While many people want to do something good by donating their cars to charity, they need to be aware that there are a number of car donation scams out there. It is not always easy to tell the legitimate programs from the car donation scams, so people must be careful about how and where they donate their vehicles.
First of all, many nonprofit organizations are not actually set up to take automobile donations. There is a lot of work involved in being permitted to collect and process donated vehicles, and not all charitable organization have been willing or able to set up such a program for themselves. If they do still accept donations of this sort, then they must do it through a third party. These companies are often referred to as intermediary agencies.
Do Intermediary Agencies Equal Car Donation Scams?
The short answer to this question is “not necessarily.” Some intermediary agencies are truly serving an important purpose for nonprofit organizations that couldn’t otherwise accept car donations. They are able to pick up the cars, transfer the titles, take them to auction, and distribute the funds back to the nonprofit. Of course, they do all of this for a fee. If the fee is a reasonable one, then it is certainly worthwhile for the nonprofit organization to go ahead and pay it.
On the other hand, it is not unheard of for intermediary agencies to expect 50% or more of the proceeds. This might even be on top of the towing and title fees. In the end, the nonprofit organization could end up with as little as 10% of the actual money raised by a donated vehicle. Even if it’s not technically illegal, it’s not hard to recognize that these are car donation scams.
Other Car Donation Scams
In general, there are two things to keep in mind if you decide to go through an intermediary agency to donate your car. First of all, how much of the proceeds will actually go to the nonprofit organization? There are disreputable companies out there that say they are picking up a vehicle on a nonprofit’s behalf, but then they keep all of the money themselves. This is basically auto theft. In order to avoid this, or even intermediary agencies that just take more than their fair share, talk to the organization you want to support. Ask them if they’ve found the agency to be reliable in the past. Make sure that they’ve not only been receiving a reasonable cut, but that they’ve been getting paid at all.
Finally, be sure that the nonprofit you’re donating to is designated as a 501(c)(3), tax-exempt organization. If they have a different designation, such as 501(c)(4), then you may miss out on the opportunity to receive a tax deduction for your donation. It’s not unheard of for car donation scams to be as simple as just omitting a few details so someone will donate under false pretenses.
The majority of car donation programs are going to be legitimate, but doing just a little bit of homework will keep both you and your favorite charity from becoming victims of car donation scams.