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OTHER ASPECTS OF DEDUCTIBLE GIVINGtransferred, constitute political campaign expenditures by the transferor exemptorganization. 192 A transfer is considered “promptly and directly” made if: (1) theprocedures followed by the organization satisfy the requirements of applicablefederal and state campaign laws; (2) the organization maintains adequaterecords to demonstrate that the amounts transferred do in fact consist of politicalcontributions or dues, rather than investment income; and (3) the political contributionsor dues transferred were not used to earn investment income for thetransferor organization. 193One of the issues reflected in the political action committee rules is the elementof promptness of the transfer of the funds. Although this generally is a factsand-circumstancestest, in one instance the IRS imported the concept into thecharitable field. The case involved facts similar to those in the utility companymatter. 194 Although the IRS wrote that the payments were “initially commingled”with the utility’s funds, it added that they were “earmarked and transferred”to the charity’s account on a “frequent and regular basis.” 195 In both ofthese instances, the transfers were made weekly. 196Based on the foregoing law (such as it is), it may be concluded that a paymentmade to a noncharitable entity can be deductible as a charitable gift underfive sets of circumstances:1. The amount that is the charitable gift is clearly so designated by the donor2. The intermediate organization is clearly functioning as the agent of thecharity3. The gift component of the payment is promptly transferred to the charity191 These organizations are tax-exempt by reason of description in IRC § 527. See Tax-Exempt Organizations ch. 17.192 See, e.g., Priv. Ltr. Rul. 7903079.193 Reg. § 1.527-6(e). In general, see Tax-Exempt Organizations § 30.5. A matter that is festering at present is thetax treatment of funding of educational activities (such as the availability and maintenance of study rooms andcomputers) within the chapter houses of college and university fraternities and sororities. The difficulty is thatthese entities are classified as social clubs (see § 10.9, note 183), although the individuals involved are membersof a charitable class (viz., students). See § 3.2(b)(vi). Usually, funding of this nature comes from relatedfoundations to which the donors have made deductible gifts. Some in the IRS, however, are of the view thatthe educational activities are inextricably interwoven with the social and recreational ones, and/or that thisfunding generates unwarranted private benefit. This issue is under active consideration by the IRS at this time,although it was once thought settled in favor of the recognition of targeted gifts and grants to chapter houses.In the meantime, the same (and sometimes more extensive) funding flowing to an educational institution isdeductible, as illustrated by the IRS ruling that contributions to a university for the purpose of reconstructingand remodeling fraternity housing owned by it qualify for the charitable contribution deduction. Priv. Ltr. Rul.9733015. Likewise, the IRS ruled that deductible contributions can be made to: (1) a university to finance constructionof a building to provide a safe meeting area for students who are members of sororities on the campus(Priv. Ltr. Rul. 9829053); (2) a college, for the renovation, construction, and operation of facilities at fraternitychapter houses (Priv. Ltr. Rul. 199929050); (3) a public charity for the preservation of a fraternity’s chapterhouse, on the condition that a perpetual conservation easement be granted (Priv. Ltr. Rul. 199933029); and (4)a college, when the college will use the funds to construct student housing and lease the houses to fraternities(Priv. Ltr. Rul. 200003013).194 See text accompanied by notes 185–189.195 Priv. Ltr. Rul. 9335022.196 An earlier private letter ruling, Priv. Ltr. Rul. 8417019, is believed to be the precursor to Rev. Rul. 85-184,1985-2 C.B. 84. In that earlier ruling, oddly, the IRS found that similar payments to a utility company weredeductible as charitable gifts. The IRS noted that the funds would not be commingled with the utility company’smoney and would accrue interest while held by the company, although the interest was to be transferredto the charity. There, too, the transfers were to be made weekly. 382