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OTHER ASPECTS OF DEDUCTIBLE GIVINGExample 10.1 illustrates these points:EXAMPLE 10.1A transfers property to a charitable remainder annuity trust. a This arrangement includes therequirement to pay to B for life an annuity equal to 5 percent of the initial fair market value ofthe property transferred in trust. The trust instrument provides that after B’s death the remainderinterest in the trust is to be transferred to M, a church, or, in the event that M is not a charitableorganization at the time the amount is to be irrevocably transferred to it, to another qualifyingcharitable organization. The contribution by A of the remainder interest is made to M. If,however, A had directed in the trust instrument that after B’s death the remainder interest was tobe held in trust for the benefit of M, the contribution would have to be considered as made forthe use of M.aSee § 12.2.§ 10.4 CONDITIONAL GIFTSA donor may make a contribution to a charitable organization but place conditionson the gift. Depending on the type of condition, there may not be a charitablededuction for the transfer, at least not until the condition is satisfied.Conversely, a condition may not have any bearing on the deductibility of thecharitable gift.There are three types of conditions in this regard:1. A condition (sometimes termed a contingency) that is material, so that thetransfer is not considered complete until the condition is satisfied2. A condition involving a possible occurrence, when the likelihood of theevent occurring is so remote as to be negligible, in which case the conditionis ignored for purposes of deductibility3. A condition that is material but that is in furtherance of a charitable purpose,so that the condition is more in the nature of a restriction(a) Material Conditions—NondeductibilityAs to the first two of the above categories, the standard is as follows: If, as of thedate of a gift, a transfer for charitable purposes depends on the performance ofsome act or the happening of a precedent event in order that it might becomeeffective, no deduction is allowable unless the possibility that the charitable transferwill not become effective is so remote as to be negligible. 130 If the possibility isnot negligible, if it occurs, and if the charitable transfer becomes effective, thecharitable deduction arises at the time the condition is satisfied or eliminated.As an illustration, a charitable organization wishes to construct a building tobe used for its program purposes. It has developed a building fund that is sufficientto cover 90 percent of the construction costs of the building; the organizationwill seek the remaining funds from the general public. The organization representsto donors that if the contributions are not sufficient to meet the balance of130 Reg. § 1.170A-1(e). 372