Looking to Donate Your Clunker? Best Auto Donation Programs

The best programs and charities to give your car to are the ones that are going to actually use it, not just turn around and sell it at an auction. That's because the IRS will only allow you to deduct full "fair market value" of your car if it is actually used by a person or a charity after it is donated (or if they make significant improvements to the car, and then use it or sell it). There are exceptions, and you need to discuss them with your tax preparer, but "fair market value" is typically the Kelly Blue Book value of a vehicle. If the charity you donate to only sells the car at auction, you can usually only deduct 0.

Unfortunately, most charities will sell your car at an auction. And the charity will not even be directly selling the car at auction -- they will hire an auction manager (who frequently is the auction house itself) to handle the sale. The auctioneer takes a big cut of the sale price for themselves, leaving usually only a few hundreds dollars for the charity to collect.

CAR DONATION

In the case of a charity selling a car at auction like this, you will typically be able to claim no more than a 0 tax deduction for your donated car. While that's not a huge amount of money, it is still a good call to donate your car, provided you itemize deductions on your tax return and that your car is not worth much more than 0 or so anyway.

But if you actually do the math on how much of a benefit the charity gets from such a car donation, you'd do better to sell your car yourself, and then donate the full proceeds of that sale to the charity. But that's only if you look at the dollars side of the transaction. Selling a car takes time -- a lot of time -- so if you want to help out a charity, but you aren't willing to spend the next few weekends selling your car, then it is a perfectly reasonable compromise to just call up the charity, arrange a pickup, and let the charity handle everything from there.

This is one major benefit to the big auto donation programs, even if they do sell donated cars at auctions -- they know exactly what they are doing. They have created a car donation machine, and it runs very smoothly, so you can trust that the entire pick up and sale of your vehicle will go smoothly, and that you'll get all your tax documents on time and in order, and that the title transfer for your old car will be handled correctly. As someone has said before, "That's not nothin'."

But the better option, both financially for you and in terms of the good you can do, is to find a charity that will use your car themselves or give it to a needy person. There are fewer charities like this, but there are still hundreds of them across the US. They just tend to be smaller and advertise less.

Finding a charity that will either use your car themselves, give the car to a needy person, or make significant improvements to a car before they give the car to a needy person is harder, but it will probably only take an extra hour or two of research. Two major, national charitable programs that do give cars to people (not auctions) are Habitat for Humanity's "Cars for Homes" program and 1-800 Charity Cars.

Looking to Donate Your Clunker? Best Auto Donation Programs

Pamella Neely writes about how to donate a car to charity and how to donate a car for a tax deduction. Her website lists hundreds of charities across the US that accept donated vehicles.

CAR DONATION