Charity's commercial use of property to fund charitable activities does not render it ineligible for an exemption.(Recent Court Decisions)(Afton Historical Society Press )

The Supreme Court of Minnesota ruled that a nonprofit book publisher that engaged in contract publishing to cover its operating costs was entitled to a property tax exemption when its primary purpose was charitable and its commercial activity was in furtherance of its charitable purpose.

The Afton Historical Society Press (Afton) is a nonprofit corporation that publishes books about Minnesota history and culture, donates books to schools and libraries, and promotes its publications through various events such as museum exhibitions. Afton sells its books at less than half the cost of publication; it covers its remaining operating costs through donations and through publishing books on a contract basis. Some donations Alton receives are designated by donors for specific publishing projects or for its Books-for-Schools program.

For the years 2003-2005, Afton sought a property tax exemption as a charitable institution. The tax court denied the exemption, finding that Afton's retail sales, contract publishing, and earmarked donations were not characteristic of a purely public charity. Afton appealed.

On appeal, the state supreme court held that Afton qualified as a public charity, noting that an institution is a charity when it provides a substantial proportion of its goods free of charge or at prices far below market value or cost. Here, the court found that the proportion of Alton's books sold at a loss or donated to schools free of charge was substantial. ...