Car donation is the practice of giving away unwanted used
automobile
A car, or an automobile, is a motor vehicle with wheels. Most definitions of cars state that they run primarily on roads, Car seat, seat one to eight people, have four wheels, and mainly transport private transport#Personal transport, peopl ...
s or other vehicles to
charitable organization
A charitable organization or charity is an organization whose primary objectives are philanthropy and social well-being (e.g. educational, Religion, religious or other activities serving the public interest or common good).
The legal definitio ...
s. In the
United States
The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
, these
donation
A donation is a gift for Charity (practice), charity, humanitarian aid, or to benefit a cause. A donation may take various forms, including money, alms, Service (economics), services, or goods such as clothing, toys, food, or vehicles. A donati ...
s can provide a
tax
A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax co ...
benefit to the donor.
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](_blank)
/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 deduc ...
.
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
An auction is usually a process of Trade, buying and selling Good (economics), goods or Service (economics), services by offering them up for Bidding, bids, taking bids, and then selling the item to the highest bidder or buying the item from th ...
. 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 organization. Operating as a non-profit organization allows charities to avoid the large overheads created by profit-making car donation companies. In addition, whereas car donation in the US has been incentivized 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, haulers, tow-truck companies and salvagers 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.
See also
* Pete Palmer Jr.
* Kars4Kids
* Wheels For Wishes
References
{{reflist
Charity
Taxation in the United States
Car donation