Charitable Contributions – Part 3

Church Law and Tax 1989-09-01 Recent Developments Charitable Contributions Richard R. Hammar, J.D., LL.M., CPA

Church Law and Tax 1989-09-01 Recent Developments

Charitable Contributions

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.

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