Donating your vehicle is fairly simple, if you’re willing to invest a bit of time up front. Better yet, most of your research can be carried out online or over the phone, from the comfort of your living room:
• Start by identifying the right charity. There are many, many organizations that accept used vehicles. Find one that does work you believe in.
• Ask how the charity would use your gift. As mentioned above, many organizations sell donated vehicles to the public or sell them as parts or scrap. Other organizations use donated cars to provide services — for example, delivering meals to shut-ins. That’s a great and worthy cause, but it means that the organization won’t be selling your vehicle, so you won’t get a receipt documenting its actual market value. You’ll have to estimate that for yourself.
• Ask whether the charity uses a broker to sell donated cars. That’s fine and legal if they do, but keep in mind that in such cases, the charity won’t receive the full benefit of your gift, since the broker will take a cut. The same goes for vehicles sold at auction. Some charities hold their own auction and this will help you maximize your gift.
• Confirm that the charity is a 501(c)(3). There are many schools, churches, museums, and other organizations that qualify for 501(c)(3) status from the IRS, but some haven’t filed the proper paperwork. If the company hasn’t received at least a preliminary ruling from the IRS, your donation won’t be tax-deductible. You should also look out for other organizations that seem like 501(c)(3)s, but are actually 501(c)(4)s — typically, lobbying groups. Contributions to 501(c)(4)s are almost never tax-deductible.
• Ask the charity how your car will get re-titled. Chances are good that once you’ve donated your vehicle, it then sold without incident, but unless there’s a formal means of transferring the title from you to the charity, you could still be on the hook if something goes wrong. State laws vary with regard to the transfer process. Make sure you know where you stand.
• Hold onto all related paperwork — your original purchase receipt, recall notices, and anything else that might be important. If the charity sells your vehicle, ask for a copy of the sales receipt, too, so you can add that to your folder. This will come in handy if there are questions down the line.
• Deliver the car in person. If you take the car to the charity yourself, you can make sure all of your last-minute questions are answered. You’ll also save the charity the towing fee, funneling that money back into the organization’s programming efforts.
• Perhaps most importantly, if you have questions or concerns about the donation process, contact a professional. We’re happy to offer general guidelines, but accountants and lawyers will be able to offer specific advice appropriate for your situation and locale.