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Nothing in life is as straightforward and simple as it seems. Even the act of giving has been made complicated by tax involvement, sometimes shady organizations, and specific restrictions on how to offer your expendable resources. Donating a car is a perfect example.
If you’re anything like us, the Kars4Kids jingle has been playing on an infinite loop in your subconscious for years, and it’s one of the most well-known car donation companies in the country. Yet, only 60% of each donation goes directly to Kars4Kids’ charity programs, while the rest goes to advertising and paying the staff. This disconnect is not entirely uncommon among car donation programs and can be somewhat confusing and frustrating to those who think all of their money is going toward the charity.
We lead with a warning, but we don’t want to discourage you from considering donating a car. We just want to walk you through the process so that your money does what you want it to do. The Drive’s crack info team has put together a guide detailing various for-profit and nonprofit organizations, tax write-offs, and determining car values to help you donate your car without worry.
Who Does a Car Donation Help?
There are a variety of companies that accept car donations and use the proceeds for good causes. Some help veterans, others the homeless, and some raise money to help animals, to name a very select few. If you have a cause that’s near and dear to your heart, there might be a company out there that accepts vehicle donations.
What’s the Benefit of Donating My Car?
Donating a car can be great for the person giving it away. Here’s why.
Avoiding the Sales Experience
Selling a car can be a pain in the rump. One of the best perks about donating a car is hurdling this process and directly connecting with a company that actively wants your vehicle as soon as possible. Plus …
They Will Pick It Up
Most of the time, the company will send a tow truck or flatbed to haul your car away without imposing the hassle onto you. That’s more convenient than your voice-command TV remote!
It Counts As a Tax Write-Off
Like other charitable donations, a car donation can be used to lower your tax bills as a write-off.
It’s For a Good Cause
At the end of the day, no matter how much of your donation actually goes toward real help or change, at least some of it is going toward real help or change. And that’s a positive, no matter how you look at it.
Potential Downsides of Donating Your Car
With the pros, there are potential cons. Munch on this while you decide if car donation is right for you.
You Probably Could Get More For Your Car …
If your car runs okay and can keep its bumpers attached, we can almost assuredly say that some elbow grease and patience will up the return on your vehicle. Perform its necessary maintenance, give it a deep clean, take some decent photos, and post it on Craigslist and forums. As long as the car’s not plagued with catastrophic problems, there’s somebody out there willing to bite the hook…
… And Give the Money Directly To a Charity
Once you earn more money back on your ride, you can then give that larger amount directly to a trusted charity. Or, if you’re into the idea of donating things, use that money to buy school resources for underprivileged classes. Regardless of what good deed it goes toward, it deletes a step and gets straight to the point.
The Organization Might Be Schemin’
In many cases, at least part of the money squeezed out of a donated vehicle goes toward administrative costs for the company, not toward the people the organization is intended to help. Furthermore, some companies might play games with the paperwork. Always make sure you fill out every part of the title, and always make sure you get a receipt.
Risk of IRS Issues
Another part of the process that requires special attention is the paperwork and business classification. Only specific types of charitable donations can be claimed as write-offs, and that requires specific paperwork for specific companies.
Additionally, the amount claimed must be accurate. You cannot simply claim the top value from Kelley Blue Book, there are specific parameters, depending on what’s done with the vehicle. Always make sure you get your receipt with the correct amount. Don’t forget to follow up!
What Happens To Donated Cars?
Once that tow truck drives off into the distance, you’ll never see your car again. Its final fate depends on its condition, but it will certainly end up down one of these paths.
Scrapped For Money
If the donated vehicle is totaled or scrap status, the organization will simply transfer the car to a company that takes such vehicles and collect the money from it. How that money is used is different for every organization, so it’s up to you to find out.
Sold For Money
If there is no use for the vehicle within the organization, it might be sold, typically at a local auto auction.
Donated To Somebody In Need
In the case that the donated vehicle is clean enough to be a daily driver, that car might be donated to somebody in great need of transportation.
Used as Company Vehicle
Yep, it’s possible. In some cases, organizations lack vehicles that could greatly increase their effectiveness. They could be used for deliveries, shuttling, administrative work, or a variety of other purposes.
Necessary Steps To Take Before You Donate a Car
As with virtually anything in this life, due diligence is the most important thing when considering how to get rid of your vehicle.
Gather Your Documents
The most important piece of paper when transferring your car to a charity is the car’s title. Make sure the “title transfer” or “new owner” section has the name of the charity with all of the correct information. Never leave it blank, regardless of what they try to tell you, and don’t let anybody else fill it out for you.
Research The Organization With These Car Donation Resources
Use these resources when researching charities to ensure your donation is put to good use. For starters, ask yourself, is this organization for-profit or nonprofit? The for-profit companies could have their priorities in the wrong place. You also want to cut out any companies that act as middlemen between you and the charity. Find a charity that directly accepts car donations. Here are a few resources to aid you in that search.
IRS: A Donor’s Guide to Vehicle Donation
Ask The Organization These Questions
You deserve to know what happens to your donated car and where the money goes. So ask, and go with the organization that works toward a mutual charitable goal.
- What Happens To the Donated Car?
- What Is the Money Used For?
- What Percentage Of the Money Goes To the Actual Charity?
Once you’ve settled on a charity, it should be pretty simple from there. The charity will collect information about you and your car, and a few days later, a tow truck should swing by to grab your ride. Once again, just make sure you get that receipt for the donation. You’ll need it for your taxes, as non-cash donations tend to draw more attention from the IRS.
How Do I Write Off My Car Donation On My Taxes?
First, you need to check that the charity you’ve chosen is a true charitable organization, code 501 (c) (3). From there, it depends on what will be done with your car, and how much it’s worth. Value levels of $250, $500, and $5,000 all require different forms, steps, and actions, such as appraisals and signatures. For a full rundown of the tax rules, WHICH YOU NEED TO READ, visit the IRS Guide To Vehicle Donation.
FAQs About Car Donations
You’ve got questions, The Drive has answers!
Q: Ok, So Should I Donate My Car or Junk It?
A: As cheapskates who do everything ourselves (it’s DIY season every season over here), we prefer to maximize our return on investment, especially if the returns are going to a good cause. Some people don’t have the time or resources, though, and donating the car can be convenient. Plus, it can help a lot of people who desperately need assistance, especially given the circumstances of the past few years.
Q: Can You Donate a Car That Isn’t Running or Needs Repairs?
A: Yes, simply select companies and charities that accept non-running vehicles to be sold for scrap metal or fixed and sold off.
Q: What Is Cash For Clunkers And Is It Still Going?
A: The Car Allowance Rebate System (CARS), the program known as Cash For Clunkers, launched under the Obama administration in 2009. The program used rebates to incentivized trading in old vehicles with poor fuel economy. The primary purpose of the Cash For Clunkers program was to stimulate car sales and the auto industry after the late 2000s recession. It started and ended in 2009.
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