Car donations for charity: High vehicle prices cause donations to drop, but donated values to rise
HOUSTON - High inflation caused charitable giving in the U.S. to drop 3.4% in 2022, or 10.5% when adjusted for inflation, according to a Giving USA report. That includes fewer cars and trucks being donated to non-profits.
Cars for Kids, a car donation program, says high car prices in recent years have meant fewer vehicle donations, but higher values for cars donated. Now drivers are keeping their cars longer or buying older used cars. Could that help fuel donations that charities need in the future?
"I was like, I really don’t think I can make it through high school. I should just drop out and live a drop-out life," said 18-year-old Carlee Berglund, a student at Texans Can Academy.
Instead, Texans Can Academy is giving her a new lease on graduating.
"It's having me set my own pace because all the teachers here are extremely kind and understanding," said Berglund.
SUGGESTED: FAFSA changes will change how much families are expected to pay for college
Texans Can Academies helps students who are often at risk.
"Some have gone through some emotional stress, either they’ve been kicked out of the house, or they are now parents themselves," explained principal Rolando Gonzalez.
Texans Can Academies provide education and other things students sometimes need, such as help with rent, food, or school supplies, funded largely through vehicle donations.
"Write off the car, not the kid," said Gonzalez, reciting the organization's motto.
Cars For Kids says annual vehicle donations declined from about 10,000 nationwide pre-COVID, to about 7,000 to 8,000 in more recent years.
"We’ve seen our donations drop, obviously, with the ability for donors or potential donors to turn around and sell their vehicle for three to four times what it might have been worth in the past," said Colin Weatherwax, CEO of Cars for Kids.
CLICK HERE FOR MORE SULLIVAN'S SMART SENSE
But Weatherwax says the hot car market has driven up the average value per donated vehicle from about $1,400 to $1,900.
"The increase in the price per vehicle has kind of offset the loss in donations for us as an organization," said Weatherwax.
Benefits to donors include helping people in need and a tax write-off.
"Most of the time, they’re going to turn around and sell the car. And if they sell the car, your deduction may be, instead of the fair market value, it will be what they sell it for," explained certified public accountant Ed Gardner.
In this hot car market, drivers are keeping cars longer and buying older used cars to avoid high car prices. Texans Can Academies hope that could help fuel future donations and future graduates like Berglund.
"If I went to my old public school, I wouldn’t be able to do this, because I’d be so crammed with studies," said Berglund.
To be able to take an income tax deduction for donating a vehicle, you must itemize deductions. Only 10% of taxpayers itemize, so you may want to donate the vehicle in a year that you'll have other deductions totaling more than the standard deduction.
To take a deduction, you must also choose a charity that is a 501c3. The charity should send you a IRS form 1098-C form with the amount they sold the car for.
If the amount is under $500, the IRS lets you claim up to $500. If it's sold for moer than $500, you can claim the sales price.
The IRS offers a search tool where you can look up whether a charity is a 501c3.
CharityWatch.com can show you the percentage of donations a charity puts toward its cause, which it says starts at 75% for top charities.