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In Lieu of Regular Car Donation, Non-profit Organizations (NPOs) Find New Sources of Revenue
from:Since the 2005 rulings that severely limited the amount of money that could be deducted for the most common types of car donation, non-profit organizations with an educational or a mission that includes the direct use of cars have had to come up with new sources of funding to make up for the loss of donor activity. In most cases, for the amount required to offset the loss of car donations, non-profit organizations with a charitable mission were relatively unaffected since the amount they were receiving from third-party donation agents was very small anyhow.
In a 2003 report from the General Accounting Office, it was shown that most charities that employed such third party agents were likely to only receive 1-5% of a vehicle's actual worth from car donation. Non-profits with a charitable mission that doesn't include the actual use of a car had few options when accepting donated cars, especially those that needed mechanical repair, other than selling them on the scrap or wholesale markets.
At that time, there were over 4,000 organizations accepting car donations. Non-profits with their own services accounted for less than 3% of the total in 2002. However, since the rule changes of 2005, the percentage of non-profits with their own shops has gone up markedly since so many of the for-profit companies have gotten out of the car donation business since is no longer nearly as lucrative for them.
Of course, this means that organizations that are in a position to accept cars directly are well-placed, as there are just as many cars that are good candidates for car donation. Non-profit organizations that accept vehicles for use, usually those that are still running and able to be delivered by the donor, have been able to reach a higher share of the donor market since there's less competition and a decade of billboards and radio ads by those for-profit companies has left an impact on people's minds.
As for the various fund-raising challenges that charities now face without car donation, non-profits nationwide have adopted an expanded list of items they are willing to accept. Cash is always good ad is the donation of choice, usually in the form of a nice, fat check.
Next, there is the inevitable acceptance of non-cash gifts that are still related to money markets or other business forces, such as stocks and bonds. These are very easily turned into cash for operations. Car donation to non-profit organizations is, even in the best of circumstances, takes longer to turn into cash money.
Even coin collections, stamps and other small, non-mobile hard goods of great value are accepted in many cases, in lieu of car donation. Non-profit organizations are now set up to handle just about anything that can be easily shipped, partly due to the ease of putting items up for auction on eBay and other auction sites.
The same rules that apply toward car donation to non profits apply toward the donation of furniture and household goods. In fact, one is now barred from taking any sort of deduction from donating items that are not in “good” or better shape. That means no more sweaters with holes and no more mangled tennis rackets.
For instance, designer clothing that cannot be sold at a charitable retail store like those run by the Salvation Army, St. Vincent De Paul or the Goodwill Industries, is then sold as scrap material, and very probably sent to China, only to return as part of a cheap rug at WalMart. The IRS isn't interested in funding a trade imbalance, either. Thus, one can now only take the real value of clothing donated, just as with car donations.
Non-profits that are ready to make the best use of the car donations that come to them won't have to use additional sources of funding unless expanding their mission or trying to offer their paid employees a higher wage.
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