• The IRS ruled that a donor can deduct contributions to a charitable organization on behalf of needy persons in a foreign country. The charitable organization obtained a list of 5,000 needy families in the foreign country from a social welfare agency located in the country. From this list 25 families were randomly selected who were given $50 per month in support payments. The IRS stated the general rule that “contributions by an individual to a charitable organization that are for the benefit of a designated individual are not deductible under [federal tax law] even though the designated individual may be an appropriate beneficiary for a charitable organization. A gift for the benefit of a specific individual is a private gift, not a charitable gift.” However, the IRS concluded that individual donors could deduct their contributions to the relief fund since the organization’s “selection of beneficiaries is done in a way to assure objectivity and to preclude any influence by individual donors in the selection. Therefore, [the charity] is not acting as a conduit for private gifts from its contributors to other individuals. Accordingly, contributions to [the charity] for the relief of needy families in a foreign country will be deductible by donors under the provisions of section 170 of the Code.” Private Letter Ruling 8916041.
© Copyright 1989, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m08 c0589