## Facts

- Dove Lewis Memorial Emergency Veterinary Clinic, Inc. operated a small-animal emergency veterinary clinic in Portland as an Oregon nonprofit corporation and held federal tax-exempt status under I.R.C. § 501(c)(3).
- The clinic was created after local veterinarians sought a centralized after-hours emergency service because a rotating on-call system was ineffective.
- For about seven years, the clinic operated in rented space and generated annual surpluses.
- In 1980, the clinic bought real property for its facility using accumulated net revenues, a bank loan, and relatively small donations.
- The clinic employed professional and support staff, paid salaries, and charged fees under a schedule intended to cover costs; its operations generated surplus revenues that were reinvested.
- Governance and staffing were tied to the Portland Veterinary Medical Association (PVMA): PVMA members elected the board, and staff veterinarians were restricted to PVMA members.
- When animals required follow-up nonemergency care, the clinic referred owners to local veterinarians, including PVMA members.
- The clinic asserted it provided some free or discounted services, but the record showed no defined criteria, procedures, or designated funds for charity care, and only a small amount of uncompensated services.

## Issues

1. Whether the clinic qualified as an “incorporated charitable institution” under ORS 307.130 so that its clinic property used for its operations was exempt from Oregon property taxation.

## Decision

- The Oregon Supreme Court, reviewing anew upon the record, affirmed the Oregon Tax Court.
- The court held the clinic was not a “charitable corporation” within ORS 307.130 and therefore its property was not exempt from ad valorem taxation.
- The court found the clinic’s operations lacked a meaningful “element of gift” and materially conferred private advantage on a readily identifiable group (veterinarians/PVMA members).
- The court rejected any rule equating federal § 501(c)(3) status with entitlement to Oregon’s charitable property-tax exemption.

## Legal Principles

- Property-tax exemptions under ORS 307.130 are strictly but reasonably construed, and the taxpayer bears the burden to prove entitlement.
- Charitable status for Oregon property-tax purposes turns on actual operations, not merely nonprofit form or federal income-tax classification.
- A qualifying charitable institution must be organized and operated primarily for purposes that are purely charitable in nature, characterized by an element of giving, and not operated for private gain or private advantage.
- Charging fees does not necessarily defeat charitable status, but the record must show substantial, structured, and documented gratuitous or reduced-fee services consistent with a charitable mission.
- Substantial private benefit to a professional group weighs against classification as a charitable institution for exemption purposes.

## Conclusion

The court concluded that a fee-for-service emergency veterinary clinic closely linked to a professional association, with minimal and undocumented charity care and meaningful private advantages to veterinarians, does not qualify for Oregon’s charitable property-tax exemption under ORS 307.130.


Dove Lewis Mem'l Emergency Veterinary Clinic, Inc. v. Dep't of Revenue, 301 Or. 423, 723 P.2d 320 (Or. 1986)