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Donations of Vehicles, Boats, etc.

Donate your auto advertisement

You have likely encountered print ads, radio announcements, and billboards soliciting donations of used cars and trucks, boats, motor homes, residences, or property to benefit a charitable organization. They provide the donor a donation tax deduction for the fair market value of their gift and a convenient way to dispose of these no longer needed items.

You have probably wondered how these programs work, how successful they are, and whether they are an appropriate means of raising money for park support organizations. We noticed such an ad in a Sierra Club Newspaper for the Point Reyes National Seashore Association and decided to find out how successful it was.

According to Gary Knoblock, former Executive Director of the Point Reyes National Seashore Association, they became involved with the car donation program in 1998. The idea came from Gary's predecessor who used a similar program to raise funds for the Lindsey Wildlife Center in the San Francisco Bay Area. The Association initially selected as their contractor a vehicle donation processing center that was established in 1996 and has over 200 charities as clients.

During the initial years of the car donation program, the Association raised approximately $55,000/year. However, as more nonprofits became involved in this type of fundraising especially over the last three years, the Association now averages about $25,000/year. To date, the Association has raised approximately $300,000 through the program.

The Association reports no problems per se with the program. They invest very limited work for the money they receive. Most of the work (administrative, processing, advertising, dealing with the auction house, paperwork for IRS tax deduction, DMV paperwork, smog certification) is handled by the center which gets 50% of the sale proceeds from each donated vehicle. The Association receives 50% of the proceeds from the sale of each vehicle. However, after towing and repair costs are paid by the Association, net donation receipts are anywhere from 20% to 80% lower. The Association tried to renegotiate their percentage, arguing that donors are motivated by giving to the Association and want to see as much of the value go to the Association as possible, but the contractor refused to lower their fees.

The Association has begun to use a second contractor. Under this new contract, the Association gets a larger percentage from the sale of the donated cars, but also absorbs more of the administrative tasks for the program. Requests for car donations and marketing are handled by the Association's bookkeeper. No new staff has been needed or hired.

Using two contractors, the Association can pick and choose which car donations they will process. Higher valued cars that bring in a larger cash return are processed through the second contractor. Lower valued cars are referred to the first contractor for processing.

The former Executive Director knows how critical it is to maintain the public's trust. The public wants their donated vehicle value to directly benefit the Association and park rather than a third party contractor. Some charities and fundraising contractors have been in the news lately as being disreputable. He is aware of the sensitivities regarding the vehicle donation program and is always concerned about the vulnerability of the Association's reputation when connected to a contractor/third party.

Funds raised through the program cover about 2.5% of the Association's $1 million annual operating budget. The program, according to Knoblock, helps diversify the Association's funding streams, requires little staff time to maintain for the amount of funding received, attracts donors and doesn't take away potential donations from individual donors. The Association is not putting a lot of energy into growing the program, which Knoblock refers to as "gravy", but instead is focusing their fundraising efforts on individual donations.

For further insights regarding the car donation program, contact Mark Bartonelli, Executive Director of the Point Reyes National Seashore Association program at (415) 663-1200.

New tax laws of 2005 specify that if the claimed value of a donated motor vehicle, boat or plane exceeds $500 and the item is sold by the charitable organization, the taxpayer can only claim the gross proceeds from the sale. The 2004 tax law allowed tax payers to deduct their estimate of the fair market value of the contributed property.

Under the new rules, the charitable organization must provide an acknowledgement to the donor within 30 days of the sale stating the amount of gross proceeds. Alternatively, if the charity significantly uses or materially improves the vehicle, the charity must certify this intended use and duration and provide an acknowledgement to the donor within 30 days of the value of the contribution. If the charity significantly uses or materially improves the vehicle, the donor may deduct the vehicle's market value.

These new IRS rules on deductions will likely enable donors to claim tax deductions for their gift. One strong incentive that is not affected is the convenience of disposal of the gifted property.

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