*2486 The Lenox Brotherhood held to be a charitable organization and contributions thereto held to be properly deductible in computing net income.
*871 This appeal is from a determination by the Commissioner of a deficiency in income tax for the taxable year 1922 in the amount of $1,771.96.
FINDINGS OF FACT.
Petitioner is a resident of Lenox, Mass., and files his tax report in the City of New York, claiming as his residence for taxation purposes 64 Wall Street, New York, N.Y.
Prior to 1915, in Lenox, Mass., a town having a population of 3,000 in the winter and 4,000 in the summer, there were two mens' clubs called "The Congregational Club," and "The Episcopal Club." In January, 1915, these two clubs were merged into an unincorporated, nonsectarian organization, called "The Lenox Brotherhood." The object of this organization, as expressed by its constitution, was to draw into closer relationship the members of the community and to promote their intellectual, moral and physical welfare. It was a club having no church affiliations and was patterned*2487 in many respects after the Young Men's Christian Association. The nearest branch of that organization was in Pittsfield, seven miles away. The constitution of the Brotherhood made provision for different classes of members, for the election of officers and standing committees, and for certain formalities to be complied with as a prerequisite to membership. It also provided for the payment of dues, and all members were expected to pay dues, with the exception of one man who was unable to do so. The dues of a regular member were $10 a year, of an associate member $6 a year, and of a lady member $5 a year. The wives and children of regular members were entitled to the privileges of the club.
From 1915 until December 15, 1923, the organization met in the chapel of the Congregational Church, or the parish house of Trinity Church. In 1922, petitioner gave a lot to the Brotherhood and in 1922 and 1923 paid practically all of the costs of constructing buildings upon this lot for the use of the Brotherhood. The buildings, *872 consisting of a main building, a bowling alley, a boat house, and a gymnasium, were not fully completed until 1923. These buildings and the lot cost*2488 between $125,000 and $150,000. The main building contained two libraries, a billiard room, a card room, an auditorium, and other rooms for the use of meetings, etc. Contributions, including floor rugs and a launch, were made by other persons.
The membership of the Brotherhood in 1922 was about 400. Many of these memberships, however, were family memberships and the total number of persons in Lenox having the full privileges of the Brotherhood was greatly in excess of 400. The list of members included laborers, as well as more prominent citizens. All the ministers and the priests belonged, as did the Congressman and all the town officials, the principals of the schools and bank officials.
The activities of the Brotherhood in 1922 were varied. Its rooms served as the meeting places for certain women's charitable and religious organizations; for the Boy Scouts and Chamber of Commerce; for boys' clubs and men's clubs. Instruction was given in the main building of the Brotherhood in dancing, singing, and instrumental music. The high school pupils and the students in a private school in Lenox had the free use of the gymnasium. The auditorium was used for meetings, lectures, *2489 addresses, entertainments, etc. There was a lake which was used for boating and swimming and upon which, in the winter, instruction was given in skating. The facilities of the Brotherhood were open to practically all of the organizations of the town and the persons comprising these organizations were allowed to use the building and equipment whether they were members of the Brotherhood or not.
The expenses of the Brotherhood were met by dues, contributions, and the proceeds of fairs and entertainments. There was a charge for the use of the billiard room and bowling alleys, which was slightly less than the customary charge elsewhere. Organizations paid $10 for the use of the auditorium, which was usually enough to pay only for the lights. These sources of income were in no case sufficient to pay all the expenses of operating the Brotherhood, consisting of salaries to the superintendent, janitor, and instructors in athletics, and of light, water, heat, insurance, etc. The deficit in each year, amounting to about $4,000, was paid by petitioner. More than $11,388.83 was contributed to the Brotherhood by petitioner in 1922, no part of which was allowed as a deduction by the Commissioner*2490 in computing his income. The officers and directors were paid nothing and no dividends were ever declared or paid.
OPINION.
PHILLIPS: Fifteen per cent of petitioner's net income for 1922 amounted to $11,388.83. More than this amount was paid to or for *873 the Lenox Brotherhood by petitioner in 1922. Petitioner contends that this sum represents contributions or gifts made for charitable and educational purposes and that said amount is deductible from his income under the provisions of section 214(a)(11) of the Revenue Act of 1921, which permits the deduction of:
(11) Contributions or gifts made within the taxable year to or for the use of: * * * (B) any corporation, or community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including posts of the American Legion or the women's auxiliary units thereof, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual; * * *
While not incorporated, the Lenox Brotherhood operated under a constitution and through officers elected by its*2491 members. There would seem to be no question that it is properly to be designated an association and, as such, falls within the definition of a corporation as set out in section 1 of the Act. Nor is it contended that this association had any net earnings which might inure to the benefit of any private stockholder or individual or, indeed, that if there were any such earnings they would so inure. The sole question presented is whether the Brotherhood is "organized and operated exclusively for religious, charitable, scientific, literary or educational purposes."
"Charitable" may be used in either a broad or a narrow sense. In its narrow sense, charity means whatever is bestowed gratuitously on the needy or suffering for their relief. In its widest sense, charity denotes all the good affections which men should bear to each other, and in that sense embraces what is generally understood as benevolence, philanthropy, and good will.
A definition of charity used by counsel in the case of , and subsequently quoted with approval in many courts, including the Supreme Court (*2492 ), is as follows:
Whatever is given from the love of God, or for the love of your neighbor, in the catholic and universal sense, given from these motives and to these ends, free from the stain or taint of every consideration that is personal, private or selfish.
In the last cited case it is said:
A charitable use, where neither law nor public policy forbids, may be applied to almost anything that tends to promote the well-doing and well-being of social man.
The purpose of the Lenox Brotherhood was not to dispense charity as the word is used in its narrow sense. Its purpose was not to relieve the suffering of unfortunate individuals or to provide the poor with the necessities of life. It supplemented the churches and the schools by extending to the community opportunities for instruction *874 in many things not taught in the schools or churches, but which lead to a better understanding and enjoyment of life. It was an institution with a broadening influence on the social, intellectual, physical, and, perhaps, moral life of the members of the community. The object of the association as stated in its charter*2493 was to draw into closer relationship the members of the community and to promote their intellectual, moral and physical welfare. We have no doubt that contributions made for such a purpose "free from the stain or taint of every consideration that is personal, private, or selfish" and tending "to promote the well-doing and well-being of social man" are charitable within the broad understanding of that word which has been adopted and applied by the courts.
We have not overlooked the social aspect of the Brotherhood. It would seem clear that if its main purpose was social, it would not meet the test of the statute. Practically all religious and educational associations and some charitable organizations make use of social or athletic features, but only as a means to an end. Unless the social feature predominates such organizations are none the less exclusively religious, educational, or charitable. The general or predominant purpose is principally to be considered. Chemists' Club v.United States (Ct. of Cls.) 6 Am. Fed. Tax Rep. 6797. The social activities of the Brotherhood were aimed at the accoumplishment of its purposes as stated in its charter. These*2494 purposes we believe to be charitable and educational within the broad meanings of those terms.
The fact that some persons paid small sums for the use of the privileges of the organization does not prevent it from being charitable or educational. Many well known organizations whose classification as charitable, religious, or educational has never been questioned make charges to those using their facilities. Many persons and organizations used the facilities of the organization without charge. It was never intended that it should be self-sustaining or a profitmaking venture.
We are of the opinion that the Lenox Brotherhood was exclusively a charitable and educational institution and that the contributions made to it by the petitioner in 1922 were deductible to the extent of 15 per cent of his net income.
Reviewed by the Board.
Decision will be entered on 10 days' notice, under Rule 50.
STERNHAGEN dissents.