Third Party or Facilitating Service to Manage Auto Donations

There are many reasons people choose to use a facilitating or third-party service organization to manage their auto donations. Indeed, they are often very similar to the reason a given charity might use such a third-party agent for auto donations. When you’ve already got too much on your plate, it’s good to let a professional help out.

For consumers, it’s often a simple matter of wanting the vehicle gone because a new one has been purchased. Sometimes it is the inherent bother and expense of hauling it away that makes people turn to professionals to handle their auto donations.

Of course, there are financial and charitable benefits to conducting such transactions yourself, but all auto donations are good ones as far as receiving charities are concerned. Also, if using a service to manage your auto donations makes donation that much more likely, then such services serve a valid purpose. As of 2004, nearly 70% of legitimate charities (determined to be non-profit by the IRS) used third-party agencies to manage their auto donations, though a similar amount did take their own inquiry calls.

As common as the practice is, there are some things you want to take into consideration when choosing a service to manage your auto donations for you. For starters, you want to make sure the third-party management of auto donations actually benefits real charities. This is often accomplished by calling the state Attorney General’s office or the state Secretary of State.

A large majority (39 of 50 states in 2004) of states require third-party agencies that handle auto donations to register with the state. If the company you’re inquiring about isn’t on the rolls but is advertising their services in the state, an investigation will likely continue. Feel free to ask for a copy of the legitimate list if you’re confused. Many states carry this information online.

There are many types of charities that can benefit from auto donations. In addition to the typical non-profit organizations as recognized by the IRS, schools, local or state governments, childcare organizations and veterans groups, in addition to the federal government itself are all eligible. Not included as valid targets of auto donations are for-profit support groups, political groups or candidates, social clubs, co-ops, labour or agricultural groups, as well as just about any social group that isn’t covered by non-profit exemption.

Once you’ve chosen a charity and third-party agent for auto donations, you can get down to the business of actually sending the car off. When inquiring about your vehicle a determination will be made as to whether it’s worth the effort of picking it up. Though some charities will accept any vehicle, others are pickier about what they will or wont’ take, as some donations actually cost them money. Those who do take all auto donations usually do so in an effort to generally encourage their donation base.

Even if your auto donation does run under its own power, it will almost always be picked up by a tow truck for liability reasons. Whether the charity in question will be using the car as is, will repair it for sale or sell it directly on the wholesale market depends upon their needs and how quickly the turnaround on auto donations are expected.

Vehicles sold at wholesale auction, as many third-party auto donation agencies prefer, will usually generate a far lower value than you could have achieved if you sold it yourself. This is generally important only if you believe the vehicle should be worth over $5,000. In this case, you’ll have to get a receipt for the actual value of the car. If it’s worth less, the “fair market value” of the vehicle may be estimated.

That said, if your car is worth less than what you paid for it, a third party group to handle auto donations may be a good choice as far as your allowable charitable deduction is concerned. In the case of higher-end auto donations, you (and the charity in question) may be better served selling in some other manner and donating the resultant money to the charity directly.

Auto Donation – Have You Analyzed The Actual Net Benefit?

When making an auto donation, whether a car, truck or RV, it may not actually be in your best financial interest when straight economics are concerned. Of course, charitable giving is it’s own reward for many, but if you actually consult your accountant, you may not enjoy any additional incentive in the form of tax deduction, as is typically offered for most auto donations. Especially if your auto donation is worth more than $5,000, you should consider your actual benefit to accurately judge whether it’s wise to donate your vehicle.

For starters, when you file your return for that year, you’ll need to file with itemized deductions, rather than taking the standard deduction. This can work against you if you’ve not rolled much of your money back into living and working expenses. Typically, itemized benefits are most often used for the self-employed since so much of their income is reinvested back into their livelihoods in the form of expenses. A young person just entering the workforce as a low wage employee may find it difficult to account for enough expenses when figuring their taxes.

Also, you could consider the cost of hiring a tax accountant if you don’t want to bother with all the receipts and calculations. Though many people could save money from itemized deduction, often they are not interested in fussing with their returns. The price of some tax preparers is low enough that a large percentage of those in the US use them each year, with widely varying results.

Auto donation is also a type of charity giving that is motivated by your desire to see the charity in question, one with whom you presumably have a particular belief in, get as much of that donation as possible. Of course, the amount you are able to deduct from your taxes also differs. Both figures are dependent upon whether you want to give your auto donation to an online or third party organization.

By taking the time and effort to find a charity that can benefit from your auto donation, you can increase the percentage of your auto donation that will be given to the charity and your deduction. The downside is that this requires time and effort on your part. This is especially true of higher value auto donations.

Third-party donation organizations are able to offer services such as towing and a quick sale, though sometimes this sale is at a lower price than you could have gotten if you’d managed the sale yourself. The price one pays for this convenience is overhead for the third-party organization.

Some states, such as California, regulate how a third-party donation service operates, stipulating that certain amounts of the proceeds are given to specific purpose. Other states have similar laws and statues. Find out if any auto donation service is registered to practice in your state. Any complaints against an auto donation service should be on file with the state Attorney General’s office.

Auto Donation Service

It is always wise to consider selling the car yourself rather than relying upon an auto donation service. Such services can consume nearly 70% of the sale price of the car in overhead costs. Even if you sell it quickly yourself, without repairing it for the sale, you can still expect far more of your donation to go to the charity you’re chosen. Often, one will contact the charity themselves with a cash donation after doing some research into the non-profit organization they’re interested in supporting.

In short, one should consider their motivations for any auto donation and balance that with their time constraints and personal financial gain in the form of a large charitable deduction on their taxes. Remember that deductions are taken off your taxable income, not the tax due. The relative worth of such a donation does depend upon your tax bracket.

All auto donations are appreciated and raise money for worthy causes, but there are great differences in the amount of relative value to you depending upon whether you conduct the donation yourself or use a third-party auto donation agency.