B.5. Accepting Gifts for the Benefit of Specific Individuals
     January 1989

Development Policy and Administration Manual 
Chapter I. Soliciting and Accepting Private Funds
Section B. Soliciting, Accepting, and Acknowledging Gifts      
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    ACCEPTING GIFTS FOR THE BENEFIT OF SPECIFIC INDIVIDUALS


A gift that is made with the condition that the proceeds will be
spent by the University for the personal benefit of a named indi-
vidual or individuals is generally not deductible as a charitable
contribution.  This rule does not apply, however, to deferred
gifts satisfying Internal Revenue Code requirements for tax
deductibility, such as charitable lead trusts, charitable remain-
der trusts, remainder interests in a personal residence or farm,
and pooled income funds, where donors retain a life interest. 
The key issue is whether the donor's intent is to make a gift for
the ultimate benefit of the general public. 

So long as the conditions of a gift are not an obvious attempt to
channel the proceeds to certain individuals, the donor may impose
conditions that limit the recipients of the gift and still re-
ceive a charitable deduction.  For example, a gift "to provide
scholarships for students from Alpine County" would be deduc-
tible; a deduction for a gift "to provide scholarships for all
pre-medical students from Alpine County enrolling at the Univer-
sity in the fall of 1989 whose last names begin with the letter
"Q" would be disallowed if it appeared to the Internal Revenue
Service (IRS) that the peculiar restrictions on the gift were
imposed so that only certain individuals could qualify.

Gifts that are made for research projects, even when carried out
by named individuals (e.g., "cancer research under the direction
of Dr. Smith"), would normally be tax deductible, since the
ultimate beneficiary is the general public.  However, gifts that
are made "for research by Dr. Smith in his absolute discretion"
are a borderline case; a shadow is cast on the deductibility of
the gift, since the IRS might find that giving uncontrolled
discretion to a named individual would empower that individual to
divert the grant to purposes deemed by the IRS to be personal.  

A gift "to be used by Dr. Jones to defray travel expenses of her
family during her sabbatical leave" would not be deductible since
it is a gift for the personal expenses of the doctor, not for the
benefit of the general public.