|
Driven
to donate
By
Kim Leonard, For The Tribune Review
Sunday,
July 18, 2004
David Meredith has donated three cars to Goodwill Industries of Pittsburgh,
mainly for the convenience.
"You don't have the hassle of trying to sell a used vehicle," said the
engineer, who lives in Allegheny Township, Westmoreland County, and commutes to
work in Moon. "No people coming to your house or dealers who only want to give
you the wholesale price toward a new car."
Meredith's most recent gift -- a 1996 Lincoln Continental -- also gave him an
$8,000 tax deduction, the type of incentive that charities have used to build
lucrative vehicle-donation programs in recent years.
As many as 1.2 million vehicles ranging from clunkers that won't start to
well kept recent models are donated annually to Goodwill, the National Kidney
Foundation, the Salvation Army and other organizations nationwide that then sell
them, usually at auction.
But there is widespread concern about federal legislation that could pass
this fall, setting tougher standards for tax deductions on car donations and
possibly curbing interest in giving.
Meredith asked a car dealer to put a value on his Continental, knowing he
needed an appraisal to claim a deduction for a vehicle worth $5,000 or more.
Owners of less-valuable cars can claim what they believe is the fair market
price, usually based on Blue Book standards.
The U.S. House and Senate now are working to reconcile two bills, both
designed to correct what some lawmakers see as abuse in the system. Taxpayers
are claiming deductions that far outweigh the actual amount charities receive
for donated vehicles, they say.
So far, the House has adopted a plan in President Bush's budget that would
require each donor to get an independent appraisal of a vehicle, or use a
formula the Treasury Department would develop.
The Senate version, passed in May, would require charities to give each donor
a receipt listing the sale price. The deduction would be limited to that price,
although proof of the sale price wouldn't be needed for vehicles worth $500 or
less.
Limiting deductions to the auction price "would be a deterrent for me," said
Meredith, whose Continental sold at a Goodwill auction for $3,200. Charities
sell cars at around wholesale rates, "and I could get that from a dealer on a
trade-in," he said.
Dr. William Poller, an Indiana Township resident and associate director of
the Breast Care Center at Allegheny General Hospital, has donated two cars to
Goodwill -- including an '87 Jaguar XJ that sold for $4,900.
Drastic limits on deductions would only hurt the cars-for-charities industry,
he said. "I'm happy to donate," said Poller, whose writeoff for the Jaguar was
$8,600, "but that would be less of a reason to donate."
Salvation Army Major George Hood, of the organization's Washington, D.C.,
headquarters, said large and small nonprofits are worried that fewer people will
donate cars if the tax incentives shrink.
"If that would happen, there would be an impact on charities nationwide. A
major revenue source for them would dry up," he said.
Those supporting the change say the idea is simply to prevent people from
claiming deductions they don't deserve, said Jill Gerber, press secretary for
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, who has questioned a
wide range of tax writeoffs for charitable donations.
The Senate provisions to control deductions on vehicles "are just building
more accuracy and accountability into the process, so it shouldn't discourage
donations at all," Gerber said.
Taxpayers claimed deductions for vehicles given to charities on about 733,000
of the 4.4 million tax returns filed for 2000, lowering their liability by $654
million, according to a 2003 report by the U.S. General Accounting Office.
But the 4,300 charities that operate vehicle donation programs got nowhere
near that amount, the report said. In two-thirds of 54 individual donations the
GAO examined, the organization got 5 percent or less of the values the taxpayer
claimed, because of low auction prices and vehicle processing, fund-raising and
other costs.
Charities are quick to supply their own, better numbers.
Goodwill of Pittsburgh, for example, said nearly 90 percent of proceeds from
its weekly auction in North Huntingdon, the biggest among 91 branches that hold
auctions, go toward career services for people on welfare or with disabilities.
Nationwide, Goodwill agencies earn about $12 million each year from vehicle
donations.
The National Kidney Foundation took in 73,000 vehicles last year, earning
$17.6 million or about a third of its total revenue. More than 67 percent of the
proceeds from "Kidney Cars" sales support patient and family services, education
and research of kidney disease, the organization said.
The Society of St. Vincent de Paul, Diocese of Pittsburgh, relies less on
revenue from donated cars than some other charities and contracts with a Florida
firm for pickups and sales. The charity gets half the proceeds from a car sold
at auction or for salvage for $400 or less, and 80 percent for bigger sales.
St. Vincent de Paul projected vehicle sale income at $35,000 for its fiscal
year, which ends Sept. 30, but its numbers are down and revenue is about three
months behind projections, Executive Director Fred Just said. Eighty vehicles
were donated from October to December 2002, compared with 30 for the same period
last year.
"We would attribute that to the fact that more nonprofits are being
encouraged to be more entrepreneurial," he said. "We're noticing much more
competition in this area."
Most charities have similar procedures and standards.
Donors must have clear titles to the vehicles and turn over the titles and a
keys by pickup time. Tows usually are free, and receipts are provided.
The cars don't have to be in working order, although charities generally
insist on whole vehicles -- no front or back end sections, or cars with missing
engines.
Goodwill requires tires. "Otherwise, it's very hard to put them up on a
flatbed" for towing, said Bob Wagner, director of the North Huntingdon auction.
And St. Vincent de Paul sets a 10- or 11-year age limit. "But we try to make
exceptions. Sometimes, you find that car that a 75-year-old woman owned, and
it's 15 years old, with 30,000 miles and in good shape," Just said.
How can I donate?
Follow these steps when giving a vehicle to a charity and claiming a tax
deduction:
- Verify that the charity is tax-exempt and authorized to solicit
contributions. The Pennsylvania Department of State, Bureau of Charitable
Organizations, answers inquiries at (800) 732-0999.
- Ask how the vehicle will be used. Will it be fixed up and given to the poor?
Will it be resold, and if so what share of the proceeds will the charity
receive?
- Itemize deductions, in order to benefit from a vehicle donation. But first,
decide whether total itemized deductions are greater than the standard
deduction.
- Deduct only the fair market value of the vehicle, taking into account its
condition. This may differ substantially from the value listed in used-car
guides.
- Document the charitable contribution deduction. IRS Publication 526
(available at www.irs.gov) explains the types of receipts taxpayers must obtain,
and the forms they must file.
- Make sure the vehicle's title is transferred to the charity and keep a copy
of the transfer. In Pennsylvania, the license plate must be removed and returned
to the state.
What is my car worth?
Starting points, to help determine a vehicle's value:
Who will accept my car?
Some local and national charities that accept vehicle donations:
- American Diabetes Association, (800) 232-6570
- Catholic Charities, Diocese of Pittsburgh, (412) 456-6969
- Goodwill Industries of Pittsburgh, (888) 304-0227
- National Kidney Foundation, (800) 488-2277
- Salvation Army, (888) 999-2769
- Society of St. Vincent de Paul, Diocese of Pittsburgh, (412) 321-1071
Sources: U.S. General Accounting Office, Tribune-Review research.
|
