4 Tips To Ensure That Your Car Donation Is Used Effectively

Posted on: 26 September 2016

If you have a vehicle that is in working condition that you don't want to sell but that you want to get rid of, one of your best options is to donate it to a charity. Here are a few tips that will help ensure that your donation is used effectively. 

#1 Donate Directly To The Charity Itself

There are numerous organizations that act as an intermediary agency and purchase old cars and then give a percentage of the sale to a specific charity. The biggest risk with using this option is that the IRS doesn't require the intermediary to give a percentage of the profits from your vehicle to the charity. For example, if your vehicle is worth $2,000, they may only give the charity $500 dollars. When you use an intermediary, you may actually not be giving as much money to charity as you think you are and are instead making a sizable donation to another business that is profiting off your generosity as a "processing" fee. 

Instead, donate your vehicle to a charity that will directly accept your car donation. That way, you can ensure that the full financial value of your vehicle actually goes to the charity. Some charities will fix up your vehicle and give it a family or person in need and others will sell it for parts and use that money for charitable purposes.

#2 Maximize Your Donation By Dropping Off Your Vehicle 

Next, if your vehicle is still running, drive it and drop it off at the charity yourself and arrange for a ride home. If your vehicle is not in running shape, pay for the tow truck yourself.

If you have roadside assistance through your insurance, you can use one of your free tows to get your car to charity. If you have to use a tow, you can write that off on your taxes as well. 

If the charity has to pay for the tow, it will cut into the value of your donation. 

#3 Transfer The Title

You also need to transfer the title to the charity. Make sure that you put the charity down as the new owner of your vehicle, and go to your DMV or Secretary of State to ensure that the title was correctly transferred. 

Do not donate to a charity that requests that you leave the ownership space blank on the title when you transfer it. Doing this puts you at risk of still being responsible for anything that happens with your vehicle. For example, if the vehicle was involved in an accident that injured someone, you could still be sued for their injures as the owner of the vehicle. 

#4 Verify 501 (c) (3) Status

Finally, make sure that you verify that the charity you are donating to actually has 501 (c) (3) status; they need to have this status in order for you to write off your donation on your taxes for the year. 

For more information, contact local professionals like Newgate School.