Car Donation Scams
While many people want to do something good by donating their cars to charity, they need to be aware that there are a number of car donation scams out there. It is not always easy to tell the legitimate programs from the car donation scams, so people must be careful about how and where they donate their vehicles.
First of all, many nonprofit organizations are not actually set up to take automobile donations. There is a lot of work involved in being permitted to collect and process donated vehicles, and not all charitable organization have been willing or able to set up such a program for themselves. If they do still accept donations of this sort, then they must do it through a third party. These companies are often referred to as intermediary agencies.
Do Intermediary Agencies Equal Car Donation Scams?
The short answer to this question is “not necessarily.” Some intermediary agencies are truly serving an important purpose for nonprofit organizations that couldn’t otherwise accept car donations. They are able to pick up the cars, transfer the titles, take them to auction, and distribute the funds back to the nonprofit. Of course, they do all of this for a fee. If the fee is a reasonable one, then it is certainly worthwhile for the nonprofit organization to go ahead and pay it.
On the other hand, it is not unheard of for intermediary agencies to expect 50% or more of the proceeds. This might even be on top of the towing and title fees. In the end, the nonprofit organization could end up with as little as 10% of the actual money raised by a donated vehicle. Even if it’s not technically illegal, it’s not hard to recognize that these are car donation scams.
Other Car Donation Scams
In general, there are two things to keep in mind if you decide to go through an intermediary agency to donate your car. First of all, how much of the proceeds will actually go to the nonprofit organization? There are disreputable companies out there that say they are picking up a vehicle on a nonprofit’s behalf, but then they keep all of the money themselves. This is basically auto theft. In order to avoid this, or even intermediary agencies that just take more than their fair share, talk to the organization you want to support. Ask them if they’ve found the agency to be reliable in the past. Make sure that they’ve not only been receiving a reasonable cut, but that they’ve been getting paid at all.
Finally, be sure that the nonprofit you’re donating to is designated as a 501(c)(3), tax-exempt organization. If they have a different designation, such as 501(c)(4), then you may miss out on the opportunity to receive a tax deduction for your donation. It’s not unheard of for car donation scams to be as simple as just omitting a few details so someone will donate under false pretenses.
The majority of car donation programs are going to be legitimate, but doing just a little bit of homework will keep both you and your favorite charity from becoming victims of car donation scams.
First, i would talk to a tax professional to make sure you ve got all your t s crossed with the irs.
Second, you need to decide if you want to outsource the pickup and sale of the vehicles or manage that process yourself. Running this in-house usually gets most of the car s value back to your charity. Some charities even have volunteers that repair the vehicles before they sell them or give them to a family.
If you choose to outsource the donation vehicle pickup and sale, find out what percentage the companies take to handle the donations. If it s cheaper to outsource, you might want to go that route. Just make sure they re reputable.
Hope that helps,
Think again charity does not have volunteers they are ran by crooks you want proof I have video tapes that shows. Ill give you name and stories of their abuse.There is no stopping their tactics.We must legislate them they pocket 90% for themselves. They hire crooks and manipulate the system that is the spirit of charity giving.Your donation make this criminal empire stronger. type you donation online then type lawsuit and see what you get.
Charles Duby says:
A few of years back the tax code allowed the donator to deduct the retail cost of the vehicle instead of the amount actually received. Then, I was replacing an Oldsmobile that, according to the Kelly Blue Book, was worth about $1000-$1400. I donated through Disabled American Veterans, which allowed one to pick the charity of his choice. I chose the youth program at my church, expecting they would receive somewhere in the neighborhood of $500. One would expect the DAV to have some integrity, right?
So the DAV hauled my car away and I got my statement. The statement looked something like a utility or phone bill, with all these unknown fees tacked on the bottom subtracting from the actual sales price (of about $800, $800?).
The result was that the charity actually received a check for $14.50!!
Fortunately, I was able to take a deduction of about $1200.
I will never ever fall for that scam again.