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§ 18.3 EARMARKING AND CONDUIT RESTRICTIONSbenefit of the home and hence qualified as deductible charitable contributions.The earmarking in this instance transformed the gift to the foster home into a giftto a particular individual. In the eyes of the court, the “contributions” were not tobe used in any manner as deemed appropriate by the home, but were for the useof a single individual in whom the “donor” felt a keen fatherly and personal interest.The charitable contribution deduction was denied in this circumstance. 15The IRS, in applying this principle to transfers of contributions from U.S.sources to foreign organizations, concluded:“A given result at the end of a straight path is not made a different resultbecause reached by following a devious path.” . . . Moreover, it seems clearthat the requirements of . . . [the federal income tax law] would be nullified ifcontributions inevitably committed to a foreign organization were held to bedeductible solely because, in the course of transmittal to a foreign organization,they came to rest momentarily in a qualifying domestic organization. Insuch case the domestic organization is only nominally the donee; the realdonee is the ultimate foreign recipient. 16IRS ruling policy permits a U.S. charitable organization to fund a foreign charitableorganization and/or individual when• the domestic organization’s purpose can be furthered by granting fundsto one or more foreign entities,• the domestic organization has reviewed and approved of the foreignentity’s purposes, and• the grants are paid from general funds rather than from special fundssolicited on behalf of the foreign organization. 17Difficulty arises, from the IRS’s point of view, when a domestic charity isempowered in such a way that it is no more than an agent of or trustee for a particularforeign organization; has purposes so narrow that its funds can go only toa particular foreign organization; or solicits funds on behalf of a particular foreignorganization.The IRS has analyzed five situations:1. A foreign organization that caused a domestic organization to be formedto conduct a fundraising campaign in the United States, pay administrativeexpenses from the collected funds, and remit any balance to the foreignorganization.2. Certain persons in the United States, desirous of furthering the work of a foreignorganization, who formed a domestic charitable organization to receivecontributions and send them periodically to the foreign organization.3. A foreign organization and a domestic organization that had previouslyreceived a ruling that contributions to it would be deductible as charitablegifts entered into an agreement under which the domestic organizationwas to conduct a fundraising campaign on behalf of the foreign15 Thomason v. Commissioner, 2 T.C. 441 (1943).16 Rev. Rul. 63-252, 1963-2 C.B. 101. In reaching this conclusion, the IRS relied on Minnesota Tea Co. v. Helvering,302 U.S. 609, 613 (1938); and Griffiths v. Helvering, 308 U.S. 355, 358 (1939).17 Rev. Rul. 63-252, 1963-2 C.B. 101. 551