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Wednesday, April 13, 2016

Car Donations: the Charity, You, and the Third Party

Non-monetary gifts are a common route donors take to give to the charities they support. Donations of food and clothing to various charities are relatively typical, but what about vehicles? Each year, a large amount of Americans choose to donate their cars, boats, and RVs to charity. At surface level, it seems like a pretty good idea, especially if your vehicle isn’t running. You call the charity, they tow it away, and your work is done.      

Unlike a donation of food or clothing, you and the charity are not usually the only parties involved in processing car donations. An overwhelming majority of charities who accept vehicle donations process these gifts through a third party for a fee. Whether or not a third party is involved is not always clear to the donor throughout the transaction process. It is often challenging to find out what payment the third party receives for selling the vehicle. That amount can be shockingly large.

In past years, if you wanted to donate your car to the Make-A-Wish Foundation, you would do so through Wheels for Wishes, an organization that has recently been placed on CN’s Watchlist. Wheels for Wishes is an alternate business name of the Car Donation Foundation, which recently underwent investigation by Minnesota Attorney General Lori Swanson. According to the report released by Attorney General Swanson, the Car Donation Foundation gives between 18-22% of its gross revenue to charitable causes. Its gross revenue over the past four years totaled over $108 million.

Make-A-Wish Foundation has since entered into contract with a new organization that guarantees at least 70% of the value of vehicle will go directly to the charity you donate. 70% is a fantastic improvement from 18-22%, but it still might be unsettling to donors who believed that their entire donation is going to charity.

If your primary motivation in donating a car, boat, or RV is charitable giving, you have two solid options. The first is to sell the car yourself and donate the profit. This is the only way to be truly certain that your entire donation is going to the organization of your choice. The second is to call organizations in your area and ask them if they could use a car. Often times, charities need cars for transportation and will use it for charitable work instead of selling it.

Check out our Guide to Donating Your Car for more information.

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