Be Careful Where You Donate Your Vehicle

More people are finding that donating their old or unused vehicle is a great way to clear up some space in their driveway while also helping a local charity. Programs like Kars4Kids accept these donations as part of their fundraising efforts.

These organizations typically sell or auction off the vehicle with proceeds going to a particular charity or program. Of course, auction house costs and other fees come out of the proceeds first. To make the most of your donation, it’s best to stick to programs that get 75% or more of the proceeds, while any intermediary that takes more than 40% of the profit should be avoided.

While there are plenty of worthy organizations out there that will make great use of your donated vehicle, there are some programs that may not make the best partners.

Kars4Kids

Kars4Kids is a program that helps raise money for Joy For Our Youth, which passes funds onto Oorah, Inc. Money raised by Kars4Kids goes towards a religious organization that attempts to convert children into its religion through day camps.

The main reason why you should avoid donating to Kars4Kids is that they’ve been found guilty and fined for misleading practices, including not disclosing their religious affiliations. Kars4Kids also lost around $5 million in real estate investments along with being accused of offering vacations in exchange for donations. According to the IRS, practices like that take a company out of being a legit charity and crossing into illegitimate territory.

The GIV Foundation

If you’ve ever seen advertisements for Cars for Breast Cancer or Cars for US Troops, you’ve encountered programs by the GIV Foundation. While this organization is registered as a non-profit called Growing in Voices, there is no consistent information online about this organization’s location, contact information, etc.

Why this organization should be avoided is that, according to the Washington Secretary of State’s office, they only pass on 7% of the proceeds to charity. That means this organization looks to profit for itself much more than passing on funds to a worthwhile organization.

Vehicle Donation Processing Center

According to CNN and the Tampa Bay Times, the Vehicle Donation Processing Center, operating under the name DonateCarUSA, is one of America’s worst charities. This organization operates under the same premise as any Car For Cause program, but it only donations between 18 to 27% of the net proceeds to charity. On top of that, DonateCarUSA has been disciplined and fined over $35,000 in Florida and New Jersey for their practices.

How To Best Donate Your Car

Just because there are a few bad charities out there taking advantage of people’s generosity doesn’t mean you should give up on doing good with your car donation. There are plenty of organizations that are committed to transparent transactions.

Here are some things you should look for to ensure your car donation is being put to great use:

Donate Directly

When possible, find a charity that accepts car donations directly. By cutting out the middleman, you avoid profits going in the wrong direction. You might even already support a charity that has a car-donation program. If not, there are more than enough awesome options out there.

Make sure you also title your donation to the charity. If you’re asked to leave the ownership space blank on the title, it could end up causing problems in the end. The charity might sell the car right away, but the car is still registered to you. When possible, find a charity that will help you officially and legally transfer the title.

Only Donate to Non-Profits

Make sure the charity with which you are partnering is an official 503 ©(3) organization. Just because a group calls themselves a non-profit organization doesn’t mean they actually are. True non-profits are subject to various rules and regulations to ensure they operate appropriately.

Learn The Rules

One of the benefits of donating your car is that you get a nice tax deduction come April. Typically, you can only deduct the amount that the car sells for by the charity, not the highest selling price on Kelley Blue Book. If the organization uses the vehicle, repairs it before selling it, sold at a discount, or is worth less than $500, your deduction is based on the Fair Market Value (FMV). A reputable organization will help you understand this part.

Make sure you also keep all documentation of your donation. You may have to fill out additional IRS forms to submit receipts to prevent the IRS from knocking on your door.