Rev. Rul. 57-38

Advice has been requested with respect to the deductibility, for Federal income tax purposes, of contributions to Committees organized to carry out the `People-to-People Program,' and actual expenses incurred by the members of the Committees in rendering volunteer services to such Committees.

The United States Information and Educational Exchange Act of 1948, 62 Stat. 6, 22 USC 1431 et seq., was enacted for the purpose of promoting a better understanding of the United States in other countries, and of increasing mutual understanding between the people of the United States and the people of other countries. Among the means to be used in achieving these objectives are (1) an information service to disseminate abroad imformation about the United States, its people, and governmental policies affecting foreign affairs, and (2) an educational exchange service to cooperate with other nations in (a) the interchange of persons, knowledge, and skills, (b) the rendering of technical and other services, and (c) the interchange of developments in the field of education, the arts and sciences. The Act provides that in carrying out the provisions of the Act it shall be the duty of the Secretary of State to utilize the services and facilities of private agencies through contractual arrangements or otherwise, and that it is the intent of Congress that the Secretary shall encourage participation in carrying out the purposes of the Act by the maximum number of different private agencies in each field consistent with the present or potential market for their services in each country. Effective August 1, 1953, the United States Information Agency was established pursuant to the Reorganization Act of 1949, as amended, and certain of the informational and educational functions formerly vested in the Secretary of State by the above-mentioned act of 1948 were transferred to this Agency.

Pursuant to the above provisions, there was recently initiated the `People-to-People Program,' which was approved by the President as an effective means of supplementing the direct activities of the Government in accomplishing the purposes of the Information and Educational Exchange Act. The Program will be organized around Committees functioning in widely different fields. At the request of the President, certain American citizens who are prominently associated with various areas of industry, business, education, etc., will act as chairman of the Committees to carry out the Program in their particular fields. The Committees will constitute private organizations functioning on their own initiative and responsibility to make the objectives and principles of the United States better understood throughout the world. The United States Information Agency will assist and advise the several Committees, pursuant to the functions of that Agency.

The members of the Committees in rendering grantuitous services incur expenses in connection with the organization of the Committees and in carrying out their purposes.

Section 170 of the Internal Revenue Code of 1954 provides, in part, for the allowance as a deduction in computing taxable income, within the limitations prescribed, of contributions or gifts payment of which is made within the taxable year to or for the use of the United States for exclusively public purposes.

It is held that contributions made to such Committees, for use exclusively in advancing the `People-to-People Program,' constitute allowable deductions under section 170 of the Code, subject to the limitations provided by that section, as contributions made for the use of the United States. Such contributions may include out-of-pocket expenses, including the entire amount expended for meals and lodging while away from home, incurred by members of the Committees directly in connection with and solely attributable to the formation of or the rendering of voluntary services to the Committees. The allowance of deductions claimed will be subject to annual certification by the United States Information Agency to the Commissioner of Internal Revenue that the activities of the particular Committee involved are exclusively in furtherance of the `Peopel-to-People Program,' and subject further to such verification as may be deemed necessary. Such certification will not relieve the Committees of the responsibility for maintaining adequate records of all receipts and expenditures in order to substantiate deductions claimed.

As used herein the term `Committee' includes incorporated or unincorporated organizations.