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Does It Make Sense to Donate Your Car to Charity?

By Edited Nov 13, 2013 1 0

The ins and outs of making a donation of your unwanted car to charity.

Chances are that you've seen the billboards, heard the radio ads, or received a flyer in the mail explaining how you can donate a car to charity.  Most people don't have extra cars sitting around that they can donate to charity, but there are many reasons why someone would want to donate their unwanted car to charity instead of outright selling it.

Perhaps you've been considering making significant repairs to the car, and you've decided that you'd rather donate it to charity.  An older car can need more frequent repairs than a newer, late-model car.  Oftentimes the car will need a major overhaul and not just a tune-up.  And unless you're super-handy around a vehicle, this can get real expensive.  In this case it will make sense to get rid of the car instead of perform the necessary repairs.

Or maybe you've recently become debt-free by following a budgeting plan like Dave Ramsey's 'Seven Baby Steps' and you want to make a nice donation to a local charity that was there for you when you needed it most.  If your financial picture has changed considerably and you can afford to get rid of a car without direct return compensation for the vehicle, you may benefit from making your car donation to charity.

A Car Donation to Charity
When you donate a car to charity, the charity will either arrange for a tow truck to pick it up, or you can often drive it to them if it's in running condition.  Make sure you have the title and be ready to sign it over to the receiving charity.  You will receive a receipt indicating your donation to the charity of 'x' car, currently worth 'x' dollars.  Make sure you hold on to this receipt indicating your charitable deduction; you'll need it to claim the deduction when you file
next year's taxes.  

The charity will then do one of two things with your vehicle.  

They may sell it to a parts yard like Pick-N-Pull for the perceived value of the car's parts.  Places like Pick-N-Pull set your car in a lot where hobby mechanics can bring their tools, remove a part from your car, and take it home for installation on their own vehicle.  They make money when they sell parts, which may not be very often, so it's a risk on their part to store your car on their lot.  The lot will likely be very short with their offer to purchase the car from a charity because they cannot predict demand with 100% accuracy.  This method of disposal is the least preferred by the charities for this reason.

If your car may be returned to running condition or improved with reasonable expense, a used car dealer may purchase the car you donated at a fair price.  Depending upon the car, sometimes an enthusiast will buy it, restore it, and make all their friends jealous with their craft.  Online auction sites like AutoTrader and eBay Motors can help find the right buyers for cars with restoration potential.  The charity may also sell it outright themselves as a car dealer would, and turn their profits into a charitable donation to eliminate any taxable income.  

Believe it or not, selling cars that were donated to charity is a huge business.  There's nothing illegal or unethical about this, either.  As long as the charitable deduction you claim on next year's taxes matches a qualifying charity, what they do with your donated car is their choice, and theirs alone.  If they can turn a profit and use that money in a charitable manner, we all benefit.

Given

Scrap Metal Cars
 rising scrap metal prices over the past few years, it has become more common for cars donated to charity that aren't worth repairing to be sold to metal recyclers.  Many late-model cars have fiberglass and plastic body and trim parts, but the frame and engines are still made from steel and/or aluminum and have significant scrap value.  

Depending on the area in which you live and the charity to which you donated your car, the parts of the car may be removed from the chassis, cleaned up, and sold individually on enthusiast sites and other websites like eBay, Amazon, and more.  This requires a considerable amount of effort, however, so unless the charity has a wide-ranging skillset in its staff, the underlying amount of work necessary will prevent many from choosing this manner of recouping the minimal costs.

Whatever you do, make sure you remove all personal items from the car before turning it into a donation to charity.  After you sign over possession, it's gone, and you'll no longer have access to the vehicle or its contents.  Check the glove box, the trunk, and under the seats.  Look in all the pockets, holders, and cargo spaces, too.  

No matter what the charity does with your donated car, you can rest assured that the vehicle will go on to live another life in some other capacity and make a difference in many lives along its path.  

 

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