The government’s so called “cash for clunkers” program may be emptying dealer lots of new, “greener” cars, but is seriously cutting the pool of cars available for donation to charitable organizations. I asked Jody Victor to telll us more about it.
Jody Victor: There are a number of reputable charities that need donated cars to keep their operation running; however, a large number of vehicles that would have otherwise been donated to “keep the lights on” are being destroyed under the CARS program.
Charities, like Volunteers of America, rely on donated vehicles for funding. Unfortunately for the charities and their beneficiaries, donations have slipped since the initiation of the CARS program. Since July 1st vehicle donations have dropped 12% and could fall as far as 25%. Whether or not a 12% drop in donation is cause for serious alarm at a non-profit charity, I'm not one to say. However, one cannot deny the devastation of a quarter drop in donations could bring to a non-profit. In all about 175K vehicles are expected to go to the CARS program instead of donation.
Jim Hartman, VP of vehicle donations at Volunteers of America told Automotive News, “It varies by market, but there's been an 11 to 12 percent drop compared with last year.”
“The cars I'm seeing cashed in as clunkers, like older SUVs, are absolutely the typical donation to us.”
Of course other factors might be affecting donations beyond the so called “Cash for Clunkers” plan. People may simply be keeping older, but reliable cars longer, selling or giving them to family and friends or literally “driving them to death”.
The majority of vehicles donated to charities are sold at auction. These auctions net millions in funding each year. The remaining donations are sold at extreme discounts to less fortunate families.
Current tax laws cap deductions for vehicle donation at $500. The CARS program promises up to $4,500 dollars. With a possible difference of 4K, its no surprise CARS is winning the race for clunkers.
However, there is hope on the very distant horizon. Charities are lobbying Washington for a $2,500 cap increase on vehicle donations—such a bill is currently on the floor of the House, but isn't expected to be passed anytime soon.
Thanks, Jody! Great info for all of us.