Charities Are Potential Clunkers Losers
August 10, 2009
Cash for Clunkers, the federal stimulus program that's put money in car buyers' pockets and
depleted automakers' once-bloated inventories may end up responsible for producing at least one regrettable "loser": charities that depend on donated used vehicles for funding or direct transfer to the needy.
Some charitable organizations that accept vehicle donations and either sell them for cash or turn over the vehicles directly to new low-income owners are seeing vehicles that normally would come their way instead being used for the $3,500 or $4,500 vouchers Cash for Clunkers provides toward new-vehicle purchases.
The Associated Press last week said one such charity in Texas estimates Cash for Clunkers has cost it $75,000 in missed used-vehicle donations. Goodwill Charities International Inc. reportedly is worried about the effect the program will have on giving. Another, the National Kidney Foundation, is projecting Cash for Clunkers will cut into its typical donation pool of about 30,000 vehicles annually to the tune of 10 percent to 15 percent.
But it may not be known for some time whether the federal program has a definite detrimental effect on vehicle donations for charity. And at least one large-scale operation told the AP it believes the Cash for Clunkers program may generate an increase in donations: many clunker owners end up unable to qualify for the program -- and dealers are suggesting the charities as an option.
The net result is somewhat equivalent in many situations, because owners of donated vehicles can tax-deduct the full book value of their clunker. But in the case of truly dilapidated vehicles, book value is nothing near the $3,500 minimum rebate available from the Cash for Clunkers program. -- By Bill Visnic
Photo by Edmunds.com's Brian Moody
Posted by Michelle Krebs at 4:11 AM under Companies , News | Comments (3) | digg this | Seed Newsvine
Since 2005, it's not been worth it to donate a car for the tax deduction. http://www.edmunds.com/advice/selling/articles/48930/article.html
Posted by: steve_ | August 10, 2009 at 9:30 AM
To me, the concept of donating a vehicle to charity is about helping others. The side benefit is the charity provides immediate disposal for the donor. Whatever personal tax write-off that there might be is just icing on the cake.
Longer term, C.A.R.S. probably will benefit charitable donations, and, ok, a teeny tiny bit for the environment. As mentioned, a lot of folks don't qualify because A)low credit scores and/or B) the vehicle is too similar in MPG vs the new unit, but still a re-sellable, presumably good fuel milage vehicle.
Posted by: fulcrumb | August 11, 2009 at 8:28 PM
I disagree with Steve_. I think it is still worth it to donate a car. You can even sometimes deduct the fair market value of the car. The IRS has a publication online that tells you what you can deduct or you can follow the online guide http://www.cardonation-taxdeduction.com (not the IRS however, so take it for what it's worth).
Also, I think it is sad that the government had to ruin the cars after accepting them into the cash for clunkers program. Why couldn't they just donate them to charity?
Posted by: bobbyst | December 01, 2009 at 1:12 PM