Internal Revenue Service
Revenue Ruling
Rev. Rul. 68-489
1968-2 C.B. 210
Sec. 501
IRS Headnote
An organization will not jeopardize its exemption under section 501(c)(3)
of the Code, even though it distributes funds to nonexempt organizations,
provided it retains control and discretion over use of the funds for
section 501(c)(3) purposes .
Full Text
Rev. Rul. 68-489
An organization exempt from Federal income tax under section 501(c)(3) of
the Internal Revenue Code of 1954 distributed part of its funds to
organizations not themselves exempt under that provision. The exempt
organization ensured use of the funds for section 501(c)(3) purposes by
limiting distributions to specific projects that are in furtherance of its
own exempt purposes. It retains control and discretion as to the use of the
funds and maintains records establishing that the funds were used for
section 501(c)(3) purposes. Held , the distributions did not jeopardize the
organization's exemption under section 501(c)(3) of the Code.
See also Revenue Ruling 67-149, C.B. 1967-1, 133, holding a charitable
organization exempt under section 501(c)(3) where it provides financial
assistance to other charitable organizations that are also exempt under
section 501(c)(3); and Revenue Ruling 63-252, C.B. 1963-2, 101, and Revenue
Ruling 66-79, C.B. 1966-1, 48, for requirements with respect to
deductibility under section 170 of the Code of contributions by individuals
to a charity organized in the United States that thereafter transmits some
or all of its funds to a foreign charitable organization.
