So you plan to donate to a charitable organization and "earmark" it and claim a charitable deduction. How does the IRS handle such “conduit contributions”?

Generally, donors may earmark their contributions in various ways. But, depending on who has control, IRS may look beyond the immediate recipient to determine if the donee is a qualified charitable donee.

“Conduit” contributions for noncharitable use. A gift to a qualified charity intended for noncharitable use may in some instances be deductible if the charity is the ultimate donee and not a mere conduit. The charity won't be treated as a conduit if it has full and unconditional control of the gift.

This can be a difficult line to draw. For example, a gift to a college for acquiring or constructing houses for use by a designated fraternity was deductible, even though direct gifts to social fraternities aren't deductible. As used by the college, it was considered incidental to its educational purpose. However, a contribution to a charity that preserved local landmarks, for use to renovate a social club's fraternity building, wasn't deductible even though the building was a registered landmark, because it was solicited exclusively for the fraternity and was considered earmarked to benefit primarily a noncharitable recipient.

Contributions to foreign charities through “conduits.” If a contribution is paid to a qualified donee organization—for example, a “friends of” organization—it may be used by a non-U.S. organization (which can't be so qualified) if the contribution is subject to the domestic organization's control and isn't earmarked in any way for use abroad.

Designated contributions for individual beneficiaries. Similarly, a contribution designated for individual beneficiaries may be deductible if the contribution is under the charity's full and unconditional control and may be used for its functions as it considers best.

For example, a contribution to a qualified charitable mission that was designated for the support of particular missionaries was deductible because the designation was no more than a manifestation of the donor's desire to have his donation credited to those missionaries' support. The donor knew and intended that his contribution would go into a common pool to be distributed only as the mission itself determined. However, a contribution to a tax-exempt educational institution providing training for ordained ministers that was earmarked for a particular student (the donor's son) by the use of account numbers linking donors to seminarians and by indicating the student's name on the contribution envelopes wasn't deductible, because the donor intended to benefit the designated student and the tax-exempt organization didn't have full control of the donated funds.

Designated contributions for disaster victims. Contributions to tax-exempt charitable organizations that are earmarked for victims of various IRS-specified disasters are deductible (though gifts to individuals aren't deductible) if they aren't earmarked for the relief of any particular individual or family.