It’s finally time to retire the old clunker. After 150,000 miles, it’s still running, but beginning to look shabby around the edges and smoke is pouring out of its rapidly rusting tailpipe. A new hybrid will put you back in the Earth’s good graces.
So what to do? You can sell the old bomb via the local car trader, but that means fielding phone calls, arranging a time to meet prospective buyers, getting all the documentation in order and more. But there is an easier way: You can donate your car to a worthy cause, and receive tax deductions, too.
Quick and Easy
The Internet makes donating your car or truck relatively painless. Provided your vehicle is fairly recent (some groups want post-1990 only), the process involves only a few clicks and a little bit of paperwork. First, identify a nonprofit, and make sure it’s set up for vehicle donations. Branches of the big national groups do this, and local organizations, too (usually using surrogate services).
The donation service should contact you within one or two business days. Let’s suppose you’re donating the car to the American Lung Association (ALA), which fights for cleaner air. ALA makes it simple with a dedicated website. Click on your state, fill in the form and you’re basically done. You”ll be asked if the vehicle has license plates, if the title is clear and if it’s drivable. When the service comes to get the car, you”ll be giving them the keys and the necessary paperwork—in many cases, a signed bill of sale and title.
The beneficiary sends out a formal acknowledgement that it has received the vehicle. As the “donee,” you’re entitled to deduct from your taxes the gross proceeds that the beneficiary realized from selling the car (usually either to an auction house or scrapyard). At Earth-share of Washington State, one organization with a car donation program, within a span of two weeks to three months after the transfer the donee will receive a “notice of sale” with an Internal Revenue Service form 1098-C. If you made the donation in, say, the calendar year 2007, you”ll be able to claim the deduction on your 2007 tax return (even if the vehicle wasn’t sold or received by its end user until 2008).
“It works out well for us,” says William Borden, executive director of Earthshare. “We raise approximately $39,000 a year from car donation, a good share of our annual $260,000 budget.” Earthshare uses two vendors to pick up and process cars because, Borden says, “We don’t have wreckers to pick cars up nor the expertise to diagnose what kind of work they need.”
Earthshare’s arrangement is typical of smaller groups. The middlemen usually operate as profit-making companies. While most do a good job for their nonprofits, not all of them are scrupulously honest. When the worst are through processing their “fees” and “fixed costs,” there’s not a lot left over for the nonprofit group. Some environmental groups report widely varying results with vendors, and say it’s best to have a written contract so that all financial exchanges are clearly handled. The car donation groups point to the number of complete wrecks they take in while incurring labor, towing and disposal fees.
“Even in the most efficiently run car donation program, the percentage of gross sales price of all the auto donations that is retained by the nonprofit just has to be pretty low,” says Donate carusa.com.
If your car is beyond saving, chances are that donating it will mean environmentally friendly recycling. Typically, 75 percent of the average automobile is recovered in dismantling operations, and Argonne National Laboratories in Chicago has pioneered efforts to recover the remainder (mainly interior plastic and fabric seat material, known as “fluff”). Used engine oil can also be “re-refined” and recycled. So even if cars polluted the atmosphere when they were operational, they can still do some good on the way to their final resting places.