357 357 Reg. § 1.501(c)(3)-1(d)(1)(i)(e).

      358 358 Reg. § 1.501(c)(3)-1(d)(1)(i)(g).

      359 359 IRC § 501(e).

      360 360 IRC § 501(f).

      361 361 IRC § 501(c)(3) and (j).

      362 362 Priv. Ltr. Rul. 9247030. Also Tripp v. Commissioner, 337 F.2d 432 (7th Cir. 1964); Phinney v. Dougherty, 307 F.2d 357 (5th Cir. 1962); Davidson v. Commissioner, 60 F.2d 50 (2d Cir. 1932); Rev. Rul. 69-573, 1969-2 C.B. 125; Rev. Rul. 60-367, 1960-2 C.B. 73.

      363 363 The IRS wrote that “restriction of charitable work to a small or identifiable class will cause such work to fail to meet the definition of charitable . . . unless such benefits are incidental to an identifiable public benefit” (Priv. Ltr. Rul. 9702040). Also: “A class of beneficiaries designated by the donor or by the donee's charter may be challenged where the class of prospective beneficiaries is so limited in size that the donee organization is considered to benefit specified individuals” (Priv. Ltr. Rul. 9316051).

      364 364 Rev. Rul. 56-403, 1956-2 C.B. 307. A corporation was denied a charitable deduction for amounts given to a foundation established to provide educational opportunities for employees and their children because the foundation's educational benefits inured to only four children of the corporation's employees (Charleston Chair Co. v. United States, 203 F. Supp. 126 (E.D.S.C. 1962)).

      365 365 E.g., Wendy L. Parker Rehabilitation Foundation Inc. v. Commissioner, 52 T.C.M. (CCH) 51 (1986).

      366 366 Carrie A. Maxwell Trust, Pasadena Methodist Foundation v. Commissioner, 2 T.C.M. (CCH) 905 (1943).

      367 367 Rev. Rul. 57-449, 1957-2 C.B. 622.

      368 368 Priv. Ltr. Rul. 9631004.

      369 369 Rev. Rul. 56-403, 1956-2 C.B. 307. Where, however, the fraternal entity is a local chapter, the requisite charitable class is not likely to exist (e.g., Priv. Ltr. Rul. 201017067).

      370 370 A private foundation proposed to develop two parcels of property and sought a ruling from the IRS that the funds to be expended to that end would be considered qualifying distributions for purposes of IRC § 4942 (the private foundation mandatory charitable grant-making rules). The IRS acceded to that request with respect to only one of the properties, which was to be improved by creating a recreational facility available to the public. As to the second property, however, which was to be developed by establishing a computer instruction facility, the IRS ruled that the funds would not be qualifying distributions because of the limitations on access to the property (Priv. Ltr. Rul. 9702040). The IRS ruled that contributions to a fund established by a tax-exempt hospital were deductible as charitable contributions when the donors were the hospital, its employees, and employees of its affiliates; the fund provided emergency assistance to financially needy individuals who had suffered economic hardship due to accident, loss, or disaster. The more than 9,000 potential beneficiaries included 2,900 current employees of the hospital and 600 former employees (Priv. Ltr. Rul. 9316051). The IRS reconsidered this ruling because of its belief that it was inconsistent with the rules as to tax-exempt charitable organizations (Priv. Ltr. Rul. 9704028). Nonetheless, the IRS subsequently upheld the deductibility of contributions to this fund (the one in Priv. Ltr. Rul. 9316051), reiterating the presence of a charitable class and noting that the hospital would not be making any grants to the fund (Priv. Ltr. Rul. 9741047). This policy may be changing again. Initially, the IRS ruled that a private foundation can make grants to one of these disaster relief and emergency hardship programs when the grants are for charitable purposes and cause only incidental private benefit (Priv. Ltr. Rul. 9516047). Subsequently, however, the IRS held that grants of this nature are not for charitable purposes, amount to private inurement, result in self-dealing, are not qualifying distributions, and are taxable expenditures (Priv. Ltr. Rul. 199914040).

      371 371 E.g., Rev. Rul. 77-246, 1977-2 C.B. 190 (elderly and disabled recognized by the IRS as charitable classes); Rev. Rul. 76-244, 1976-1 C.B. 155 (organization undertaking home delivery of meals to the elderly and disabled held charitable).

      372 372 E.g., Rev. Rul. 75-196, 1975-2 C.B. 155 (law library held to be educational because access to it by lawyers was held to be a public benefit); Rev. Rul. 69-545, 1969-2 C.B. 117 (promotion of health held to be charitable activity because of overall benefit to the community).

      373 373 Sound Health Association v. Commissioner, 71 T.C. 158, 185 (1978). The requirement of a charitable class is usually applied only when assessing the status of a charitable organization. That is, this type of a class is usually not required with respect to religious or educational entities. As to the latter, for example, the exempt function is that of disseminating knowledge; there are many rulings holding that organizations conducting educational programs for a limited group qualify as IRC § 501(c)(3) entities. E.g., Rev. Rul. 68-504, 1968-2 C.B. 211; Rev. Rul. 65-298, 1965-2 C.B. 163. Yet the IRS sometimes applies the charitable class requirement in the context of a putative educational organization. See text accompanied by supra note 364.

      374 374 This reference to other charitable donees is to organizations that are the subject of § 2.3, text accompanied by supra notes 303–304.

      375 375 IRC § 509(a).

      376 376 See Tax-Exempt Organizations ch. 12.

      377 377 See Tax-Exempt Organizations § 28.2(a)(iii).

      378 378 IRC §§ 170(b)(1)(A)(i) and 509(a)(1).

      379 379 Internal Revenue Manual § 321.3.

      380 380 E.g., American Guidance Foundation, Inc. v. United States, 490 F. Supp. 304 (D.D.C. 1980). Also St. Martin Evangelical Lutheran Church v. South Dakota, 451 U.S. 772 (1981).

      381 381 E.g., Tech Adv. Mem. 200437040.

      382 382 Foundation of Human Understanding v. United States, 2009-2 U.S.T.C. ¶ 50,519 (U.S. Ct. Fed. Cl. 2009), aff'd, 614 F.3d 1383 (Fed. Cir. 2010), cert. den., 562 U.S. 1286 (2011).

      383 383 See Tax-Exempt Organizations § 10.3 and § 12.3(a).

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