1Amending the act of November 26, 1997 (P.L.508, No.55), entitled
2"An act providing for the tax exemption of institutions of
3purely public charity; exempting real property owned by
4State-related universities or Federal Government
5instrumentalities from taxation; providing for unfair
6competition; imposing penalties; and making repeals," further
7providing for criteria for institutions of purely public
8charity.

9The General Assembly of the Commonwealth of Pennsylvania
10hereby enacts as follows:

11Section 1.  Section 5(c) of the act of November 26, 1997
12(P.L.508, No.55), known as the Institutions of Purely Public
13Charity Act, is amended to read:

14Section 5.  Criteria for institutions of purely public charity.

15* * *

16(c)  Private profit motive.--The institution must operate
17entirely free from private profit motive. Notwithstanding
18whether the institution's revenues exceed its expenses, this
19criterion is satisfied if the institution meets all of the
20following:

21(1)  Neither the institution's net earnings nor donations

1which it receives inures to the benefit of private
2shareholders or other individuals, as the private inurement
3standard is interpreted under section 501(c)(3) of the
4Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 
5501(c)(3)).

6(2)  The institution applies or reserves all revenue,
7including contributions, in excess of expenses in furtherance
8of its charitable purpose or to funding of other institutions
9which meet the provisions of this subsection and subsection
10(b).

11(3)  Compensation, including benefits, of any director,
12officer or employee is not based primarily upon the financial
13performance of the institution.

14(4)  The governing body of the institution of purely
15public charity has adopted as part of its articles of
16incorporation or, if unincorporated, other governing legal
17documents a provision that expressly prohibits the use of any
18surplus funds for private inurement to any person in the
19event of a sale or dissolution of the institution of purely
20public charity.

21(5)  In any taxable year, the institution does not enter
22into a contract for services that will be provided by
23individuals located outside of this Commonwealth if the
24services could otherwise be provided by the institution's
25employees or through a contract with an entity or individuals
26located in this Commonwealth.

27* * *

28Section 2.  This act shall take effect in 60 days.