status. See Davidson, 817 F.Supp. at 614. Rather,

the important consideration is whether any profit or surplus is

used to further the charitable purpose of the organization. Id.

Ms. Ohmsen testified that the YMCA's reliance on donated

contributions makes it unable to gauge its financial situation

from year to year. Therefore, the YMCA depends on any surplus

to preserve the charitable programs in existence and facilitate

further growth. Ms. Ohmsen noted that it is important for the

organization to remain financially healthy in order to encourage

donors to make donations. Again, prudence and the exercise of

fiduciary responsibility fully justify a nonprofit organization

accumulating a surplus, provided it continues to invest in the

organization's charitable purpose or otherwise expends the

surplus for a charitable purpose. Indeed, a charitable

institution's inability to sometimes post a surplus may doom its

and its standards are officially recognized as authoritative by
the federal Securities and Exchange Commission.

13
existence and end its work of charity when nonsurplus years

arrive.

Finally, we cannot agree with Ola's contention that an

entity's significant reliance on voluntary contributions is

irrelevant to a determination of charitable status. In Weston,

we noted that the defendant hospital was a charitable entity, in

part because it was not self-sustaining. 131 Va. at 590, 107

S.E.2d at 786. The public policy behind the doctrine of

charitable immunity admits the necessity of public and private

contributions to carry on the organization's charitable purpose.

While the receipt of a minimal amount of an entity's total

revenue as a charitable donation may augur against a finding

that it operates in fact as a charity, the YMCA receives nearly

one-third of its revenues from the public as donated funds.4

Such a level of giving cannot be dismissed as de minimis, but

should be recognized as a significant factor of charitable

operation. The trial court's reliance on the YMCA's receipt of

donations was appropriate.

4
In Davidson, the entity in question, the Colonial
Williamsburg Foundation, was deemed not to be a charitable
institution eligible to claim the bar of charitable immunity
primarily because the "articles of incorporation did not limit
the Foundation's expenditures to charitable or educational
purposes, or expressly state that it was not operated for
profit." Davidson, 817 F.Supp. at 615. The court did note that
"only 8% of the Foundation's operating income came from
donations and gifts," but that factor was not dispositive of the
case. Id.

14
 The trial court also correctly distinguished the recreation

center in Bailey from the YMCA. While the YMCA is a "members-

only" organization, it does not, like the center in Bailey,

restrict membership only to those who can pay the published fee.

Rather, those who seek membership, but cannot afford to pay all

of the membership fee, are eligible for a subsidized membership

at a discounted rate depending on the ability to pay.5 Further,

unlike the center in Bailey, the YMCA is a tax-exempt, nonprofit

organization, with a significant portion of its mission funded

by donations. As the YMCA is readily distinguishable under the

multi-factor test from the recreation center in Bailey, that

case is not determinative of the case at bar.

E. Ola as a Charitable Beneficiary

We next address Ola's contention that she was not a

beneficiary of the YMCA's charitable bounty at the time of the

attack, and therefore her tort action should not be barred by

the YMCA's otherwise applicable charitable immunity. Ola

specifically argues that any charitable activities undertaken by

the YMCA are too far removed from the negligence at issue to

immunize the YMCA against liability. We disagree.

The trial court found that because Ola paid a discounted

membership fee, she "received the pecuniary benefit of financial

5
The fact that a charity's resources limit the number of
reduced-fee memberships or services does not negate the

15
assistance" and therefore, was a recipient of the YMCA's

charitable bounty. Ola argues that this finding "implicitly

holds that the YMCA owes a duty of care to members who pay full

price dues but owes no duty to members who pay discounted dues."

We reject Ola's argument. The fact that an organization

receives compensation from those who are able to pay for

services received does not remove its charitable immunity.

Hospital of St. Vincent v. Thompson, 116 Va. 101, 104, 81 S.E.

13, 14 (1914). Thus, a court's decision to sustain a plea of

charitable immunity rests solely on the organization's status as

a charitable entity, not on the beneficiary's financial status.

"The rich and the indigent stand on the same footing as to

protection against such negligence." Weston, 131 Va. at 597,

107 S.E. at 788.

In Virginia, a person is a beneficiary of charity if he or

she has a "beneficial relationship" to the charitable

organization. Roanoke Hospital Ass'n v. Hayes, 204 Va. 703,

707, 133 S.E.2d 559, 562 (1963). However, mere membership in a

class eligible to receive future benefits, conditioned upon

circumstances which might never occur, is too remote and

speculative to merit beneficiary status. Thrasher, 239 Va. at

342, 389 S.E.2d at 701.

applicability of charitable immunity.

16
 Relying on this Court's precedent, the United States Court

of Appeals for the Fourth Circuit has held that an individual

need not receive financial assistance from a charitable entity

to be a beneficiary of that organization. Instead a beneficiary

is a person who receives something of value, which the

organization by its charitable purpose, undertakes to provide.

An individual is "a beneficiary of [charitable] bounty" if that

individual's interaction with the entity "is related to the

charitable purpose of the [organization]." Egerton v. R. E. Lee

Memorial Church, 395 F.2d 381, 384 (4th Cir. 1968) (tourist

entering historic church to view stained glass is a

beneficiary). See also Bodenheimer v. Confederate Memorial

Ass'n, 68 F.2d 507, 509 (4th Cir. 1934) ("Plaintiff became a

beneficiary of the charity of the defendant when she entered

upon its premises for the purpose of viewing the paintings and

other exhibits which it had collected").

We noted in Weston, that a person who pays the full price

for services is still a beneficiary of the charitable work of

the charitable organization because that entity could not

provide those services without charitable contributions:

The public charity which the patient pays for the
privilege of enjoying is the hospital building, with
all its equipment and management, the care and
nursing, and the rules and regulations under which it
is operated, whereby it is kept sanitary and is made
comfortable. All of these are provided by charity
before the patient applies for admission, and he pays

17
 for the privilege of enjoying them as he finds them,
and his payments go to the further maintenance of the
charity of which others coming after him are to enjoy
the benefits. He is receiving the benefits which
charity has provided. In this sense, he is a charity
patient.

131 Va. at 596-97, 107 S.E. at 788.

Similarly, the United States Court of Appeals for the

Fourth Circuit applied the same conceptual basis in determining

that a student was a beneficiary of a private college's charity

even if he paid full tuition:

[I]t is equally clear both that the eleemosynary or
charitable nature of an educational institution is not
destroyed by the fact that it makes a charge for
tuition, and that the payment of tuition by its
students does not prevent their being considered
beneficiaries of the charity. . . . In a very direct
and practical sense, therefore, not only are such
institutions engaged in a work of charity, but the
pay[ing] student as well as others is a beneficiary
thereof. And, apart from the fact that what such a
student pays does not equal the cost of his education,
he is a beneficiary of the charity for the reason that
but for the charitable gifts made to the institution
and the charitable work which it is carrying on, it
would not exist to serve him. These principles are
settled by the overwhelming weight of authority.

Ettlinger v. Trustees of Randolph-Macon College, 31 F.2d 869,

871 (4th Cir. 1929).

We reiterated the holdings in these cases in Richmond v.

Richmond Memorial Hospital, 202 Va. 86, 94, 116 S.E.2d 79, 84

(1960), noting that paying clients "as well as those who do not

pay are the beneficiaries" of charitable bounty because "but for

the charitable gifts made to the [organizations] and the

18
charitable work which they are carrying on they would not exist

to serve [anyone]." Id.

Under this well-reasoned precedent, Ola clearly was a

beneficiary of the YMCA's charity, not because she received

membership at a reduced fee, but because she was participating

in the YMCA swimming program at the time of her injury. The

parties stipulated that just prior to the attack, Ola had used

the YMCA's swimming pool. As the trial court noted, "Swimming

clearly provides an excellent means of maintaining physical and

mental well-being and thus can be characterized as a part of the

YMCA's charitable benefits." Thus, whether Ola paid a full or

reduced membership fee, she was a beneficiary of the charitable

bounty of the YMCA because she actually used YMCA facilities

which depend on charity for their existence and operation.

III. CONCLUSION

The trial court correctly determined that the YMCA is a

charitable organization operating in accordance with its

charitable purpose. The trial court also correctly determined

that Ola was a beneficiary of the YMCA's charitable bounty at

the time of her injury. Accordingly, the trial court did not

err in sustaining the YMCA's plea of charitable immunity. We

will therefore affirm the judgment of the trial court.

Affirmed.

19