Many car-donation organizations leave little to charity

Some firms keep 50% to 90% of the proceeds from a vehicle’s sale, a watchdog group says.

Liz Pulliam Weston | Money Talk

Dear Liz: I want to dispose of my older car but don’t want to face the hassle and intrusion of selling it. I’m having trouble finding a reputable car donation organization in my area. I checked with a charity watchdog site but it didn’t have information on specific charities to use. Can you recommend an organization that operates efficiently and actually gives a substantial amount of the car proceeds to charity?

Answer: Start paying attention to which charities heavily advertise their car donation programs on commercial radio and TV stations and strongly consider avoiding them.

Many of these ads are paid for by for-profit companies that wind up keeping most of the proceeds from car sales. “Even the most reputable of the agencies that handle these transactions keep nearly 50% of the car’s value for their troubles,” notes watchdog site Charity Navigator, adding that other, less scrupulous entities keep 90%, or even more.

By contrast, charities that handle the donations themselves get to keep all or at least most of the proceeds. But finding such charities may not be easy.

Instead of starting with an ad, start with a charity you admire. Call and ask if it accepts car donations, or check its website. If the charity accepts such donations, ask if it handles the donation itself or contracts out to another entity. If it contracts, ask how much of the proceeds are donated to the charity. If you can live with that percentage, go ahead with the donation.

If you’re really stumped, check out your local public radio or television station. Many accept vehicle donations, and although the sales may be contracted out, the nonprofit typically ends up with the bulk of the proceeds.

Finally, remember that your tax deduction, if any, typically will be limited to what the car sells for at auction. And you won’t get any tax break if you don’t itemize your deductions on the relevant year’s tax return.

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