Clunkers into Cash
Car donation programs serve as successful fundraising tool for shelters
by Jim Baker
It’s hard to believe that your 1992 Geo Metro or your rusting Ford F-150 pickup could be the apple of anyone’s eye. But shelters around the country are turning unwanted vehicles into much-needed cash to support their lifesaving efforts for animals.
Such a funding source is certainly helping the Oregon Humane Society (OHS), which brings in about $200,000 from its Autos for Animals car donation program. Overseen by development program manager Martha Chrest, the program used to bring in even more for the shelter—the high-water mark was around $500,000—before 2004 when the tax rules became more stringent for charitable deductions from donated cars.
Other shelters have also discovered the potential windfall to be reaped from offering programs that accept people’s used cars, motorcycles, boats, trailers, vans, and RVs and turn them into cash. The donated vehicles don’t even have to run—even the humblest heap may have scrap value to salvage companies.
Some animal welfare organizations, like OHS, dedicate a staff member to manage their programs, while others contract with a third-party business to take all the details off their hands, so all they need to do is collect the checks and send out thank-you letters to donors.
Either way, they’ve discovered, there’s money to be made, it gives donors another opportunity to support their organizations, and it also provides a service that people want.
Motorin’ into Money
OHS keeps most aspects of its Autos for Animals program in house, which results in the shelter getting about 90 percent of the proceeds from sales. “If your organization can pay a staff member to handle it, it’s definitely worth it. We have a really great partner who does our towing for free. They do the auctioning for 10 percent [of the sale price], and they never take more than $500, so if we have a real cream puff coming in, and they sell it, their cap is $500,” Chrest says.
OHS’s partner since 1996 is Sergeant’s Towing in Portland. The program takes in about 500 cars annually, but before the IRS tax provision change in 2004, it was processing 800 to 1,000 vehicles, according to Chrest. The average sale price for cars in the program last year was around $900; cars sold for scrap net about $300.
“I work really closely with our tow company, and they will pick up anything for us, because even $290 back to the shelter still buys a lot of dog and cat food. So we want to pick up a lot,” she says, laughing.
The East Bay SPCA (EBSPCA) in Berkeley, Calif., opted to contract with a third party, Cars With Heart, to take care of most aspects of its program. The Minnesota-based company typically receives a flat transaction fee per vehicle, as well as a percentage of the proceeds from each sale. The nonprofit receives the rest.
Laura Fulda, EBSPCA’s vice president of marketing and development, says the percentage of the proceeds that the shelter receives is “the most favorable I’ve ever found.” People who want to donate their vehicles simply call a phone number listed on the shelter’s website, and Cars With Heart goes into action, arranging to tow the vehicle, auction it, handle the state’s DMV paperwork, and mail the charitable-deduction tax form (Form 1098C) to donors.
The company then sends the shelter the names and addresses of the donors, the vehicle identification number, make and model of each car, and the amount it sold for. EBSPCA sends out an acknowledgement and a thank-you note, printed on shelter letterhead for tax purposes, so donors can get their charitable deductions. Capturing the names and addresses of donors is important, because that information can be used for other fundraising, says executive director Allison Lindquist.
EBSPCA took in 29 vehicles in 2012, raising about $31,000 for the shelter. “[Cars With Heart makes] it very easy for us. They make it very easy for the people donating the cars, as well,” Lindquist says.
The San Diego Humane Society and SPCA has also chosen to contract with a car-donation management service to handle all the legwork. Its partner, Charitable Auto Resources (CARS), provides logistical and managerial support to more than 500 nonprofits across the nation.
Last fiscal year, the shelter received 200 cars through its program, which brought in about $111,000, according to Jenny Ludovissy, development assistant. Just about any vehicle that requires a title is eligible. “A big concern for a lot of donors when they call is, ‘It doesn’t run,’ ‘It won’t pass [emissions tests]; can you still take it?’ And yes, we can,” she says. “We could even take a plane, if someone wanted to donate a plane.”
It’s a turn-key program, so there’s little for the shelter to do beyond marketing the program and cashing the checks, Ludovissy says.
Less Profit is Still Profit
Before Congress changed the tax provision affecting car donation programs, donors could claim as a charitable deduction the fair-market value of a vehicle up to $5,000; above that, they would need to get an appraisal, explains Chrest. Many vehicles would sell at auction at wholesale prices—maybe a few hundred dollars—but donors were allowed to claim the Kelley Blue Book value of their vehicle, which could be a much higher figure.
Congress, viewing these deductions as excessive, put the kibosh on the practice, according to Lester Thompson, a certified public accountant who has provided tax and accounting advice to many charities.
Now donors can claim charitable deductions based only on the fair-market value of their vehicles up to $500, or what they sell for at auction. “So 2004 was an awesome year. I think we took in over a thousand vehicles,” Chrest says. OHS’s program took a big hit in 2005, and since then, “it’s been slowly picking back up.”
Programs like OHS’s can still be lucrative, though.
One “cream puff” that rolled through the program in 2012 was a Saturn Sky roadster with about 20,000 miles on the odometer. “It still smelled new, and that brought in around seven or eight grand for us,” Chrest recalls. But even a crumbling Corolla a few days short of imploding is fine. OHS has learned to make lemonade from lemons.
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