Donating Your Used Car to Charity

 Kevin Collins | Better Business Bureau

 

With increasing frequency, radio announcements, classified

ads, and television promotions are mentioning used car donations as a giving

alternative that can result in a handsome, income tax write-off while also

providing a simple way for both individuals and businesses to dispose of

unwanted vehicles. Better Business Bureaus around the country have reported

increasing interest in donating used cars to local charities and affiliates of

national organizations.

Before you donate your vehicle, the BBB suggests you do some

homework.

Ask for a copy of the organization’s Internal Revenue

Service determination letter that verifies the soliciting group is tax exempt

as a charity under section 501(c)(3) of the Internal Revenue Code. Don’t assume

that a charitable-sounding organization requesting donations is eligible to

receive tax deductible gifts.

Ask the organization for copies of its latest annual report

and IRS Form 990 that specify how they spent their funds in the past fiscal

year. Check to make sure that the charity is registered to solicit with your

state government’s charity registration office. Also, contact your Better

Business Bureau for information it may have on file.

Find out what happens to the donated cars. Some charities

may state that donated cars will be used to help carry out the group’s program

service activities (such as providing transportation for needy families).

However, if the charity is involved in major promotions for such contributions,

chances are that the volume donated will result in most cars not being used

but, instead, sold to raise funds for the organization.

Cars can be sold directly by the charity or through an

outside seller, such as an auctioneer or used car dealer. If an outside seller

is involved, the charity might receive a flat fee (for example, $100 per

vehicle), a percentage of the actual sales price, or a combination of both. In

some cases, less than 20% of the actual sale may go to the charity. Ask the

charity for a receipt that verifies a car donation was made. For cars that need

to be towed-in, the charity may need to mail receipts and titles to the donor.

This is all the more reason to check out the charity before making the

donation. It is also up to the donor, not the charity, to place an accurate

value on the car donation. If the donated value, as claimed, exceeds $500, the

individual or business contributor will need to complete IRS Form 8283 as an

attachment to his/her tax return. If the claimed value is over $5,000, the donor

will need to obtain a qualified written appraisal of the car.

Donating your unused car can be a win-win for you and the

charity but just a little homework in the beginning can save huge headaches in

the end. For more information on tax deductions, visit www.irs.gov. For more consumer tips you can

trust, visit www.bbb.org.

Kelvin Collins is president/CEO of the Better Business

Bureau of Central Georgia & the CSRA, Inc. serving 41 counties in Central

Georgia and the Central Savannah River Area (CSRA). This tips column is

provided through the local BBB and the Council of Better Business Bureaus.

Questions or complaints about a specific company or charity should be referred

directly to the BBB at Phone: 1-800-763-4222, Web site: www.bbb.org or E-mail: info@centralgeorgia.bbb.org or info@csra.bbb.org

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