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Using a Facilitating Service to Manage Auto Donations
from:There are many reasons people choose to use a facilitating or third-party service organization to manage their auto donations. Indeed, they are often very similar to the reason a given charity might use such a third-party agent for auto donations. When you've already got too much on your plate, it's good to let a professional help out.
For consumers, it's often a simple matter of wanting the vehicle gone because a new one has been purchased. Sometimes it is the inherent bother and expense of hauling it away that makes people turn to professionals to handle their auto donations.
Of course, there are financial and charitable benefits to conducting such transactions yourself, but all auto donations are good ones as far as receiving charities are concerned. Also, if using a service to manage your auto donations makes donation that much more likely, then such services serve a valid purpose. As of 2004, nearly 70% of legitimate charities (determined to be non-profit by the IRS) used third-party agencies to manage their auto donations, though a similar amount did take their own inquiry calls.
As common as the practice is, there are some things you want to take into consideration when choosing a service to manage your auto donations for you. For starters, you want to make sure the third-party management of auto donations actually benefits real charities. This is often accomplished by calling the state Attorney General's office or the state Secretary of State.
A large majority (39 of 50 states in 2004) of states require third-party agencies that handle auto donations to register with the state. If the company you're inquiring about isn't on the rolls but is advertising their services in the state, an investigation will likely continue. Feel free to ask for a copy of the legitimate list if you're confused. Many states carry this information online.
There are many types of charities that can benefit from auto donations. In addition to the typical non-profit organizations as recognized by the IRS, schools, local or state governments, childcare organizations and veterans groups, in addition to the federal government itself are all eligible. Not included as valid targets of auto donations are for-profit support groups, political groups or candidates, social clubs, co-ops, labour or agricultural groups, as well as just about any social group that isn't covered by non-profit exemption.
Once you've chosen a charity and third-party agent for auto donations, you can get down to the business of actually sending the car off. When inquiring about your vehicle a determination will be made as to whether it's worth the effort of picking it up. Though some charities will accept any vehicle, others are pickier about what they will or wont' take, as some donations actually cost them money. Those who do take all auto donations usually do so in an effort to generally encourage their donation base.
Even if your auto donation does run under its own power, it will almost always be picked up by a tow truck for liability reasons. Whether the charity in question will be using the car as is, will repair it for sale or sell it directly on the wholesale market depends upon their needs and how quickly the turnaround on auto donations are expected.
Vehicles sold at wholesale auction, as many third-party auto donation agencies prefer, will usually generate a far lower value than you could have achieved if you sold it yourself. This is generally important only if you believe the vehicle should be worth over $5,000. In this case, you'll have to get a receipt for the actual value of the car. If it's worth less, the “fair market value” of the vehicle may be estimated.
That said, if your car is worth less than what you paid for it, a third party group to handle auto donations may be a good choice as far as your allowable charitable deduction is concerned. In the case of higher-end auto donations, you (and the charity in question) may be better served selling in some other manner and donating the resultant money to the charity directly.
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