Charities say the donations they receive are dwindling just as the need for their services is increasing to what may be the highest level of our lifetimes.
In this economy, many of us are in little position to help. But there is at least one thing that many of us can do. Most of us will eventually need to replace our cars, and when that time comes, we can offer our old car as a donation to charity.
Many people are already offering their car for donation. There were 311,451 vehicle donations in 2005 with an average value of $1,508 each, according to the IRS.
Offering a car for donation is usually a fairly easy thing to do. Most programs that handle car donations will tow your car for free. Generally, they will accept cars that are not running or that cannot pass state emissions standards.
There is a tax deduction available for offering your car for donation. However, if you have done this before, you should be aware that the tax rules now are not as generous as they were in the past.
Prior to 2005, the available tax deduction was equal to the fair market value of the car offered for donation.
Now you can generally only deduct the fair market value if the car is worth less than $500.
A charity or the company that runs its car donation program will often resell the cars it receives. Under current tax law, you can only deduct an amount equal to the resale price, unless the car is worth less than $500.
Make sure your charity provides you with written documentation of the sale. Charities must provide documentation within 30 days.
A couple of other things to keep in mind if you offer your car for donation:
In most states, it is the responsibility of the donor to notify their state department of motor vehicles of the registration change after donating their car. Don’t forget to do this. If you do not notify DMV of the change of ownership, you may be charged with parking tickets and other fines for violations committed by the next owner of your car.
Also, when deciding which charity to donate to, you may want to ask a few questions about their vehicle donation programs. The California Attorney General’s Office found in 2005 that in 2004, less than half of the proceeds raised through charitable vehicle donations in California ended up going to charities. The remainder went to commercial fundraisers that the charities contracted with to run their vehicle donation programs.