When your car has reached the end of its drivable life, you have the option of donating it to a charity. This can mean significant savings on your tax return, especially if your vehicle isn’t sold or scrapped by the charity of your choice.
But there are so many groups claiming to be charities that will accept your used car. How do you know which ones are legitimate? Here’s how to avoid car donation scams and fraudulent car donation programs.
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Choose Your Charity
There are over 1.4 million charities in the United States. These are all legitimate, legal charities where you can donate your vehicle. Of course, not all will accept your vehicle donation–some will simply have no use for your car.
Do you have a cause you’re passionate about? Do you have a family member who has benefited from a non-profit’s work? The easiest solution for you would be to ask whether that group accepts vehicle donations.
If you don’t have a charity or cause in mind, a quick Google search will bring up a list of groups that will accept your vehicle. That, however, is only the beginning of your research.
What Does the Charity Support?
Before you donate your car to a charity, look into what the non-profit does. There have been cases of non-profits not offering full disclosure as to their practices. For instance, Kars4Kids, a nationally advertised non-profit, came under fire for not disclosing that donations only benefit Jewish children and only in certain states.
Take your time and fully check out the charity’s mission statement and how they will use your vehicle. Remember that not all non-profits will use the physical car; some will sell or auction your vehicle. That’s normal and to be expected.
What you want to know is how the profits from the sale will be used and who will benefit from them. Programs with scant information are not necessarily car donation scams, but it’s still good to know how your donated vehicle will be used.
Is the Charity Federally Recognized?
It’s very easy to find out whether a charity is registered with the IRS as a 501(c)(3) non-profit. Simply visit the IRS website and download the IRS Publication 78. You can avoid car donation scams and fraud by verifying that the car donation program is managed by a legitimate charity.
Now, you may choose a “charity” that’s not on this list. Perhaps your local church is in need of a vehicle, or a private school needs a transport van. That’s okay, you can certainly gift your car to them. But it’s not tax-deductible if you’re not giving to someone on the list. In fact, there are other tax implications, so be sure to research how to gift a vehicle.
Eliminate the Middleman
An important tip to remember when learning how to avoid car donation scams and fraud is to cut out the middleman. These middlemen can be trickier to spot than you may think.
When you do your initial search for charities that accept vehicle donations, you’ll find quite a few websites that will lead you to believe that the company advertised is a charity. In fact, some of these agencies simply take your car, “process” it, and give a portion of the proceeds to the non-profit.
In other words, they may be taking up to 90% of the value of your donation.
Work Directly with Non-Profits
The safest way to donate your car is to work directly with the non-profit you’ve chosen. Again, you may already have a charity in mind. If this is the case, a simple phone call will start the conversation. Call your local chapter or connection to agree on the next steps.
If you haven’t already chosen a charity, it’s perfectly fine to search online. Just be sure to diligently research whether the organization is legitimate, then call the non-profit directly. Don’t depend upon a third party to handle the transfer of your vehicle to the charity.
When you make that initial call, it’s okay to ask questions. How will your vehicle be used? What is the tax deduction you can take? Will they sell, auction, or scrap your car? Do you care? Who will the proceeds benefit, or who will benefit from the use of your car?
You absolutely have the right to ask questions about your donation. Handing over the keys to your vehicle is no small matter; you want to ensure that they’re in good hands.
Summary: Car Donation Programs and Charities
With literally millions of charities in existence in the United States, it can be hard to choose one to donate your car to. There may even be sound options you’ve never before heard of! Do your research and check to make sure that the non-profit you choose is the real deal. Doing so can save you time and frustration when it’s time to file your taxes.