Car Donations and charitable donations
by Michael Rad
The modern society, with its distinct wealth-based classes has always prided itself with a
strong inclination to charity. From fundraising events to church donations, charity has become a way for helping
others but also a way to get rid of some taxes. The tax benefit one gets from donating for charity is roughly
proportional to the value of the donation of course. Lately, a new 'charity trend' has formed, especially in the
United States and Western/Central Europe, that of the car donation.
Car donations are practically give-aways of no longer wanted or heavily used cars, to charity organizations,
individuals, companies or even institutions. In the United States, the tax benefit from such car donations is among
the highest you can get from donations; hence the practice of giving away your old car when you buy a new one has
become very popular. Usually, the charity organization you will donate your car too will evaluate it and set an
estimative value for it, which will determine this tax reduction. For values that are under $500, the value of this
reduction is set by the donors own estimate of the cars value. Deductions for donations over this amount are
usually limited by the selling price of the vehicle. The vehicles are either sold in auctions or through direct
marketing.
Although the car donation program is a solid one in theory, it has been speculated that it could soon become a
'tax shelter'. Since this could not be proven so far, car donations have steadily grown to a number of almost 1
million per year. This means that almost 1 million tax payers have reduced their taxes with sums of up to $600-$700
million each year, only through this type of car donation.
From a charity organizations point of view, the car donation program is one of the best fields to work with.
Actually, it has come to a point where such non-profit organizations actually rely on car donations to keep their
charity events possible. Some of them have their own car lots for donated cars and process them directly, while
others rely on ads, auto auction companies and so forth. What most charity organization will do is take the donated
car, sell it through the auction company and then distribute the money to local charity organizations, or further
donates the money to a charity that the donor of the car indicated.
It is important to understand that the charity organizations selling donated cars dont get a profit from it,
they only take a small quota of the sum to cover up their expenses. A trustworthy car donation charity organization
will bring other charities and institutions a lot of money each year, genuinely helping them out. This said, it is
expected that the car donation phenomenon will constantly rise with each year, if the same tax reduction laws are
applied further on. Given the fact that its one of the most solid and popular types of donations today, its very
unlikely that these reductions will be hindered by government in any way.
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