Good Deeds

By Chandra Orr

April 3, 2009 5 min read

GOOD DEEDS

Donate your old car to charity and everyone wins

Chandra Orr

Creators News Service

Give away a car? In this economy?

It's not as crazy as it sounds. Donating an unwanted car or truck to charity is a powerful way to support a worthwhile cause and save some money come tax time.

"It is an easy alternative to selling or trading your vehicle and a unique way to make a significant charitable gift in lieu of cash or other assets," said Kelly Buttler, director of Cars For Courage, which benefits the Courage Center in Minneapolis, Minn., a rehabilitation and resource center for people with disabilities. Hundreds of charities nationwide rely on vehicle donations to help fund their efforts, including Volunteers of America, Goodwill Industries and Habitat for Humanity.

For many drivers, the tax benefit far outweighs the meager trade-in value on their late model car or the cost of towing that old junker to the scrap yard. Even the most road-weary ride can make a big impact on a nonprofit's bottom line. It may be leaking oil, taking up valuable real estate in your garage or it might not even run, but a worthy charity will appreciate the donation.

"Sometimes donors think their vehicle is not worthy of being donated. We assure donors that even if we get $125 in scrap value for their donation, that's more than most people can contribute on a cash basis," Buttler said.

All it takes is a phone call. The charity will arrange for pickup and guide you through the necessary paperwork, including the title transfer, a release of liability and the necessary documentation for tax purposes.

The amount of your deduction is determined by where your vehicle ends up. Of course, where it ends up depends on the charity you donate it to.

Some organizations simply sell the vehicle and use the profits to fund programs. To facilitate the process, many charities use a middleman -- an independent company that arranges for pickup, sells the vehicle at auction or for salvage and passes on the proceeds to the nonprofit.

In such situations, your deduction might not amount to much. If your car is valued at more than $500, it is limited to the actual selling price of the vehicle, which is generally less than the market value when your car is sold at a wholesale auction or for scrap.

Want a higher deduction? Work with a charity that skips the middleman. The Kalamazoo Gospel Mission, a homeless shelter in Kalamazoo, Mich., for example, turns vehicle donations into teaching tools before selling them at market value.

The Mission's substance abuse rehabilitation program uses donated vehicles to teach clients valuable automotive mechanic skills. The organization then sells the refurbished cars and trucks and uses the proceeds to help fund shelter, food, counseling and childcare services for homeless clients. It's a win-win situation for everyone involved.

"The donor gets a tax write-off and the good feeling that he has helped out a worthy charity, the client learns practical job skills, the Mission gets the proceeds from the sale and the buyer gets a reliable vehicle at a reasonable price," said Donna Pearce, development director for the Mission.

Other charities put donated vehicles to more practical uses, which will also garner a larger deduction. If the organization uses the car as part of its stated cause, you can deduct the full fair market value.

For example, Project Self-Sufficiency's Cars for Families program in Fort Collins, Colo., makes donated vehicles available to needy families for their daily transportation to work, school, child care and medical appointments. Because Project Self-Sufficiency provides vehicles directly to disadvantaged families, donations to the cause result in higher deductions.

In order to find the right charity, make a few phone calls to find out exactly what will become of your vehicle. Visit www.smartgivers.com to be sure your donation goes to a reputable organization.

"Make sure the charity is well established in your community," Buttler said. "Choose an organization that utilizes many selling outlets to maximize the value of your donation. Ask around -- many people have donated vehicles, and a successful experience is a good reference."

But keep in mind that it isn't all about the money.

"Think of the intangibles -- the good feeling of knowing a low-income person is receiving something that will assist him immeasurably in finding and keeping a job and the knowledge that an addiction-recovery person is learning job skills that will help him in getting his life back on track," Pearce said. "Those are contributions that go way beyond money."

Like it? Share it!

  • 0


YOU MAY ALSO LIKE...