Donate cars directly to charity

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Q: How can I donate my used car to charity?

A: Many major charities accept donations of used cars, but there are some pitfalls to be aware of.

First, be wary of middlemen who take the cars, then sell them at auction and give part of the proceeds to a charity -- after taking their cut.

Trent Stamp, executive director of Charity Navigator, a nonprofit organization that evaluates charities, advises potential donors of used cars to cut out the middleman whenever possible.

"The best advice for people who are trying to do some good, as well as to get a tax benefit for themselves, is to go directly to a charity that will handle the donation and sale process themselves," Mr. Stamp says.

In most cases, the charity will sell the car at auction anyway, just like the middleman would. The difference is that the charity will get all the proceeds if it does the sale itself, minus whatever costs they incurred to tow the car and sell it.

Donations of used cars can be taken as a tax deduction. However, years of taxpayers abusing the system by claiming inflated values for their donated cars, as well as a drive to make up for budget shortfalls, has led Congress to consider tougher rules on used-car donations, Mr. Stamp says.

In order to make an equitable estimate of the value of your car, Mr. Stamp advises going to the Kelley Blue Book or the NADA Appraisal Guide (affiliated with the National Automobile Dealers' Association) to find the fair-market value. Another resource is Edmunds.com Inc.

Elizabeth Schwinn, a reporter for the Chronicle of Philanthropy in Washington, D.C., says the used-car donation system has been investigated by the Internal Revenue Service for the past few years because of widespread abuse.

"There are people who donate their cars to charity and claim a deduction even though the car doesn't run," Miss Schwinn said.

In order to find a charity near you that takes donations of cars, Mr. Stamp recommends calling well-known organizations such as United Way, the Salvation Army and the Boys Clubs and Girls Clubs for advice on how to make a donation and which local groups accept them. You also can search online; many charities that accept donations of cars have instructions on their Web sites.

"They understand how this game works, and they don't want the money going away from these charities," Mr. Stamp says.

ASSOCIATED PRESS