Car donations typically end up in a few places, depending on the condition and the charity. Sometimes they’re used directly by the charity for their programs, but they may also be sold to a dealer or auction to generate funds. Some charities sell donated cars for a discounted price to people in need.
Car Donations for Direct Charity Use
Some car donations are used directly by the charity for various programs. For example, they may be used to deliver meals, transport clients, or perform other administrative tasks. Some charities have more specialized programs. For example, Good News Garage repairs and distributes car donations to low-income people who couldn’t otherwise afford cars. Another charity, Newgate School, uses many car donations for its students’ training to be mechanics.
Selling Car Donations for Funding
Some charities also sell car donations for funding. These may be sold through auctions or licensed dealers. If the car is in poor condition, it might be sold to a salvage yard for parts and materials. Some charities may operate used car lots or partner with online car sales platforms to sell the cars. The profits from selling the car are then used by the charity to carry out its mission. As mentioned above, sometimes the cars are refurbished and sold at a discount to needy individuals.
Do Charities Pick Up Cars?
The beginning of a car donation journey starts with delivering the car to the charity. However, many charities will also arrange to pick up the car. Whether that means coming to your house and driving the car away or having it towed depends on the condition of the vehicle.
If you’re donating a car, it’s important to verify with the charity whether you need to drop it off or if they’ll pick it up. It’s also important to note the time and place of the drop-off or pickup and get a receipt. This will be your proof to the IRS that the car donation happened. It’s also a good idea to take pictures of the vehicle and its condition to confirm fair market value.
How Charities Decide What to Do with Car Donations
Some charities accept vehicles no matter what condition they’re in. These charities will make use of the vehicle depending on its condition. They might strip the vehicle for parts, sell it to a salvage yard, or use it as a repair dummy in the case of mechanical schools. Sometimes the charity repairs the vehicle and sells it for a profit, or to help those with low income. If the car is in good shape, it might be used to help the charity directly, such as becoming regular transportation for charity workers to complete various missions.
What Factors Affect Tax Deductions?
What a charity does with a vehicle might affect your tax deduction. That’s why it’s a good idea to find out what the charity will do with your vehicle. The tax deduction for car donations depends on how it’s being used. For example, if the vehicle is sold, then your tax deduction is based on the sale price. The minimum deduction is usually $500 for a vehicle that runs. If the charity uses the car for its work or sells it at a reduced price to a low-income person, then the deduction will be the vehicle’s fair market value.
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