Driven to donate

By Kim Leonard, For The Tribune Review

David Meredith has donated three cars to Goodwill Industries of Pittsburgh, mainly for the convenience.

"You don't have the hassle of trying to sell a used vehicle," said the engineer, who lives in Allegheny Township, Westmoreland County, and commutes to work in Moon. "No people coming to your house or dealers who only want to give you the wholesale price toward a new car."

Meredith's most recent gift -- a 1996 Lincoln Continental -- also gave him an $8,000 tax deduction, the type of incentive that charities have used to build lucrative vehicle-donation programs in recent years.

As many as 1.2 million vehicles ranging from clunkers that won't start to well kept recent models are donated annually to Goodwill, the National Kidney Foundation, the Salvation Army and other organizations nationwide that then sell them, usually at auction.

But there is widespread concern about federal legislation that could pass this fall, setting tougher standards for tax deductions on car donations and possibly curbing interest in giving.

Meredith asked a car dealer to put a value on his Continental, knowing he needed an appraisal to claim a deduction for a vehicle worth $5,000 or more. Owners of less-valuable cars can claim what they believe is the fair market price, usually based on Blue Book standards.

The U.S. House and Senate now are working to reconcile two bills, both designed to correct what some lawmakers see as abuse in the system. Taxpayers are claiming deductions that far outweigh the actual amount charities receive for donated vehicles, they say.

So far, the House has adopted a plan in President Bush's budget that would require each donor to get an independent appraisal of a vehicle, or use a formula the Treasury Department would develop.

The Senate version, passed in May, would require charities to give each donor a receipt listing the sale price. The deduction would be limited to that price, although proof of the sale price wouldn't be needed for vehicles worth $500 or less.

Limiting deductions to the auction price "would be a deterrent for me," said Meredith, whose Continental sold at a Goodwill auction for $3,200. Charities sell cars at around wholesale rates, "and I could get that from a dealer on a trade-in," he said.

Dr. William Poller, an Indiana Township resident and associate director of the Breast Care Center at Allegheny General Hospital, has donated two cars to Goodwill -- including an '87 Jaguar XJ that sold for $4,900.

Drastic limits on deductions would only hurt the cars-for-charities industry, he said. "I'm happy to donate," said Poller, whose writeoff for the Jaguar was $8,600, "but that would be less of a reason to donate."

Salvation Army Major George Hood, of the organization's Washington, D.C., headquarters, said large and small nonprofits are worried that fewer people will donate cars if the tax incentives shrink.

"If that would happen, there would be an impact on charities nationwide. A major revenue source for them would dry up," he said.

Those supporting the change say the idea is simply to prevent people from claiming deductions they don't deserve, said Jill Gerber, press secretary for Senate Finance Committee Chairman Chuck Grassley, R-Iowa, who has questioned a wide range of tax writeoffs for charitable donations.

The Senate provisions to control deductions on vehicles "are just building more accuracy and accountability into the process, so it shouldn't discourage donations at all," Gerber said.

Taxpayers claimed deductions for vehicles given to charities on about 733,000 of the 4.4 million tax returns filed for 2000, lowering their liability by $654 million, according to a 2003 report by the U.S. General Accounting Office.

But the 4,300 charities that operate vehicle donation programs got nowhere near that amount, the report said. In two-thirds of 54 individual donations the GAO examined, the organization got 5 percent or less of the values the taxpayer claimed, because of low auction prices and vehicle processing, fund-raising and other costs.

Charities are quick to supply their own, better numbers.

Goodwill of Pittsburgh, for example, said nearly 90 percent of proceeds from its weekly auction in North Huntingdon, the biggest among 91 branches that hold auctions, go toward career services for people on welfare or with disabilities. Nationwide, Goodwill agencies earn about $12 million each year from vehicle donations.

The National Kidney Foundation took in 73,000 vehicles last year, earning $17.6 million or about a third of its total revenue. More than 67 percent of the proceeds from "Kidney Cars" sales support patient and family services, education and research of kidney disease, the organization said.

The Society of St. Vincent de Paul, Diocese of Pittsburgh, relies less on revenue from donated cars than some other charities and contracts with a Florida firm for pickups and sales. The charity gets half the proceeds from a car sold at auction or for salvage for $400 or less, and 80 percent for bigger sales.

St. Vincent de Paul projected vehicle sale income at $35,000 for its fiscal year, which ends Sept. 30, but its numbers are down and revenue is about three months behind projections, Executive Director Fred Just said. Eighty vehicles were donated from October to December 2002, compared with 30 for the same period last year.

"We would attribute that to the fact that more nonprofits are being encouraged to be more entrepreneurial," he said. "We're noticing much more competition in this area."

Most charities have similar procedures and standards.

Donors must have clear titles to the vehicles and turn over the titles and a keys by pickup time. Tows usually are free, and receipts are provided.

The cars don't have to be in working order, although charities generally insist on whole vehicles -- no front or back end sections, or cars with missing engines.

Goodwill requires tires. "Otherwise, it's very hard to put them up on a flatbed" for towing, said Bob Wagner, director of the North Huntingdon auction. And St. Vincent de Paul sets a 10- or 11-year age limit. "But we try to make exceptions. Sometimes, you find that car that a 75-year-old woman owned, and it's 15 years old, with 30,000 miles and in good shape," Just said.

How can I donate?

Follow these steps when giving a vehicle to a charity and claiming a tax deduction:

• Verify that the charity is tax-exempt and authorized to solicit contributions. The Pennsylvania Department of State, Bureau of Charitable Organizations, answers inquiries at (800) 732-0999.

• Ask how the vehicle will be used. Will it be fixed up and given to the poor? Will it be resold, and if so what share of the proceeds will the charity receive?

• Itemize deductions, in order to benefit from a vehicle donation. But first, decide whether total itemized deductions are greater than the standard deduction.

• Deduct only the fair market value of the vehicle, taking into account its condition. This may differ substantially from the value listed in used-car guides.

• Document the charitable contribution deduction. IRS Publication 526 (available at www.irs.gov) explains the types of receipts taxpayers must obtain, and the forms they must file.

• Make sure the vehicle's title is transferred to the charity and keep a copy of the transfer. In Pennsylvania, the license plate must be removed and returned to the state.

What is my car worth?

Starting points, to help determine a vehicle's value:

• Kelly Blue Book, www.kbb.com

• National Automobile Dealers Association, www.nadaguides.com

• Edmunds.com, www.edmunds.com

Who will accept my car?

Some local and national charities that accept vehicle donations:

• American Diabetes Association, (800) 232-6570

• Catholic Charities, Diocese of Pittsburgh, (412) 456-6969

• Goodwill Industries of Pittsburgh, (888) 304-0227

• National Kidney Foundation, (800) 488-2277

• Salvation Army, (888) 999-2769

• Society of St. Vincent de Paul, Diocese of Pittsburgh, (412) 321-1071

http://www.car-donate-program.com
http://www.world-donation.com
http://www.donation-car-us.com

New York Times Scribe Seeks To Donate A Car For Re-Use Not Resale

By JAMES SCHEMBARI

Donating an old vehicle to a charity has long been a popular option. The charity makes money by reselling the car, and the owners get a tax break and the satisfaction that they're doing some good. Many charities accept old vehicles. The Polly Klaas Foundation and the California Council of the Blind say they receive most of their income this way.

Just last month, the National Automobile Dealers Association announced a donation program that lets owners choose a charity from a list of 200 (www.nadaguides.com or 800 792-2095). The dealers work with the Vehicle Donation Processing Center in Monrovia, Calif., which runs the donation programs for these groups.

The Vehicle Donation Processing Center says it generally will not take non-running domestic cars that are more than 15 years old.

"This is a fund-raising exercise, so we only want cars that we believe will have a net profit," said Harvard E. Palmer Jr., vice president of the processing center.

Many of the organizations make donating incredibly easy. They mail the paperwork to the owner, who signs over the title and mails everything back. Usually within days, a tow-truck operator calls to make an appointment to haul the car away.

http://www.car-donate-program.com
http://www.world-donation.com
http://www.donation-car-us.com

The Seattle Times On Car Donation -- Blind Group Funds Scholarships

By Suzanne Monson
Special to The Times

It shouldn't bother donors to learn that many legitimate, tax-exempt 501(c)(3)-registered charities contract with other companies, says Bert Colley, president of the Washington Council of the Blind, considered one of the pioneers in cars-for-charity in this region.

Most charitable groups don't have the overhead to run this kind of program, he explains.

"We're an all-volunteer program," Colley says. "We'd have to purchase a fleet of a dozen trucks, run maintenance, employ people, pay out all the Labor and Industry things you have to when you have a business. That would probably knock it down to 12 to 13 percent actual net for us."

Instead, he says, the council receives about 22 percent of the vehicle's sale price. The money supports scholarships, crisis programs and education support. Since starting its program in 1998, the council has gone from a nonprofit group that collected $75,000 in donations to one that made $270,000 last year. Colley calls the 3,600 vehicles it collected in 2002 the council's "best year ever."

To Tom Williamson of Renton, a little money to a charity is better than none at all. That's why he has donated two vehicles to Washington Council of the Blind. "I knew some of the work they did, saw the ads in the newspaper, and I actually did call to see if they were who they said they were," Williamson says. "They made it painless. In both cases, I called the number. They asked me a few questions about the cars — its brand, age, condition — and they sent me a packet in the mail within five days.

"They gave me information on how to calculate the fair market for the tax deduction," Williamson says. "But honestly, I just wanted them to be moved."

http://www.car-donate-program.com
http://www.world-donation.com
http://www.donation-car-us.com

The San Francisco Chronicle Sunday Magazine Re: "Donate a Car"

In an article originally published on Sunday, November 11, 2001, in The San Francisco Chronicle's Sunday Magazine section, titled "Converting Cars into Cash - Donating your car to charity seems like a good idea. But how much of the money really ends up with the cause?" Chronicle staff writer Craig Marine took the usual tough reporter's stance vis-à-vis the costs of operating vehicle donation programs but he still did at least explain the charities and vehicle donation processors position as well. Mr. Marine kindly identified the Vehicle Donation Processing Center, Inc. as "one of the larger and more reputable middlemen" and quoted Pete Palmer at some length on his insight into the car donation field. (We especially enjoyed Mr. Marine's Palmer quote zinger, at the very end of the article, "...we're hard-working, middle class businessmen. No jets, no limos.")

In fairness to those upstanding, for-profit commercial fund-raisers, they are the ones doing all the work. The commercial fund raisers absorb all the costs associated with soliciting, collecting, repairing, reselling and/or auctioning off what are largely - according to Pete Palmer, vice president of the Vehicle Donation Processing Center Inc., one of the larger and more reputable middlemen - Junkers worth an average of $400.

Palmer, in fact, bristles (to put it mildly) when the topic of percentages comes up in the vehicle donation business.

"The whole issue is bogus and I'll tell you why. I can only speak for our business and yes, there are bad guys out there, but in truth, there are a high percentage of fixed costs associated with trying to get cars for charities. If this is combined with the fact that the average worth of a donated car is around $400, then it's much clearer why charities don't get a higher percentage of the total revenue.

"We have towing, we have DMV costs - the fixed costs run to about $200 per car," Palmer continues. "There are lots of cars we take a loss on, and we turn all of our cars over to auction, it's the only way we do it because it's the reputable way to do it, in my opinion. Some of the cars we get might be worth $5 or $10, honestly, and we're going to eat that cost. If every car we got in was worth $10,000, then I'm sure we could turn 90 percent of the money over to charity. But I've been doing this for quite a few years, and I think I may have seen two donated cars worth 10 grand."

Perhaps because the case was more recent or eventually solved and therefore received more publicity, the Klaas Foundation received $2,429,174 in total revenue through its 1999 commercial fund-raising campaign for vehicle donations with the aforementioned Vehicle Donation Processing Center, Inc. The Amber Foundation, while not approaching that total, still took in $15,045.92 during the same time period, using a different commercial fund-raiser, Charity Funding Services Inc. the percentage paid to the foundation was 39.95 percent.

Of those totals, the Klaas Foundation actually received $1,265,473.10, or 52.09 percent of its total, while the Amber Foundation pocketed a mere $6,011, or 4 percent of its original $150,000-plus total revenue.

Paula Skuratowicz, the executive director of the Polly Klaas Foundation, doesn't have a problem with 48 percent of more than $2.4 million going to a for-profit organization.

"Frankly, I think it is a win-win situation for us as a nonprofit. This is the agreement we entered into, and the fund-raiser does have to absorb a tremendous amount of expenses," Skuratowicz says. "I think people out there are looking for a way to help, and this gives the public a way to help. We're very satisfied with the relationship - after all, it's more than a million dollars that we would not have otherwise gotten, and its money that we badly need."

As an aside, Skuratowicz also points out that the consistent advertising, not just for her own charity but others of a similar ilk, keeps the issue of missing children before the public.

"It can be very easy for people to forget about this issue if there isn't some highly publicized case going on at a given time," she contends. "When you hear our ads or see the billboards with the foundation's name on them, it serves as a reminder that children are being kidnapped around the country all the time; it breeds certain vigilance and an ongoing compassion." At the risk of appearing crass, it might seem that it's one thing to be satisfied with half of $2.4 million and quite another to run a charity receiving about six grand out of $150,000. However, even Kim Swartz, whose Amber Foundation took in the low end of the second total, still can't quite bring herself to rip her fund-raiser.

Back in the world of vehicular giving, Palmer explains the discrepancies one sees between various campaigns his company runs quite simply: Vehicle Donations Inc. runs different campaigns for different companies, and there is no way to control what might be towed in for whom.

"Different cars come in to different companies. If we had omniscient telephone operators, we could only accept the best cars. But we don't. And, naturally, the highest cost comes from the media - advertising. Without it, we can't reach enough people, and it can get quite expensive placing advertisements in various places, but we do the best we can by all our clients, that I can promise," he says.

Palmer's arrangement with the charities is simple.

"We guarantee that the charity will not lose money. We split the net proceeds down the middle. Are there crooks out there? You bet - people with side deals with used car lots, all kinds of things. But then again, there's crooks everywhere,” Palmer continues, before concluding with his own description of himself and the people at his company. "I like to say that we're hard-working, middle class businessmen. No jets, no limos."

http://www.car-donate-program.com
http://www.world-donation.com
http://www.donation-car-us.com

IRS Officials Urge Care for Those Making a Car Donation; New Law Changes Rules at End of the Year

WASHINGTON — The Internal Revenue Service issued a consumer alert today to help taxpayers avoid potential pitfalls when they donate their automobiles to charities.

In addition, as taxpayers plan their charitable giving, donors should understand the way that the American Jobs Creation Act of 2004 will alter the rules for the contribution of used motor vehicles, boats and planes after Dec. 31, 2004.

Next year, if the claimed value of the donated motor vehicle, boat or plane exceeds $500 and the item is sold by the charitable organization, the taxpayer is limited to the gross proceeds from the sale.

Under the new rules, the charitable organization must provide an acknowledgement to the donor within 30 days of the sale stating the amount of gross proceeds. Alternatively, if the charity significantly uses or materially improves the vehicles, the charity must certify this intended use and duration and provide an acknowledgement to the donor within 30 days of the contribution. If the charity significantly uses or materially improves the vehicle, generally, the donor may deduct the vehicle’s market value.

For the remainder of 2004, however, the new rules do not apply. Under the rules in effect for 2004, taxpayers will be able to deduct the fair market value of the contributed property.

“Just because the rules will be tightened for vehicles donated next year doesn’t mean anyone should give a car to charity and claim an inflated value this year,” said IRS Commissioner Mark W. Everson.

IRS officials recommend that people who want to donate their vehicle by Dec. 31, 2004, take the following steps:

• Check That the Organization is Qualified — Taxpayers should make certain that they contribute their car to an eligible organization; otherwise, their donation will not be tax deductible. Taxpayers can use the IRS Web site to check that an organization is qualified by searching Publication 78. Publication 78 is an annual, cumulative list of most organizations that are qualified to receive deductible contributions. Publication 78 is also available in many public libraries. In addition, taxpayers can call IRS Tax Exempt/Government Entities Customer Service at 1-877-829-5500. Be sure to have the organization’s correct name and its headquarters location, if possible. Churches, synagogues, temples, mosques and governments are not required to apply for this exemption in order to be qualified. They frequently are not listed in Publication 78. Donations to these institutions are tax deductible.
  
  
• Itemize in Order to Benefit — Many taxpayers can’t take a deduction for car donations because they don’t itemize deductions on their personal tax return. For taxpayers, the decision to itemize is determined by whether their total itemized deductions are greater than the standard deduction (for 2004, the standard deduction will be $4,850 for single; $9,700 for married filing jointly). Slightly more than one-third of the 130 million individual taxpayers itemized in 2001, the last year for which complete data is available.
  
  
• Calculate the Fair Market Value — The donor must take many factors into consideration to establish the value of the car. Many used-car buying guides contain step-by-step instructions so that readers can make adjustments to the value of a car for accessories, mileage and other indicators of its general condition. Both Publication 526, Charitable Deductions, and Publication 561, “Determining the Value of Donated Property,” provide detailed instructions.
  
  
• Deduct Only the Car’s Fair Market Value — Some car donation program operators have mistakenly claimed that donors can deduct the highest value listed in a used-car buyer’s guide for their make and model of car, regardless of the donated car's condition. The IRS, however, will only allow a deduction for the fair market value of the car. Fair market value takes into account many factors, including the vehicle’s condition. The fair market value of the taxpayer’s car may be substantially different than the highest value listed in a used-car buyer’s guide for that make and model of car.
  
  
• Document the Charitable Contribution Deduction — For vehicle donations, taxpayers must document the car donation and its fair market value. Recordkeeping requirements are comprehensive and vary depending on the amount of the contribution and the total amount of the charitable deduction. IRS Publication 526 details requirements for the types of receipts taxpayers must obtain and the forms they must file.
  
  
• Contact State Charity and IRS Officials When in Doubt — Donors with questions about whether a contribution is deductible should call the IRS at 1-800-829-1040 or for TTY/TDD help, call 1-800-829-4059. They can also find IRS forms and publications at IRS.gov. Donors concerned that contributions are being solicited for fraudulent purposes should contact the appropriate state charity official, who is often located in the state attorney general's office. A list of state charity official offices can be found online.

http://www.car-donate-program.com
http://www.world-donation.com
http://www.donation-car-us.com