Contributions to an Individual

• According to IRS Publication 526, contributions earmarked for a certain individual including those that are needy or worthy are not deductible. However, if an individual gives a contribution to a qualified organization that in turn helps needy individuals, the contribution would be deductible...if that individual does not designate a specific person(s) they want their gift to go to.

• Revenue Ruling 62-113, states that the test in each case (whether or not deductible) is whether the organization has full control of the donated funds, and discretion as to their use, so as to ensure that they will be used to carry out its functions and purposes.

So in conclusion, if an individual gives your organization money and designates that it is to go to a specific individual...before you accept the earmarked gift...you should stress to that person that their gift is not a tax-deductible contribution and no tax-deductible receipt will be issue from your organization. Some even stamp “NONDEDUCTIBLE” in red ink on the front of the check.

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