The holidays are all about giving, and many households make their largest charitable donations at the end of the year. An increasingly popular form of donation is a vehicle.
I frequently encounter ads on the radio, TV, and online urging me to donate my car to a cause (too bad I don’t have one!). However, donating a car to charity isn’t as simple as advertisements make it sound. It’s important to verify that the donated vehicle will actually benefit a charity and that the charity is trustworthy. Additionally, it’s important that you fill out the correct paperwork to avoid getting in trouble with the authorities.
The following tips from your BBB will help you donate your vehicle safely and successfully:
- Research the charity. org can help you make a well-informed giving decision. Charities are evaluated against comprehensive Standards for Charity Accountability, and are accredited if they meet all 20. When you look up an organization at give.org, you can see how the charity operates and where your donation goes – whether it be to programs, salaries, overhead costs, fundraising, etc. Although participation is voluntary, it should raise a red flag for donors if charities haven’t disclosed any of the requested information. You should only be donating your vehicle to a transparent, trustworthy organization. It’s also important to ensure that the charity in question is a 501(c)3, which you can do on the IRS website. Make sure the charity is also registered with the California Attorney General.
- Avoid scams. In 2016, consumers reported hundreds of charity scams to BBB Scam Tracker. If you’re contacted out of the blue about donating your car to an organization, be wary. It’s possible that the charity doesn’t actually exist, and is using a fake but legitimate-sounding name and spoofing the Caller ID to create a false sense of security. If you have an old car you’d like to donate, it’s better to be proactive rather than reactive. Don’t be lured by and respond to advertisements – find a trustworthy charity who’s mission you support that accepts vehicle donations and go from there.
- Ask questions. Ask if the charity accepts cars directly and handles the transaction themselves. To maximize the impact of your donation, it may be best to steer clear of charities that use commercial fundraisers to collect car donations. Commercial fundraisers may keep a large percentage of the proceeds, leaving little to the charity. If possible, drive your car to the charity so that they don’t have to pay for a towing service. Ask the charity if they’ll be using the car for their needs, giving it away to someone less fortunate, or auctioning it off – this is important for your tax records. If the car is being sold, ask about the process and how much of the sale proceeds go to the charity.
- Fill out the necessary paperwork. It’s vital that you transfer the car’s title to the charity’s name and keep a copy of this record. If a charity asks you to leave the assignment of ownership space on the charity donation papers blank, that’s a red flag. If you don’t sign your car over to the nonprofit, you will be held responsible for any tickets the car receives or liable if it’s used in a crime. According to the CA Attorney General, “failure to transfer registration has subjected many donors to subsequent penalties and expenses for donated vehicles, most often accrued parking violations.” For tips on transferring your car’s title and registration, visit the DMV’s website.
- Know how to report it to the IRS. A car is a valuable asset, and reporting your donation to the IRS can be complex. The amount that you can deduct from your taxes depends on whether the car was auctioned off, given to someone in need, or used by the charity after the donation. The IRS publication “A Donor’s Guide to Vehicle Donation” and website have all the information you’ll need for deducting your donation correctly.