Car donation charities are very common in the United States, with thousands of registered non-profit organizations taking cars from donors daily. Unfortunately, because the market for donating vehicles to charity is so competitive, it can be challenging to figure out which charities are legitimate and trustworthy and which are not. If you’re considering donating your car to charity, here’s how to identify reputable car donation charities.
How do you know if the organization is legitimate?
Step one for investigating if an organization is legitimate is by looking at its website and ensuring they have contact information listed and the company’s full address. The best car donation charities are also ones that are local and won’t charge you any fees for the service of picking up your donated vehicle from your home or office.
Do they have an IRS 501(c)(3) status? A 501(c)(3) status means the Internal Revenue Service has approved the charity. Many philanthropists like donating cars because they get to claim their contribution on their taxes. If they don’t have this designation, they can contact their tax preparer or accountant before deciding.
The Internal Revenue Service maintains an online database where you can check whether an organization is a registered charity and if your donation will be tax-deductible. You can also report possible charity fraud to the Federal Trade Commission and your state’s corresponding charity oversight office.
Who can benefit from donated cars?
Donating a car to charity can be an excellent way of giving back and getting some extra benefits. Many diverse organizations accept vehicle donations sold for funding to support their mission. Some examples of populations being supported include:
– Children & families
– Those experiencing terminal illness
– Scientists and researchers
– Refugees
– Students with learning disabilities
The best charities have good track records for helping people who need it most, providing tangible results (rather than just talking about helping others), and not spending too much money on fundraising or administrative costs.
Are there tax breaks for donating vehicles?
Suppose you donate your vehicle to a qualified nonprofit. Talk with a tax professional to ensure you fully understand how those benefits will impact your financial situation.
While there are many great reasons for donating vehicles, it is essential to know that the IRS does not allow you to write off the total cost of what you paid for the car in your taxes. You can only deduct either the fair market value or what you paid for it.
If I’m selling my car, should I donate it instead?
If you have an older vehicle that no longer meets your family’s needs, don’t scrap it! Instead, consider donating it to a charitable organization that supports families in need.
Even if you plan on selling a car that has high market value, it may be advantageous to donate it instead. Aside from the clear benefits of skipping the long sales process, you can potentially get even more significant financial benefits from donating. For example, a sale will create a tax bill, while donating creates a deduction.
Talk with your tax professional to estimate how this may impact your tax liability to fully understand how the choice will impact you financially.
Helping determine which donation location makes sense for you
The first step in this process is determining which type of charity you want to donate your vehicle to, the next step is finding out whether the charitable organization has a branch in your area, and finally, it’s all about finding out whether or not the organization will accept your make and model of vehicle.
You can do this by visiting the charitable organization’s website and checking the list of vehicles they will accept. In addition, many organizations have a donation coordinator on staff who can help you fully understand the benefits of working with their organization and how your donation will be used.
Hands of the Carpenter (Hands) has locations in Golden, Colorado, and Aurora, Colorado, to serve single moms with dependent children. Most local vehicle donations provided to Hands go directly to moms in need. In addition, out-of-state donations can be picked up and sold at auction to benefit our mission.
