Following is my Answer to your Query:

KARMA THEORY is very subtle and deep in itself. As ordained by God it works for ever. Distribution of Punya has altogether a different meaning. It is not similar to distribution of money or material where the stock depletes when once distribution begins.
Here in Karma Theory , the distribution of Punya begets further virtue by way of paving way to the Moksha(Salvation or freedom from Birth and Death) which is the achievement of the highest order for a ‘Jeevatman’. However, in the meanwhile you would be burning down bad karma(‘Paapa’) with a difference as follows:
There are TWO points to be noted carefully here.
1) When distributing ‘Punya’, you are progressing appreciably in the eyes of God and would not be developing the tendency to do further, any ‘Paapa’(Bad Karma) because you are getting rich points as a ‘Saatvik’.
2) Because of your action as above, God takes care of you in such a manner that, you would not feel the pain of suffering while burning down ‘Paapa’ in your existing life which otherwise would have been ‘A real ordeal’, in the absence of Distribution of your ‘Punya’ as above.

Sri Raghavendra Swamy of Mantralaya in his previous birth was ‘Vyasa Teertha’(During the period of Sri Krishna devaraya of Vijajyanagara Dynasty in India, during which he gave vedic education to millions and saved many of their sufferings in mundane lives and also saved the king Sri Krishna devaraya from ‘Kuha Yoga Peeda’(Malific fatalistic effect by planets which occurred to him according to his horoscope).
All these positive contributions to the society gave Sri Vyasa Teertha lot of ‘Punya’.
Much before in ‘Krita Yuga’ too, he as ‘Prahlada’ earned immense ‘Punya’ by administering his subjects of the Three worlds in the most righteous way of preserving ‘dharma’. Sri Raghavendra Swamy with such mountainous treasure of ‘Punya’ is now distributing to us by fulfilling our worldly desires when we pray him.
Sri Raghavendra thus has earned for himself the eligibility for ‘Moksha’

Another example on what happens in distributing Punya earned by you :-

If you are a wealthy person it would be due to your good karma(‘Punya’) in the past.
It is up to you now, to exercise your free will to make good use of your wealth (earn Punya further) or to misuse the same (thereby earning ‘Paapa’) is your decision. Parting with your wealth(Nothing but your ‘Punya’ in material form) may deplete your material possessions, but in the spiritual sense you are immensely benefited(you would be more fortunate in your next birth according to karma theory). This is one way of elevating your spiritual level.
Social Service, Charity, serving the sick & old people, saving the lives etc., are all means of earning ‘Punya’.

Parting with what you already have for a noble cause is deemed as ‘Distributing Punya’ thereby climbing up the spiritual ladder. ***********************************************************************