The most frequent ways that Americans give to charities are through volunteering and through donations of used clothing and household items. Vehicle donations are increasingly popular as well, though many people may not be aware of how the programs work. Typically, Americans can dispose of most any unwanted vehicle -- cars, motorhomes, even motorcycles. At the same time, they can benefit their favorties charities. Most charities make it is easy and convenient. Vehicle donations also let Americans give while getting something back: a tax write-off. Charities see the benefits, and have simplified the system for giving. Often donors can find application forms over the Internet to get the process started. Large charities often will hire fundraisers to collect the cars and resell them for the proceeds. The charities then split the money with the fundraising company. By hiring fundraisers, charities often can collect vehicles from anywhere in the nation. If the vehicle doesn't run, the charity will tow it. Donors, meanwhile, can use the vehicle donation as a deduction at tax time, as long as they are willing to itemize the gift on their tax forms, and keep records of the transfer, which they will need to copy for the IRS.


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The Better Business Bureau offers general advice to people who want to make vehicle donations: * Do research and ask professionals for help. * Seek legal and financial advice before you donate your car. Does it make financial sense to donate your vehicle? Is the charity able to meet your giving needs? * Get the charity's annual report and read it. Find out how the charity managed its budget in the last fiscal year, including how it spent income from vehicle donations. * Ask the charity how it uses donated vehicles. Does it resell them at wholesale prices? Or does it refurbish the vehicles for disadvantaged families that need transportation? * Get receipts. Make sure the receipt has the registered charity's identification number on it. * Check with your state Attorney General's Office to make sure the charity is registered as a 501(c)3. * Contact the Better Business Bureau to find out if it has information on file about the charity and its vehicle donations.


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Make sure you understand federal and state policies for charities accepting vehicle donations. The policies not only protect the charities from abuse and fraud but they also protect the donors making vehicle donations. These policies include getting receipts for the donations and making sure the receipts contain the charity's name and identification number. Watchdog groups that monitor vehicle donations report they have received phone calls from donors who did not get a receipt from the charity, and cannot remember the name of it. Other donors who did not transfer the title, as required, later learn they are responsible for traffic and parking tickets accumulated by someone else.


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Americans used to be able to claim fair market value on most any donated vehicle. Not so anymore. In 2004, Congress passed the American Jobs Creation Act. It contained vast changes for valuing vehicle donations. As a result, the IRS has a tougher policy for accepting vehicle donations as tax deductions. The tax deduction for donated vehicles worth more than $500 cannot top the gross proceeds the charity receives selling the vehicle. The taxpayer also needs written acknowledgment of the donation from the charity and must attach a copy to his or her tax return.


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