Can a person donate to a 501(c)(3) charitable organization in the United States, ask the organization to donate this money to a particular organization or project abroad, and still claim a charitable contribution deduction here in the U.S.?
It depends. A U.S. taxpayer may claim a charitable contribution deduction only for gifts given to U.S. charities. Therefore, if the gift is “earmarked” for a foreign organization, i.e. given on the condition that it be transferred to the foreign organization, it would not be deductible. If the “request” is one that the U.S. charity could disregard and the U.S. charity retains full control over the use of the money, it would be deductible. This is the theory on which so many “friends of” foreign organizations are able to attract deductible contributions in the U.S. And if the money is earmarked for a program that the U.S. charity operates abroad, it would still be deductible as a gift to the U.S. charity for its own program.
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Hi Don, I have been doing some research into a US 501(c)(3) charitable organisation, based in California. However, there are some cloudy specifics: - This organisation was set up by another Non-Profit Org in the UK (which works towards the same causes), and appears on the surface, to be a conduit for this UK based company. - From looking at previous 990 forms of the organisation over the last 6 years, every single year it receives in the hundreds of thousands of donations. - Every single year it sends this annual total of donations across to the UK in the form of a single grant to a deliberately unnnamed UK charitable organisation. The 990 forms state that this UK organisation works towards the same causes as the US charity. - Every year, the name of the UK charitable organisation is left blank on the 990. Now, I have some questions about the above
I have not been able to find anyone to answer as yet:
1) Is the US based charitable organisation required to specify which specific UK organisation is the recipient of this grant every year on their 990 form?
2) Is there a chance that if it is revealed that this recipient is the exact same organisation receiving all the money, every year, can the US org really be said to be excercising 'control and discretion' in the release of these funds or could it possibly be seen as a conduit and therefore breaching tax laws that make donations to the org tax deductable?
3) Can it be said that if all the annual donations for a 501(c)(3) organisation get given in a single grant to the same foreign company, then that foreign company is being 'defacto earmarked' as a receiver of the donations and thus again, these donations are incorrectly ruled as tax deductable?
4) Is there any way possible to view which UK organisation is the recipient of this grant other than the 990 forms (which dont specify this)? Thank you very much for your help, Don.
Thanks for submitting your question. Typically the questions we receive through the site are of a general nature, applicable to most nonprofits, and Don selects those of general interest to publish in our weekly Q&A and the newsletter. You’ve asked some very detailed questions. Don does make himself available to our readers in direct one on one calls. You can get specific answers to individual questions like yours. If you’re interesting in speaking with him, I’d invite you to review his services - https://www.nonprofitissues.com/store/ask-don-kramer --Lisa Chatburn, Managing Editor
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