Auctioneer Chris Leach sells a donated Volvo at Insurance Auto Auctions in Tukwila. Donated cars in decent shape are often sold at auction, while junkers are sold for parts. (Cody Ellerd Bay)
The ads are all over the newspaper, TV and radio. Everyone from cancer researchers to arts organizations -- especially at this time of year -- seems to be looking for vehicle donations.
Are they just trying to score a set of wheels for Christmas? Not at all. Vehicle-donation programs are an important source of revenue for many nonprofits. They also provide an easy way to get rid of a car, RV, boat or other vehicle and get a year-end tax break to boot.
Ringman Brad Caldwell shows off a donated Volvo at Insurance Auto Auctions in Tukwila. (Cody Ellerd Bay)
"The main reason people donate is to get rid of the junk in the driveway," says Pete Palmer, co-founder and vice president of the Monrovia, Calif.-based Vehicle Donation Processing Center Inc. "They don't have to mess around on Craigslist, and they also get a little warm fuzzy."
Selin Caka, a graduate student at Antioch University, had a 1997 Dodge Colt that she had totaled but continued driving for about a year. "I figured that instead of junking it, I would give it to someone who could get money for my junk," she says.
Caka called El Centro de la Raza, a Seattle-based Latino community advocacy organization. "There were just a couple of questions they had, and they picked it up," she says. "It was really easy."
Whether or not the donor realizes it, most auto donations go through an organization like Palmer's. These companies are contracted by hundreds of charities across the country, including dozens of groups in this area, to tow the cars and handle the process of turning them into cash.
"Someone has an old car and they might not think it's worth something to them," says Rick Watkins, CEO of Charitable Auto Resources in San Diego, another donation-processing company. "But maybe it helps someone get fed, or it helps a single mother or an injured animal, and it helps the environment by getting those old cars off the road."
Tips for donating
- If you have a specific charity in mind, call or go to its website to find out if it accepts car donations. Many have a link to a donation-processing company and the donation can be made online.
- If not, you can visit a processing company's website, such as donatecarusa.com or donatingiseasy.org, for suggestions.
- Within 30 days of your car's sale, you should get a receipt in the mail. As long as you initiate the donation by midnight on Dec. 31, you can claim it as an itemized tax deduction for 2010.
So what happens between the phone call and your tax receipt? It depends on the car. If it's beyond repair, it gets broken down and recycled, in which case the charity gets money from the parts.
Cars in good working condition might be given to a charity that can use them for day-to-day work, like Meals On Wheels. In most cases, cars that need a bit of work get sent to an auto-auction company such as Insurance Auto Auctions in Tukwila, where they're auctioned off either to used-car dealers or end buyers.
Once the car has been sold, a portion of the money goes to the charity (usually from 50 percent to 70 percent of the net proceeds), and the rest goes to the vehicle-processing company to cover its costs. The person who donated the car gets a receipt and tax forms in the mail stating the price that the car sold for, which can be claimed as an itemized tax deduction.
Ernie Butler, executive director of the Northwest Chapter of the Paralyzed Veterans of America, estimates that 30 percent of his organization's donation funds -- between $30,000 and $40,000 a year -- come from donated vehicles. He says the money helps make many of the group's sports, rehabilitation and recreation programs for disabled veterans possible.
"It's a great time to donate a car," he says, "and it gives us a lot of the funds to do the business that we do and do well."
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