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§ 10.9 DEDUCTIBLE GIFTS TO NONCHARITABLE ORGANIZATIONSto the club that was paid over to the charitable organizations. 183 This is a commonpractice among trade, business, and professional associations that encouragemembers to make gifts to related charitable organizations at the same timethey pay their annual membership dues. The payments to both entities are madeas a single transaction because the gift element of the payments is flowedthrough the association to the charitable recipient. 184Charitable gift deductibility treatment was accorded to additional amountspaid by customers of a utility company, when paying their bills to the company,when the additional amounts were earmarked for a charitable organization thatassisted individuals with emergency-related energy needs. 185 Again, the utilitycompany was considered the agent of the charitable organization; the companydid not exercise any control over the funds and segregated them from its ownfunds. In a similar situation, contributions paid to a title-holding company 186 forpurposes of maintaining and operating a historic property were once ruled bythe IRS to be deductible as charitable gifts, when the gifts were segregated fromthe company’s funds and were otherwise clearly devoted to charitable ends. 187In this instance, however, the ruling was subsequently withdrawn, 188 althoughthe effect of the withdrawal was not made retroactive. 189Although not in the charitable giving context, a comparable set of rulesoffers some guidelines for this type of pass-through giving. The law is thatamounts paid to a tax-exempt organization (such as a business league 190 ) fortransfer to a political action committee 191 do not, when promptly and directly183 Rev. Rul. 55-192, 1955-1 C.B. 294.184 See, e.g., Priv. Ltr. Rul. 7944054.185 Rev. Rul. 85-184, 1985-2 C.B. 84.186 These organizations are tax-exempt under IRC § 501(a) by reason of description in IRC §§ 501(c)(2) and (25).See Tax-Exempt Organizations § 18.2.187 Priv. Ltr. Rul. 8705041.188 Priv. Ltr. Rul. 8826012.189 Priv. Ltr. Rul. 8836040. The IRS did not provide any explanation for the withdrawal of this ruling, although itmay be surmised that the IRS was concerned that this form of charitable giving (that is, giving to noncharitableorganizations) could become prevalent and present difficulties in enforcing the rules.There are other private letter rulings dealing with somewhat comparable settings. For example, the IRS heldthat charitable contributions can be made in the form of rebates on the purchase price of certain items and couponsredeemable at local supermarkets and retailers, when the rebate amounts are paid to charities. See §3.1(h). In one ruling, the matter involved an individual credit or debit cardholder who purchases items at participatingretailers that submit a percentage of the purchase price to the sponsor of the cards. The sponsor inturn transfers an amount in excess of its administrative and processing costs to a charitable organization of thecardholder’s choice. The sponsor held these amounts on behalf of each cardholder in a custodial account. Inruling that the contributions were deductible as charitable gifts, the IRS focused on the cardholder’s ability todecide whether to make payments to a charity (a voluntary act), along with his or her ability to designate thecharitable organization to receive the payments. As to when the cardholder may take the deduction, the IRSconcluded that the sponsor acted as agent of the cardholders, so the cardholder controlled the funds until theywere actually paid to the charity. Priv. Ltr. Rul. 9623035. As emphasized in a subsequent ruling, therefore, acardholder in this situation is entitled to a charitable deduction only upon transfer of the funds to the designatedcharitable organization. Priv. Ltr. Rul. 199939021.A bank clearinghouse association made contributions on behalf of its member banks to various charitableorganizations. The amounts of the contributions were included in the bills rendered to member banks on amonthly basis. A court held that the association acted as a disbursing agent for the banks in making the contributions,thus providing the banks with a charitable contribution deduction for the payments. First Nat’l Bankv. Commissioner, 17 B.T.A. 1358 (1929), sustaining & vacating (on another issue), 49 F.2d 70 (8th Cir. 1931).190 These organizations are tax-exempt under IRC § 501(a) by reason of description in IRC § 501(c)(6). See Tax-Exempt Organizations ch. 13. 381