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The Truth About Donating Your Car to Charity

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Is vehicle donation really the best option?

old lady granny driving car woman elderly driver
When your car is on its last leg and it’s time to find a replacement, you’re faced with many options on what to do with your old ride. If you’re well-off financial and have a generous heart, you might be considering donating your car to charity instead of selling or trading it.

But before you donate your vehicle–or truck, van, trailer, boat, motorcycle, RV, or ATV–to charity, there are some important cautions you should consider.

First Time Buying a Car? Make sure you know these helpful test driving tips!

Consider First…

One of the most appealing benefits of donating your used vehicle to a charity–apart from the opportunity to help someone in need–is the ease of donation. Instead of going through the hassle of selling your car, fixing it, advertising it, or haggling for a reasonable trade-in value with a dealership, many charities will simply tow away your car once you submit the paperwork.

But if you’re concerned about how much money the charity is receiving from your donation, or how much you’re claiming on your tax returns, you may want to reconsider.

man standing ourside car arms crossedFirst of all, the financial benefit you’ll receive on your taxes from donating your vehicle are minimal, if anything. Claiming your vehicle donation on your tax returns involves itemizing your charitable donations, and you have to have a lot of other donations to warrant itemizing over claiming the standard deduction; your charity might not even be eligible.

Secondly, donating a used vehicle to a charity does not ensure that the vehicle will be handed over to someone in need. If the car isn’t in great condition, it will most likely be auctioned or salvaged for money to be used by the charity in other ways; the organization has no obligation to actually pass the vehicle on to a charitable recipient. Many times, a group of cars will be sold or auctioned together, with a portion of the proceeds being returned to the charity. The organization typically doesn’t get very much money this way, so if you really want to support the charity’s work, perhaps you should sell the car and donate the money directly.

Or, if you know which person you want to have the car (perhaps a member of your church), transfer the ownership directly to that person and bypass the middlemen.

…Then Act

Senior Citizen standing by car old person woman

To begin the process, contact the organization to determine if they actually accept used vehicle donations and what the steps are. Remove all personal items and identification from the car when you’re ready to donate it; clean out all trash, debris, loose items, and anything that could be perceived as hazardous. Don’t forget to fill out the DMV paperwork to cancel your registration and transfer your title!

The vehicle will be picked up a couple business days after you submit the paperwork, but because charities typically pay a third party to tow the car, save the charity some money by driving it in yourself if there’s a local drop-off point.

Once the car is sold, you’ll be contacted by the charity with a statement of how much money was raised, for your tax records. If the car was donated directly to a person in need rather than sold for money, you’ll have to calculate the fair market value for your vehicle–which should involve the assistance of a tax expert.

Quiz: What type of vehicle is right for you?

Sources: IRS, DMV, Edmunds, Donate-A-Car