How to Donate a Vehicle to a Nonprofit

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By Lija Rasa
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Donate your used car to charity

Donating your used vehicle is a great way to give to charity and it comes with benefits such as lowering your taxes. If you are planning on donating a car, however, you should be aware that this has become a huge for-profit business. If you really want to help someone, make sure to donate your vehicle to a nonprofit organization. Here is how you can do it.

Difficulty: Moderate

Instructions

Step 1

Look for a charity organization that can accept a vehicle donation. A charity you already contribute to, might be able to do that - make sure to check. Ask at your local church - they might be able to point you to the right place.
1-800-Charity-Cars could be a good choice if you can't find a local charity you could donate to.
Step 2

Don't fall for a middleman trap - there are so many organizations who advertise charitable car donations, yet they keep most of the profits from the sale of the vehicle. Beware that IRS does not have a requirement of what percentage of the money must actually go to charity. Sometimes it's as little as 10% or even less.
Step 3

Check with the nonprofit organization you are considering donating the car to if they have 501 (c) (3) public charity status. This is the only type of nonprofit that will allow you to claim the tax deduction.
Step 4

Fill out the donation papers and make sure to transfer the car title to the nonprofit. If on the donation papers they ask you to leave a blank space where the new owner name is supposed to go, you might want to look for another charity.
When the car is sold at an auction, the new owner might not bother to register it, and you will still be considered the owner. You might be held liable for parking tickets or, worse yet, if the car is used in a crime.
Step 5

If your car still runs, you might want to drive it to drop it off as opposed to having the nonprofit arrange for a pickup. The costs of that would reduce the amount of money that would actually go to charitable causes.
Step 6

Make sure to save the receipt the charity sends you after they auction your car so that you can deduct the donation from your taxes. If the charity chooses to use the car for their own purposes or give it to a person in need, then you may use Fair Market Value (from Kelley Blue Book) for your tax deduction.