Why Some People Are Donating Their Cars to Charity
I’ve had the pleasure of donating three of my cars to charity over the years, older models which could still have fetched me several hundred to a few thousand dollars each had I chosen to sell them privately. Another option, to trade these cars in when buying a new one was something that I considered, but I was much more moved by helping a charity out who could resell the car and keep the cash. When you donate to charity it is a really great feeling.
Donating your old car to charity can be a wise move, one that can benefit a needy organization as well as yourself. Is donating a car always the right move? From a financial standpoint that answer would be “no,” but it does have its advantages. Read on and we’ll explore why donating your car can be one of the smartest decisions you ever make.
Eligible charities - Although many charities may accept car donations, in order to reap the tax deduction on your federal tax return, you should give to those organizations which are 501(c)(3) recognized under the federal tax code. If they are, then you’ll be able to claim the amount that the charity was sold for. Remember, your donation will go to the charity, but in all likelihood they’ll resell your car and keep the proceeds. Once the sale is done, you’ll receive a receipt from the charity telling you how much the car fetched at auction. Use that amount to claim a deduction per IRS regulations.
Donate directly - Regardless of the value of your car, you’ll want to donate it directly to the charity, if possible. This means that if your car is in good running order, you can drive it to the charity’s office, sign the related paperwork retitling the car, and leave. When a third party must be brought in to pick up the car, the charity must pay the tow truck driver to remove your car, cutting into the funds they make for selling the car. Why not maximize your donation by cutting out the middleman?
Avoid a headache - Trading your car in when buying a new one or selling it separately to an unknown party can be a tedious event. Likely, the amount of money you’ll get when trading it in will be far less than what the car is worth; this especially holds true if you’re trying to unload a gas guzzler. As far as a private transaction goes, do you really want to deal with strangers?

