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seattlepi.com

Seattle Post-Intelligencer

Some get more mileage out of an old car that goes to charity

But not all donations go smoothly, government warn
Saturday, December 27, 2003

By DEBERA CARLTON HARRELL
SEATTLE POST-INTELLIGENCER REPORTER

Donated junkers head for the scrap heap, reliable cars go to working folks and hot donations -- like that '91 Lexus and Mazda Miata -- are posted on eBay.

Ka-ching.

When all goes well with charitable vehicle donations, nothing is wasted and everybody wins, according to Jim Brown, program director for the auto donation program of Volunteers of America/Western Washington in Everett, one of the oldest and largest such programs in the state. People who desperately need cars get them for low cost, charities get a boost and donors avoid hassles, feel good about helping others -- and get a tax deduction.

But acknowledging that not all such donations go smoothly, federal and state agencies are increasing both scrutiny and consumer advice, particularly as end-of-year donations rise.

In recent weeks:

  • The Internal Revenue Service has issued consumer alerts, urging taxpayers to ask questions when they donate their vehicles to charity.
  • The General Accounting Office released a study saying that while donating vehicles to charity saved Americans an estimated $654 million in taxes in 2000, the most recent data available, charities nationwide collected only a fraction of that amount. The report also found that many donors overvalue their contributions.
  • The Secretary of State's Office, to better track charitable car donations, has for the first time created a separate category for such donations in its new database.

    "Definitely, charitable car donations are growing," said Austin DePaolo, executive director of the Martin Luther King Jr. Family Outreach Center in Spokane. The agency is one of 11 non-profits that benefit from Cars for Charity, a tax-exempt organization that takes in and sells donated cars, disbursing the proceeds.

    Vehicle donations are attractive for both donor and charity because they "give the most return for the least amount of effort" compared with other fund-raising methods, DePaolo said.

    "Donating a car is a very simple, straightforward thing. It shouldn't involve a whole lot of hassle," said Dennis Poor, supervisor for the Seattle-based consumer protection area, a division of the State Attorney General's Office that includes King, Snohomish, Clallam and Jefferson counties.

    Poor said his office has received only a few minor complaints this year involving charitable car donations, and neither required action by the Attorney General's Office. Both, however, involved what Poor and others call the most critical issue facing donors: ownership, as established by vehicle titles.

    Those who fail to clear their car titles, or do not file the required seller's report, can -- and have -- wound up being liable for towing, license tab and other fees. Such outstanding fees can, for example, block a driver's license renewal.

    "Everyone should file a seller's report, whether they're selling or donating," Poor said.

    Rebecca Sherrell, charities project manager in the Secretary of State's Office, said the amount a charity receives from car donations varies according to agreements made between parties. Some organizations, such as Volunteers of America, have their own donation lots. While many charities rely on volunteers, such as mechanics, others may sign pacts with a range of organizations, including towing and salvage companies, charitable fund-raisers or for-profit vehicle processing centers. The greater the number of parties and fees involved, the higher the overhead and the less money to charities, Sherrell and others said.

    Overhead is a fact, Brown said. More than 50 percent of the cars donated to Volunteers of America go to salvage, necessitating such fees as towing -- at $80 or more per car. In the last few years, the organization also has spent $200,000 a year in newspaper, TV and other advertising.

    But the generosity of many -- including repeat donors -- has helped the program grow from the annual $40,000 raised 10 years ago to about $1 million raised last year. The money is distributed to 30 local charities and the organization's own food distribution programs, crisis care line, children's camps and dispute resolution center, Brown said.

    Over the years, Brown has marveled at the generosity of donors, including some who donate many times. Sometimes, transactions can help ease grief. One woman who donated the helicopter of her deceased son, Brown said, received "a sense of closure" when it was ultimately sold for $500 to a chopper enthusiast.

    Sam Granato, executive director of the Silverdale Chamber of Commerce, said his family has donated three cars over the years. A local towing company agreed to tow their Peugeot free of cost to Bremerton Vocational Technical School, where the donation became a teaching project. A second car, an old Mercedes, went to Seattle-area homeless, and a third to a charity helping the blind.

    Granato said the family had a good experience each time.

    "We tended to keep cars way after they were paid for, and ran them for years," Granato said.

    "Instead of trading them in, we preferred to donate. It felt like a win-win for us because we got a tax deduction, but we were also helping people."

    DONATION GUIDELINES

     

  • Always fill out a seller's report, whether you are a donor or a seller, to establish clear title and avoid liability for title-related problems. The seller's report is available from the state Department of Licensing and/or local branches; 360-902-3600 or www.dol.wa.gov.
     
  • Do not assume that because a charitable organization or fund-raiser is registered with the Secretary of State's Office, as required by law, that it has a seal of approval. Registration only means the group has provided required information. No group should ever use registration as an endorsement while soliciting consumers. The Secretary of State's Office cannot tell callers where to donate their cars. Information on charitable organizations involved in car donations is available online at www.secstate.wa.gov/charities.
     
  • Ask questions. The IRS urges donors to ask whether those soliciting the donation are officials of the charity itself or a private fund-raiser acting on the charity's behalf. If it is a private fund-raiser, what will it do with the vehicle? Will the car be fixed up and given to the poor and needy? Or will it be resold? And if it is resold, what share of the proceeds will go to the charity?
     
  • Itemize. Many taxpayers can't take a deduction for donations because they don't itemize deductions on their personal tax return. The decision to itemize is determined by whether the total itemized deductions are greater than the standard deduction. For 2003, the standard deduction will be $4,750 for single; $9,500 for married filing jointly.
     
  • Calculate the fair market value and deduct only that. 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.
     
  • Keep records. 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.
     
  • When in doubt about whether a contribution is deductible, call the IRS at 800-829-1040 or for TTY/TDD help, call 800-829-4059 or check the Web site at www.irs.gov/bus_info/eo/index.html Donors concerned that contributions are being solicited for fraudulent purposes should contact the appropriate state charity. A list of state charity offices can be found online at www.nasconet.org.

     

    P-I reporter Debera Carlton Harrell can be reached at 206-448-8326 or deberaharrell@seattlepi.com

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