So charities are now trying to figure out how to deal with the decrease in donated cars and the resulting drop in revenue. Then taxpayers can deduct fair market value, rather than actual sale price.īut that doesn't help many of the dozens of organizations in Minnesota that have vehicle donation programs. The only exceptions are for vehicles donated to nonprofits that use the car for their own purposes, for training, or to sell to people in need. And that's what philanthropy should be about." "It aligns philanthropic intent with the tax deduction, so that you only get the amount that benefits the charity. But on balance I think it's one of the better kinds of changes," says Cowles. "Any of these changes end up hurting some people. Rich Cowles of the Charities Review Council says it's unfortunate that some charities are suffering because of the change, but he says it's an improvement. The goal of the new law is to get taxpayer deductions more in line with what charities actually receive for the cars. The GAO also found that many of those deductions were inflated, and in some cases, the charities got only 5 percent or less of the value that donors claimed on their tax returns. And so if the deduction isn't as good as it used to be, it's not surprising to us that the interest in donating vehicles would decline," Cowles says.Ĭongress changed the law last year because some taxpayers were getting more benefits than the charities, by claiming inflated values for their donated vehicles.Ī report last year by the federal Government Accountability Office says vehicle deductions showed up on more than 700,000 tax returns in 2000, the most recent year studied, costing the treasury an estimated $654 million.
"There are a lot of people who make donations who are motivated partly by charity, but in many cases to get the tax deductions. The drop in vehicle donations is dramatic, but could have been predicted, says Rich Cowles, executive director of the Charities Review Council. "We're hoping to close that gap, but revenues are down 25 percent from what they were last year." "For the remainder of this fiscal year, we're not expecting to get back to where we were last year," says Becker. Goodwill spokesman Brian Becker says he's not optimistic about a turnaround anytime soon. Goodwill used to receive so many cars that it ran two auctions a week. Vehicle donations to Goodwill/Easter Seals are down, too. That could mean less money for Courage Center's theraputic, educational and other services. And it could be as high as a $1 million deficit to our operating budget," Adams says. "If the trend continues, we're looking at a huge deficit for 2006.
But Adams says the change in the tax law has led to a sharp drop in vehicle donations - they're down nearly 50 percent from this time last year. The sale of donated vehicles has helped generate more than $2 million a year for Courage Center programs. The program is one of the largest car donation programs in Minnesota. "It's a critical source of revenue for Courage Center," says Rose Adams, director of the Courage Center's Cars for Courage program. And that means fewer dollars for the charities that run vehicle donation programs. In December 2004, before the new tax law went into effect, there was a rush on vehicle donations. That means that same 10-year-old car might only garner a $350 deduction. So you could have donated a 10-year-old car and claimed $3,500 on your return.īut now, you can deduct only what the charity receives for the sale of your car - no matter what you think the vehicle's worth. And charities say there's been a sharp drop in the number of cars being donated.īefore this year, if you donated a car to a nonprofit agency, you determined its fair market value, and that was the figure that you deducted on your tax return. The change means people who donate cars don't get as big of a tax break as they used to. Back in January the federal government changed the tax law that covers car donations. Car donations have generated millions of dollars for nonprofit organizations. (MPR Photo/Toni Randolph)įor years, charities have been collecting cars and reselling them to make money.
Before vehicle donations dropped, auctions were held twice a week. Goodwill/Easter Seals holds an auto auction once a week.
0 kommentar(er)
