Oct 23 2008
There are so many “cars for this” and “cars for that” companies out there, it can be extremely confusing. Once you decide that it is time to donate your car, you then have to decide where to donate it.
You may have heard a radio advertisement saying you can win a free vacation, or get cash and a tax break from donating your vehicle. So many billboards, TV and radio ads citing help blind children, donate car to fight cancer, fight poverty, give to the kidney foundation, or alzheimer’s research, to find a cure for breast cancer; the list is seemingly endless.
Wow ! So many worthy causes, how do you choose? How do you pick a car donation charity that will make the most of your donation, and won’t leave you holding the bag for liability and hidden costs?
We have heard many stories about how in previous experiences, donors have received parking tickets, towing and impound fees, DMV costs etc. after they have donated their car and assumed they would never hear anything about it again. Except of course when they will receive their tax receipt only to find that once tax time rolls around, the donation program turns out to be unreachable, or simply vanishes.
These negative experiences color the potential donor’s decision about what vehicle donation program to use.
There are some people, however, that let their philanthropic hearts lead them, and we commend them for being brave enough to try it a second time. Here are some suggestions to assist you in making an informed choice.
How do you know which companies you can trust and which ones to steer clear of?
1. Do your homework!
Research. Go online. Check with your local charity registries. Talk to friends and family members about experiences they may have had donating their vehicles. Call the program you are interested in and go to their website, if they have one.
Find out all you can about how the process works, and if there are any hidden fees or costs. Make sure you understand all of the steps involved in making a vehicle donation.
2. Find out how much of the value of your car will actually go towards the cause that you want to support.
Make sure you understand the difference between gross and net payments. Ask how much of your charity dollar actually goes to the charity itself, and how much of your dollar will go to administrative costs and overhead.
Be wary if the administrative cost is too high. If the charity cites more than 20% to administrative costs, your donation might be better utilized elsewhere. Also, find out what they do with your car. Will it be salvaged? Given to a needy family? Will they auction your car “as is” or repair and sell it wholesale or retail?
The dispensation of the vehicle will determine the amount of potential tax benefit to the donor.
3. Contact your State Dept.of Motor Vehicles.
Find out how to assign your title to the vehicle, and what your responsibility is and how to release liability for your vehicle. It is important that you take responsibility and don’t simply assume that the donation program will take care of everything for you. Many organizations do not have staffing reserves in place to handle DMV paperwork and transfers of title.
4. Find out about how towing and paperwork is handled, and by whom.
Who will be making the arrangements to pick up the car? Will you need to be present to release the car? How will the DMV forms be handled? Will you be receiving a receipt for the donation? Is the tow driver an employee or a contractor of the donation program? This may be important if there is an accident or the vehicle is damaged in the towing process(many donated vehicles are uninsured). How would the donation program handle such an issue?
5. Tax Receipt
The organization you donate to must be a non-profit in order for you to get tax deduction for a charitable donation, and that company must provide you a receipt for that purpose. If they are not willing to prove their tax exempt status, or give you their Federal Tax ID number, that should be a red flag warning that they may not be a true non-profit and beware.
Make sure you are clear on the follow up to your donation regarding how much of a write off you will be able to claim for donating your car. IRS guidelines have changed within the past few years, and you should be informed as to how that works. Obviously, you want to maximize the potential tax benefit available, so finding out how the sale of your vehicle is handled is very important. Keep the organization updated with current contact information so that a tax receipt can be sent to you in a timely fashion.
It is very important that you make an educated and informed decision about where your donation will do the most good because after all, isn’t that why we give?