Car donation is the practice of giving away unwanted automobiles or other vehicles to charitable organizations. In the United States, these donations can provide a tax benefit.

In the United States

Tax considerations

Donors need to fulfil certain post-donation requirements to qualify for the tax deduction,Internal Revenue Service Publication 4303, A Donor's Guide to Vehicle Donations
/ref> such as obtaining a written acknowledgment of the car's subsequent sale by the charity, and itemizing tax returns instead of taking the

standard deduction Under United States tax law, the standard deduction is a dollar amount that non- itemizers may subtract from their income before income tax (but not other kinds of tax, such as payroll tax) is applied. Taxpayers may choose either itemized deducti ...

. For vehicles valued at less than $500, the deduction amount comes from the donor's own estimate of the car's value, even if the charity receives less money from its sale. Deductions greater than $500 are limited to the proceeds of selling the vehicle, usually at auction. The U.S Internal Revenue Service advises that starting in 2005:

In the United Kingdom

Car donation schemes in the UK are slightly different from those operating in the United States and only established themselves as a valued source of income for UK charities in January 2010, led by GiveACar – a non-profit organisation. Operating as a non-profit organisation allows charities to avoid the large overheads created by profit-making car donation companies. In addition, whereas car donation in the US has been incentivised through tax breaks, in the UK there are no such tax benefits to donating your car.

Practices

Vehicle donations in America are operated in a wide variety of plans, ranging from highly organized and professional-grade not-for-profit, national, or local

charities A charitable organization or charity is an organization whose primary objectives are philanthropy and social well-being (e.g. educational, religious or other activities serving the public interest or common good). The legal definition of a cha ...

to scrap yards,

hauler Haulage is the business of transporting goods by road or rail between suppliers and large consumer outlets, factories, warehouses, or depots. This includes everything humans might wish to move in bulk - from vegetables and other foodstuffs, to cloth ...

s, tow-truck companies and

salvager A salvage tug, known also historically as a wrecking tug, is a specialized type of tugboat that is used to rescue ships that are in distress or in danger of sinking, or to salvage ships that have already sunk or run aground. Overview Few tugbo ...

s who establish programs that may support a charity. According to Charity Navigator, the guidance of the rating agencies concerning car donation programs, where the charity receives a flat fee for the use of their name by a third party, versus program management by a third party, there are some questionable companies who contract to use a nonprofit's agencies name and logo to raise funds and then just give them a flat fee unrelated to income or performance. This is frowned upon by rating agencies and the government. However, a percentage return program is viewed positively if the nonprofit receives more than 50% of the generated income.

References

External links

* {{dmoz, Society/Philanthropy/Gifts_in_Kind/Vehicle_Donations Donation Charity Taxation in the United States Used car market