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Donating Your Vehicle to Charity
Most people who donate a motor vehicle to charity are interested both in benefiting a worthwhile charitable purpose and receiving a tax deduction. Not all charitable vehicle donations programs are alike, however. This flyer has suggestions on how to better understand who you are donating to, how your donation will be used, and whether, and how much you can deduct on your taxes for a donated vehicle.
How Charities May Use Your Donation.
Charities typically do one of two things with a vehicle donation:
First, a charity may use the donated vehicle in its charitable program or distribute the vehicle to needy individuals. For example, a charity may use your vehicle to teach disadvantaged individuals how to repair cars or to deliver groceries to senior citizens. It may also give or sell your car at a steep discount to an economically disadvantaged person.
Second, the charity may sell your donated vehicle to the public or a junkyard and use the proceeds from the sale to fund its charitable programs.
Charity-Operated Programs vs. Fundraiser-Operated Programs.
Some charities operate their own car donation programs. Other charities, however, use for-profit fundraising companies to solicit vehicle donations and sell or scrap your vehicle. In these instances, typically only a portion of the sales price going to charity and the remainder is kept by the for-profit fundraising company as a fee or commission.
Under Minnesota law, a fundraising company is supposed to disclose its name and that the solicitation is being conducted by a fundraising company. If it does not, ask the person you are speaking with if they work for the charity or if they work for a fundraising company.
In other cases, one charity may solicit vehicle donations and pay a portion of the proceeds to another charity. Here too, it is important to determine how much money ultimately goes to the charitable purpose and how much is spent on fundraising and overhead.
Before you donate, ask the charity or fundraising company how it will use your donated vehicle. Will it auction off your car to the public or sell it to a scrapyard? Will it give your vehicle for free or at a nominal cost to a needy person? Will it keep your vehicle and use it to carry out the charity's mission? Ask about the mission of the charity, what services are provided by the charity, and what people are helped by the charity.
It is usually best to donate to organizations you know. Some charities that advertise heavily may use your donation for purposes which would surprise you.
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