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Donating Your Used Car To Charity: Pros, Cons, And Tips

used_carWe donate our used clothing and other items to charity, so why not other items that we no longer have a use for? You can make a difference in a big way by donating big ticket items like boats and cars to charitable organizations. The increase in charities accepting vehicle donations has led to a mutually beneficial and booming business, wherein the donor saves by claiming the donation on income taz returns and the charity is able to sell the vehicle and use the funds to further its cause. While this might seem like a straightforward way to do good in the world, there are some associated risks with donating your car. 

Pros

  • Many charities have started to accept vehicles as a form of donation, so you can most likely find a charity that supports your favorite cause to donate to.
  • You can claim a huge deduction on your income tax returns when you donate your car to a charity approved by the IRS.
  • You get to save yourself the hassle of trying to find a buyer for your used car.
  • Donating a car makes it much easier to make a big difference for your charity with less financial impact to you than a cash donation.

Cons

  • Intermediaries that accept your car donation and then donate the proceeds to the charity of your choice often take a substantial cut away from your chosen cause. If the charities you support don’t accept car donations directly, you may be better off finding one that does.
  • To get a tax deduction, you’ll need to follow up with the charity to get paperwork that proves the vehicle’s value. Your estimate or the fair market value probably won’t cut it if your car is worth over $500.
  • The same paperwork to get rid of the car is still necessary- if you don’t formally re-title the vehicle, you could risk parking tickets and more down the line.

Tips

  1. Avoid 3rd parties and try to donate your car directly to the charity of your choice.
  2. Choose a charity that means a lot to you and has a big impact in its line of work. If the charities you usually support don’t accept car donations, take time to investigate alternatives instead of just picking the first charity you find. The Better Business Bureau can help you to evaluate charities whose activities you aren’t very familiar with.
  3. Make 100% sure that your chosen charity is a 501(c)3 non-profit organization that is qualified by the IRS for donation deduction purposes. 
  4. If you have to use a middle man, do your research to find out how much of the proceeds from the car’s sale will actually go to the charity. Do they take a percentage, or a flat fee? Using an intermediary not only limits the effectiveness of your gift, but can also have tax implications.
  5. Keep a thorough paper trail for tax purposes in order to claim the donation on your tax returns.
  6. Deliver the car to the charity yourself so they don’t have to take money out of your donation to pay someone to come pick it up.
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Jack Lovegood is a automotive expert and a contributing blogger for Chrysler Group LLC, where you can purchase a Jeep extended warranty at a discounted rate. 

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