Many nonprofit organizations accept donated cars to help fund their works to help children. If you've considered car donation but weren't sure just how it works, this explanation of how
car donations Phoenix help fund children's charities may help you make up your mind to do reach out and help children in need with your unwanted automobile.
Non-profit organizations have strict rules they must follow in raising money to fund their charitable works. Those regulations include rules about record keeping, giving receipts and activities they may pursue with the money they collect.
Car donation became an extremely popular way to give to charity back in the 1990s. The popularity was fueled in part by used car dealers who took advantage of the lax regulations to lay off their considerable tax burden by donating cars to charity and taking full value for their donations regardless of the amount the charity actually realized for the sale of the donated cars. The IRS stepped in and tightened regulations to eliminate the tax loophole, but the process of car donation is actually quite simple for an individual who simply wants to help children by donating your car to a children's charity.
What Children Charities Do with Donated Cars
There are three types of charity car donations for tax purposes. Here's a quick rundown of the three types and what you need to know about them.
Donate Your Car to Charity for Its Own Use
If you donate a car to charity and the organization chooses to keep the car and use it as part of carrying out its mission, you may take the full Blue Book value of your car as a tax deduction. Your car donation fits into this category if, for instance, you donate your car to your church, which uses it to deliver meals to shut-ins or help poor parents get their children to doctors' appointments. In that case, all you need is a receipt from the organization and a statement of value for the vehicle. The receipt must state that the charity is keeping ownership of the vehicle for its own use.
Charities That Donate Cars to Poor Families
Many organizations will repair or refurbish your car donation and then give it to a poor family that needs a car, or sell it to them at a very low cost. Most often, these families qualify for a car donation because they need a vehicle to transport their children to medical appointment, or because the breadwinner of the family needs a car in order to get or keep a job. The receipt for your charity car donation should include a statement signifying that the charity has given the car to a needy family, along with a statement of any repairs made to the car. You'll be able to donate the fair market value of the car on your taxes in this case.
Charities That Use the Proceeds of Car Sales for Funding
The final category of car donation types is the most common - charities that accept your donated car and sell it, then use the proceeds to fund their good works. Depending on the charity and the condition of the vehicle, the organization may do any needed repairs and sell the car at auction, sell the car as is to a dealer or at auction, or sell the car for salvage. Many charities that use car donations this way have an established procedure and maintain relationships with auction houses and salvage yards to ensure that they receive the best value for the cars they sell. If you donate your car to an organization that sell the car for the proceeds, your tax deduction is limited to the amount of money the charity realized on the sale of your car.
You can find charities of all types in any state in the U.S. When you decide to make a
car donation to help children and the disadvantage, do a little homework, and donate your car where you feel it will do the most good.
