By Richard R. Hammar, J.D., LL.M., CPA
© 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
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.