How to Use a Car Donation Program to Take the Hassle Out of Charitable Giving

Vehicle donation programs benefit a wide variety of charitable organizations. The money from the sale of your car goes directly to organizations that provide food for the homeless, relief to countries ravaged by war and natural disasters, and inner city education programs. Vehicle donation programs represent a growing source of revenues for U.S. Each year, Goodwill Industries earns an estimated $12 million from donated vehicles, enabling the organization to provide intensive career services for an estimated 5,000 welfare recipients, or 2,500 people with disabilities. Vehicle donation programs, after all, make a lot of sense for charities. People get rid of their old cars all the time.

Not everyone has the time to deal with all the intricacies of preparing their car for sale, much less fixing up an old clunker to maximize their sale value. This has historically been the responsibility of the vehicle donation program that was run by either a charity or non-profit organization (NPO).

There are times when NPOs use a for-profit third party to facilitate the possession and sale of truck and car donations. Such unscrupulous programs that take advantage of the charities they are advertised to serve have been a less common though persistent problem since modifications were made to the tax code in 2005. However, by carefully checking the details of any vehicle donation program you decide to go with, you can guarantee that the majority of the proceeds from the sale or donation of your car goes directly to the charity you choose instead of middle-men.

Indeed, though they once represented only about 4% of third-party donation agents that manage car donation programs, some are actually non-profit themselves. You can check on this to make sure by asking for the organizations tax ID number and looking it up on the IRS website.

Using such a car donation program has the advantage of best utilizing the talents of those working for the charity you hope to donate to. Especially now that the actual amount of your deduction is tied to the ultimate use of the automotive donation, it is in the interest of many such organizations to get the most practical use from your donation as possible.

And let's be honest, most of the cars given to a car donation program are not in the best of shape, otherwise you'd not be getting rid of the car in the first place. When the car isn't even running well, the offer of a free tow from your location can be a good motivator. In some cases, however, you may want to shop around to see if there is a vehicle donation program in your area that specializes in teaching people how to fix up old cars rather than just selling them to the nearest available scrap yard.

Sometimes, donated cars run perfectly well, though you've decided to upgrade. It is usually the case that many charities are constantly on the lookout for such car donations. Vehicle programs that focus on road-worthy cars are often the very same ones that will find a practical use for your donated vehicle that will make it possible for you to take the fair market value of the car for a deduction rather than a somewhat lower (often much lower) sale price that is paid for vehicles auctioned at wholesale.

Just because you don't have time to deal with making the sale of the vehicle yourself doesn't mean that you don't want to make sure the charity you choose doesn't get the highest possible benefit from your donation. As such, you should never be afraid to ask a car donation program to tell you how they plan to use your vehicle. If you don't like what they have to say, go ahead and keep looking. There are a plentitude of non-profit organizations and charities (and their agents) that are legitimately hoping to maximize your value as well as their own.

One exception to the usual benefit of car donation programs is a vehicle that has actually appreciated in value over time. Though this is not usually the case, some classic cars are subject to such appreciation. If you've had the vehicle for more than one year and it has appreciated during that time, you may be subject to capital gains tax from the sale.

It is best to consult with an accountant to deterimine if the donation of such a car, whether you conduct the sale yourself and dontae cash or allow a car donation program to handle it is the best option for you. Generally, donating the car itself is the best course of action, though again, its use has an impact on the amount you'll be able to deduct from your taxes.

Car donation programs can take a lot of hassle out of your charitable donation of a vehicle. By simply following the guidelines for choosing the best car donation program for your needs, you can fully maximize the benefit of your gift all around.