Hello and Welcome to Your Car Donations Blog, I hope you find the answer to your questions here.

Perhaps the most personally rewarding sort of car donations involves giving your old ride to the local high school for use in their shop class.  High schools are considered valid charitable organizations according to the IRS, as are colleges and adult training programs that fulfill a charitable mission.

Since the tax laws regarding car donations were changed in 2005 to stem the tide of fraudulent deductions that were uncovered by several independent reporters and the US General Accounting Office in 2002-3, choosing to make car donations to charities that will fix up the car and put it to good use will help you get the full fair market value for your car in the form of a legal deduction.

Most high schools have a shop program, just as most schools have a budget shortfall these days.  Just after music and arts programs, the mechanical arts programs are very often among those programs on the chopping block when budget time rolls around.  A healthy stream of car donations to such programs not only emphasizes the need for such training, but can also become a valuable revenue source for the schools in question, making shop classes that much more difficult to cut or limit.

Moreover, the proceeds from the sale of newly renovated car donations can benefit other programs such as arts and music.  Even if the purpose of such proceeds are turned right back into trips to the Corvette Hall of Fame for shop class students, a valuable message is sent to those students that their services will be required upon graduation, so perhaps they ought to pay attention.

Indeed, there’s nothing quite like seeing your old jalopy being used to haul a float in the homecoming parade.  You can watch it drive by with the satisfaction that money from your car donations is staying in the local community and going to benefit people whose training your town will rely upon for years to come.

Of course, there are limits to just how junky the automobiles used for car donations can be while remaining useful training.  Particularly if there are very expensive parts that need to be ordered and can’t simply be repaired.  In this case, the school might find itself spending more on parts than the car is likely to get when it’s eventually sold.

It is this sale price that drives the ultimate financial value of car donations as far as the donor is concerned.  One of the most important aspects of such ar donations is the amount of deduction that can be claimed.  Though you should get a receipt of transfer as soon as a vehicle is donated to the school, the ultimate value will be determined by the final sale price of the vehicle.

This represents your fair market value of the donated car and is often quite a bit higher than if you tried to sell the car yourself without making repairs or if a charitable organization simply sold the vehicle on the open, wholesale market.  Even if the car is eventually given away or used to transport the girl’s softball team to away games, such car donations may still be deducted at the fair market value according to publications such as the Kelly Blue Book.

There may be other restrictions.  For instance, some high schools stipulate that only car donatations of US manufacture are suitable for their students to work on.  This isn’t necessarily a type of bias – they may simply not have metric standardized tools to do the work on foreign autos.  If you do have the proper tools to work on your oddball car, you might want to consider throwing those in with any such car donations, to sweeten the deal.

Especially in demand are older or classic cars that have plenty of room and require body work.  Vehicles that allow for a mechanical tune up without special diagnostic equipment are also highly prized car donations.  Taking all these variables into consideration, your old vehicle might be the very thing for your local high school to refurbish into the lean, mean, driving machine you fell in love with in the first place.  Having a plaque on the wall with your name on it isn’t a bad incentive either.

While a bevy of advertisements encouraging car donation to charity would lead one to believe that such donations are a major force behind fundraising for legitimate charities and non-profit organizations (NPOs), most charities are far more reliant upon more traditional methods of giving.  Non-cash donations continue to be dominated by donations of household goods to thrift stores and stock donations than vehicle donations.

When contemplating a car donation to charity, one should consider just how the charity or NPO in question could actually use the donation of a vehicle.  Just as there are now restrictions of usefulness on what one can claim from household object donations, a car that runs (or can at least be repaired without major capital investment) is far more valuable to a charity that can actually use the car directly to further their charitable mission.

Consider a charity that employs a third party, for-profit organization to facilitiate all car donations to charity.  After their cut is taken, there is sometimes very little left over to actually be donated to the charity in question.  Moreover, if you give a car that is only fit for scrap, the invoice statement you’ll be given as a guide to your actual deduction benefit will reflect this.

Usually the value is far higher for a running car in terms of total money produced by the sale of your car as well the percentage of that the charity is able to keep from said sale.  This means more money to reduce your net taxable income, too.  Cosmetic damages are usually unimportant to a NPO or charity that is primarily concerned with the functionality of non-cash automotive donations.

Because many of the third-party agents that handle car donations to charity have turned their attentions elsewhere since 2005, there are many NPOs that formerly took auto donations but are no longer accepting them because of all the bother associated with running such a program themselves.

Sometimes, this is simply because the agency lacks a tow truck of its own to pick up cars.  Whether they’re running or not, vehicles are almost always towed away to avoid liability issues.  As such, this type of car donation to charity, even if the tow truck in question is not in the best shape ever, can be incredibly useful as well as being a high-ticket item for deduction purposes.  Not only will you be able to claim a highly useful fair market value deduction, but you’ll also help the charity or NPO collect a lot more money and automobiles in useful car donations that they may have otherwise had to pass on.

Of course, another way to maximize your donation dollars is to make sure you have a free and clear title that can be easily transferred without making staff members of the non-profit jump through proverbial flaming hoops at the department of motor vehicle office.  Often people remove the existing license plates and leave the title inside the glove-box for the towing company to find.  This allows you to make sure that you’re not held liable for any of the traffic violations a teenage Meals on Wheels volunteer may commit with your former car.  Donations to charity don’t need to put you in a vulnerable position!

Overall, the reliance of most NPOs on car donations to charity has remained somewhat low.  This is true of most charitable organizations with the exception of those that specialize in giving cars away to needy folks who require reliable transportation.  Even if they sell them at a discounted rate, such charities are especially valuable to donors as well as the populations they serve.

If your car is still running, even if it has become ugly, is of great use to many of the organizations that still accept car donations to charity.  Choose wisely to make sure your car is put to the best possible use.  If your car is fit for little else than scrap, donating it to a charity that requires running vehicles may not be much of a useful donation at all.

According to the General Accounting Office’s (GAO) 2003 report to the Senate Committee on Finance, the incidence of mis-reporting from car donation programs was out of control.  In 2005, some changes were made to the rules that govern car donations and the subsequent deductions that are allowed.

However, the report also showed that an alarming 95% of third-party agents that facilitated the donations for perfectly legitimate charities and non-profit organizations (NPOs) were for-profit organizations that ate up as much as 70% (and sometimes even more) of the profits from the sale of donated automobiles.  This means that a very paltry amount of the proceeds from such sales were actually reaching the charities.

Since the 2005 changes took effect, the previously very lucrative business of selling donated cars for IRS authorized charities that didn’t have in-house resources for dealing with automotive donations, has become somewhat less profitable.  As such, the proportion of third-party car donation programs that operate for profit has declined.

That doesn’t mean you don’t have to be diligent about the type of car donation programs you look into when deciding to donate a used car to charity.  There are still several states (many of them in the Western United States) that don’t require such car donation programs to register with the state Attorney General’s office.  If you live in one of these states, you’ll have to be very careful about the ultimate use of your car, since the amount you’ll be able to legally deduct without attracting the attention of auditors is tied its use.

For starters, you should check all car donation programs to see that they are actually representing charities and non-profits that are sanctioned as charitable organizations by the IRS.  If in doubt, ask someone at the charity in question how their relationship with the third-party agent works.  If they are not in control of the program, there could be room for citing exorbitant overhead costs, despite increased regulation of such overhead costs since 2005.

Car donation programs should be able to give you a good idea of how the donated car will ultimately be used.  Your benefit in the form of allowed deductions will be higher if the car is to be used by the charity itself (such as is the case with Meals on Wheels) or given to a needy family that needs reliable transportation.  If this involves fixing the car up before being given away, the value of the repaired car may be deducted.

It also behooves a donor to inquire as to how the vehicle will be rehabilitated.  Car donation programs that are known for performing such repairs as part of an educational mission will make it especially easy for you to claim the fair market value of the car, even if it is eventually sold to someone (such as one of those needy families) at a deeply discounted rate.

If one of the car donation programs you’ve chosen doesn’t seem to be forthcoming with answers to your questions, check with the state Attorney General or other organization that is responsible for monitoring such agents.  Even in a state without such oversight, some private organizations, such as the Better Business Bureau, have their own lists of reputable car donation programs that may be better able to serve your charitable desires.  Indeed, this might be the best place to begin your search.

It is also useful to note that all car donation programs are required to give you a receipt within 30 days of picking up your car, though the receipt of sale is what you will actually use to value your donated automobile for deduction purposes.  If the charity in question will be spending some time fixing the car up or using it for their own charitable purposes, you should still expect some paperwork to that effect.  If you don’t get it within a month of your car donation, you should call to check up on the status of your receipt.

It has become far easier to check on the charitable mission of car donation programs in recent years.  A little bit of homework on your part will help you avoid unscrupulous car donation programs that have little, if anything, to do with the charities they claim to represent.  Check twice and donate once.