A qualifying distribution includes a contribution to a private nonoperating foundation or to an organization formed for certain religious, charitable, scientific, educational or other exempt purposes that is controlled by the contributing foundation or by one or more disqualified persons or to a private nonoperating foundation if:
Not later than one year after the end of the tax year in which the donee organization received the contribution, it makes a distribution equal to the full amount of the contribution and the distribution is a qualifying distribution that is treated as being made out of corpus (or would be treated as such if the donee organization were a private nonoperating foundation), and
The private foundation making the contribution obtains adequate records or enough other evidence from the donee organization showing that the donee has made a qualifying distribution. The evidence must also show the names and addresses of the recipients of the qualifying distributions, the amount received by each and that the distribution is treated as being made out of corpus (or would be so treated if the donee organization were a private nonoperating foundation).
When a distribution is for an administrative expense that is for public charitable purposes or is part of another public charitable expenditure that cannot reasonably be separately accounted for, the record-keeping requirements of item (2), are satisfied if the donee organization submits a statement giving the general purpose for which it is making the expenditure and stating that the amount was distributed as a qualifying distribution.
If both requirements are not met, no part of the contribution will be treated as a qualifying distribution. To meet the distribution requirements, the donee organization must, by the close of the first tax year after the tax year in which the contribution is received, distribute an amount equal in value to the contribution, and it must have no remaining undistributed income for the year in which the contribution was received.
If a donee organization redistributes less than the amount of the total contributions from donor organizations that must be redistributed by the end of the first tax year after the year in which received, amounts treated as redistributions will be considered as made pro rata from all contributions received in the prior tax year that are required to be redistributed by the donee organization regardless of any earmarking or identification of the source made by the donee. The amounts considered as not to have been redistributed will be included pro rata in the gross income of each donor foundation in the foundation's first tax year beginning after the close of the donee organization's tax year in which the amount should have been distributed.