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§ 9.3 INVENTORYfor the use of) the ill, needy, or infants for their care or be retained for their care.No other individual may use the contributed property except as incidental toprimary use in the care of the ill, needy, or infants. The donee organization maysatisfy these requirements by transferring the property to a relative, custodian,parent, or guardian of the ill or needy individual or infant, or to any other individualif it makes a reasonable effort to ascertain that the property will ultimatelybe used primarily for the care of the ill or needy individual, or infant, andnot for the primary benefit of any other person. 53The donee organization may transfer the gift properties to other qualifiedtax-exempt public charitable organizations, within or outside the United States.For these rules to be satisfied, however, the transferring organization mustobtain a written statement from the transferee organization. 54 If the property isultimately transferred to, or used for the benefit of, ill or needy persons, orinfants, who are outside the United States, the organization that transfers theproperty outside the United States must be a corporation. For these purposes, ifthe donee organization charges for its transfer of contributed property (otherthan an allowable fee), 55 the requirements of these rules are not met. 56In one instance, a pharmaceutical company created a private operatingfoundation to distribute medicines and medical supplies in conformity withthese rules. One of the ways the medicines or supplies were distributed wasthrough a voucher system: the eligible recipients of these items took the vouchersto a commercial pharmacy or other dispensing agent and received the itemsat no charge. The pharmacy or other agent thereafter returned the vouchers tothe company to receive, without charge, replacement items for the agent’sinventory. Because this system was intended to facilitate distribution of theproducts, and because the substance of the transaction was distribution of theproducts by the foundation, the IRS ruled that use of this voucher system wouldnot violate these rules. 57The term ill person is defined for these purposes as follows:An ill person is a person who requires medical care . . . .[ 58 ] Examples of illpersons include a person suffering from physical injury, a person with a significantimpairment of a bodily organ, a person with an existing handicap,whether from birth or later injury, a person suffering from malnutrition, aperson with a disease, sickness, or infection which significantly impairs physicalhealth, a person partially or totally incapable of self-care (including incapacitydue to old age). A person suffering from mental illness is included [inthis definition] if the person is hospitalized or institutionalized for the mentaldisorder, or, although the person is nonhospitalized or noninstitutionalized, ifthe person’s mental illness constitutes a significant health impairment. 59The term care of the ill means “alleviation or cure of an existing illness andincludes care of the physical, mental, or emotional needs of the ill.” 6053 Reg. § 1.170A-4A(b)(2)(ii)(A).54 This written statement must conform to the requirements described in notes 68−71.55 See text accompanied by notes 65, 66, and 68.56 Reg. § 1.170A-4A(b)(2)(ii)(A).57 Priv. Ltr. Rul. 9321057.58 This term is, in turn, defined in Reg. § 1.213-1(e).59 Reg. § 1.170A-4A(b)(2)(ii)(B).60 Reg. § 1.170A-4A(b)(2)(ii)(C). 275