Charitable Immunity Requires That a Non-Religious, Non-Educational Immunity Claimant Receive Some Substantial Percentage of Its Revenue From Charitable Contributions

F.K. v. Integrity House, Inc., 460 N.J. Super. 105 (App. Div. 2019). This charitable immunity case centered on how much in charitable contributions (as opposed to, say, government support) defendant received. In order to satisfy the three-pronged test for charitable immunity, the second prong of which (the only one at issue on this appeal) requires that an entity be “organized exclusively for religious, charitable or educational purposes,” it was necessary for defendant, a drug treatment facility, to show a charitable purpose. To do that, the percentage of its funds that came from charitable contributions became relevant.

Since charitable immunity is an affirmative defense, the burden was on defendant to prove entitlement to that immunity. There was a dispute of fact as to the percentage of defendant’s annual revenue that represented charitable contributions. Defendant asserted that that percentage was 2.04%, but an expert report on behalf of plaintiff, a resident of defendant’s facility who slipped and fell on a staircase, found the percentage to be 1.26%.

Defendant moved for and won summary judgment in the Law Division. Plaintiff appealed, and the Appellate Division, applying de novo review, reversed in an opinion by Judge MIttheroff.

“Entities that can prove they are organized exclusively for educational or religious purposes automatically satisfy the second prong of the charitable immunity standard.” But defendant did not fit within the educational or religious categories. “[F]or an entity asserting that it is organized for charitable purposes, a reviewing court must conduct a ‘source of funds assessment’ to discern whether a charitable purpose is being fulfilled,” Judge Mitterhoff observed, citing prior authority. That requires a showing of “some level of support from charitable donations and/or trust funds as it is those sources of income the [Charitable Immunity] Act seeks to protect.”

After canvassing prior cases, including one that had involved this same defendant and which found it entitled to charitable immunity, Judge Mitterhoff reversed the ruling below. The factual dispute as to the percentage of revenue that represented charitable contributions prevented the panel from validly deciding the issue. Judge Mitterhoff found that defendant had simply not carried its burden of proving entitlement to qualified immunity. She distinguished the prior case that had conferred charitable immunity because, in the year at issue there (1998), the percentage representing charitable funds was in the mid-teens, not 1-2%, as here. Evidence of 1998 figures was too remote to apply here.

Judge Mitterhoff concluded that “[u]sing either plaintiff’s or defendant’s figures, the percentage of private contributions received by Integrity House seems too nominal to advance the underlying purpose of the doctrine to protect and encourage private charitable contributions.” She observed that “no published case has granted charitable immunity to a non-religious, non-educational entity with such a small portion of funding from private contributions.” Accordingly, the panel reversed the summary judgment in favor of defendants.