June 13, 2002 | Read Time: 1 minute
Although many nonprofit organizations heavily promote them, car-donation programs often benefit everyone but the charities they are intended to help, says The Washington Monthly (June).
“Most charities don’t have the resources to run car-donation programs themselves, and instead rely on private fund-raising companies to run their program,” the magazine says.
By the time the companies dispose of cars — by selling them or auctioning them for scrap — they have extracted “an exorbitant chunk” of the vehicles’ value to cover their costs, says the magazine. The result: Charities often don’t wind up with much of the money stemming from gifts of automobiles.
What’s more, the magazine notes that donors of used vehicles are legally allowed to take charitable-tax deductions that are based on the cars’ fair market value — a figure that is often an exaggerated estimate of the real worth of the cars. The magazine says Congress could curb the loss of revenue by limiting the size of the used-car tax deduction to the actual sale price.
Meanwhile, says the magazine, “with each car towed in the name of charity, donors benefit greatly, fund raisers obscenely, charities slightly, and the poor only occasionally.”
