Numerous car donation programs appeals you to donate your vehicles, but do you know that only some of these actually contribute to the charity? Most of the car donations are used by fraudulent organizations that very well know how to convince you to part with your vehicles to them. None of us want to get cheated this way. Even the IRS which has been alarmed due to the tremendous growth of car donation programs has recommended that you carry out a clear study of the program before you part with your car to it. Here are tips on choosing the best car donation program that will genuinely utilize your vehicle for a social purpose.
- The charity that you choose must be a trusted and renowned one. Thousands of charitable organizations out there accept car donations. But before you donate to one of them, get to know about it in-depth. The organization should work to benefit the community, either local or outside. Beware of charities that use a name a similar to that of a renowned charitable trust so as to lure you into thinking that these are the original ones.
- Ask the organization how much they will receive on your donation. The organization has the responsibility to manage your car donation in the best possible manner. Get to know from them the amount of gross proceeds that will go to them from your car donation. If the charity will get only a percentage of net proceeds, your car donation could be a big waste. Reports say that most car donation programs return an amount somewhere between 15 – 35% of the gross amount to the charity, but this they report as 50 – 70% of the net amount. Thus, the difference becomes quite big as this means that the charity may get just $150, whereas you thought that the amount given to it will be $1000.
- After you have chosen a charity to donate your car to, sign the title of your vehicle directly over to the organization or to their agent. All of the American states have very precise regulations regarding the transfer of vehicle ownership. Under any situation, never leave the ‘buyer’ section blank in the title. If you leave it blank, anyone can transfer the title from you to themselves. This can lead to the following two problems.
- The donor may remain liable for the car, which means that he may be liable to the current owner, and to his actions if the car transfer is not correctly done.
- The charity may not get any credit for the car donation. When you sign the title directly to the charity or their legal agent, it is more likely that the car will be used for the charity, for the purpose that you mention.
- Make sure that the paper work of the vehicle transfer is carried out in the right way. Or else, you will have to face certain adverse consequences in the future. These consequences are not just those mentioned above, but also those related to annual audits by the IRS. So, if a charity does not agree on carrying out the paperwork properly, it is better to find another one for making your vehicle donation.
- Get to know how the donated vehicle will be handled. Ask how your car will be picked up and transported to the charity. Ensure that it is done by insured and licensed towing companies. Also ask if the charity has contracted a licensed dealer to handle the legal transfer of the donation.
- Get to know how and where the money will be used. The answer for this should be easy. The charity should put the funds received through selling the vehicle in the best way possible. Keep away from those programs that claim to send the funds to any charity without having any direct contact with them. Not all charities are equal, and not every vehicle donation program pays equal attention to the wishes of the donor.
- If possible, it is better to go for a charity that accepts your vehicle donation directly. The charity should look after the sale transaction of your donated vehicle by itself. This way you can ensure that the entire amount received from the sale goes to the charity. On the other hand, a charity that employs an intermediate agency to sell the car will have to part with at least 50% of the sales proceeds to the agency. So, avoid these kinds of charities.
- Go for a charity that accepts car donation and owns a good reputation in the social area where you would like your contribution to go. You will have to carry out some research to know these aspects of any charity.
- Make sure that the charity has a 501 (c) (3) status. This way you can ensure that you are eligible for tax deductions on the car that you have donated. Some organizations that fall under 501 (c) (4) may claim to be of the non-profit kind, but these are not entitled for tax deductions.
- In case you decide to donate your car to an organization that employs an intermediate to sell your car, get to know the percentage that the charity will receive through research. Ensure that the intermediary gives a lion’s share of the sale proceeds to the charitable organization. This way, you will not only get the satisfaction that your car donation has been put to the best use possible, but also that your tax deduction is also maximized.
- Once you have made up your mind to donate your car, it is advised that you get your car evaluated properly. Since you are going to avail tax deduction on the donated vehicle, the IRS keenly gets to know the actual value of your car. It deducts your tax on the basis if the price for which your car gets sold. Even if the car is not sold by the charity, but is used by it, you should get to know its fair market value. The same principle applies for a car donation made to someone with a low income resource.
Based on the above mentioned tips, you can filter out genuine car donation programs where you can make car donations to. An easy way to find out the frauds is that they cannot or will not answer to your queries about their whereabouts and what-abouts. And usually, the genuine ones immensely simplify the process of getting you connected with the charity to which your funds go.