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    Internal Revenue Service
 Revenue Ruling

Rev. Rul. 68-73

1968-1 C.B. 251

Sec. 501

IRS Headnote

A nonprofit organization created created to minister to the non-medical
needs of patients in a proprietary hospital may be exempt from Federal
income tax under section 501(c)(3) of the Internal Revenue Code of 1954. 

Full Text

Rev. Rul. 68-73 

Advice has been requested whether the nonprofit organization described
below qualifies for exemption from Federal income tax under section
501(c)(3) of the Internal Revenue Code of 1954. 

The organization was created to minister to the non-medical needs of
patients of a proprietary hospital by reading to them, writing letters for
them, and providing other similar personal services in an effort to improve
their mental well-being and physical comfort. The organization is not
related to or controlled by the proprietary hospital. These services are of
a type which are not ordinarily provided by a hospital. The members are not
permitted to engage in any activity performed by the hospital staff and
employees in the ordinary course of hospital operation. Membership in the
organization is open to anyone in the community who is willing to donate
his services. 

The income of the organization is derived from contributions and fund
raising activities. 

Section 501(c)(3) of the Code provides for the exemption from Federal
income tax of organizations organized and operated exclusively for
charitable purposes. Section 1.501(c)(3)-1(d)(2) of the Income Tax
Regulations states that the term `charitable' is used in section 501(c)(3)
in its generally accepted legal sense. 

In ministering to the needs of hospitalized patients by reading to them,
writing letters for them, and performing other similar personal services in
an effort to improve their mental well-being and physical comfort, the
organization is performing charitable acts. The fact that these acts are
performed in a proprietary hospital is not material because it is the
patients who are the primary beneficiaries. Any benefits to the hospital
are merely incidental. Accordingly, the organization is exempt from Federal
income tax under section 501(c)(3) of the Code. 

Even though an organization considers itself within the scope of this
Revenue Ruling, it must (in order to establish exemption under section
501(c)(3) of the Code) file an application of Form 1023, Exemption
Application, with the District Director of Internal Revenue for the
internal revenue district in which is located the principal place of
business or principal office of the organization. See section 1.501(a)-1 of
the regulations.