VEHICLE DONATIONS
There are two sides to every dollar bill.
This is an appropriate analogy for this discussion:
Protagonists hold that deductible donations are an effortless way for both charities
to receive and donors to give cash for worthy causes... that even Uncle Sam sees the merits to these transactions as defined
by Code.
Antagonist hold that via deductible donations charities receive too little of all the money
that is derived from the sale of a donated asset... in essence that the charities are "screwed."
What is the truth? Truth can be interpreted... Facts cannot be. So here are the
facts as they relate to passenger cars which make up 95% of the donated vehicles. Some of these facts are specific to Massachusetts.
1. Most vehicles that are donated have problems for which
the cost of repairs EXCEEDS the resale value of the vehicle. Some of these repairs may be cosmetic; others, fatal to
the passing of state inspection. In fact, many vehicles are donated because the present owner does not want to go through
the time and expense of the disposal for scrap.
2. Vehicle problems quickly involve Lemon, Lemonade, Merchantability
of Fitness, and Rights To Return laws. Therefore, sellers need to fix vehicles for sale, or have access to markets where
problem vehicles can be sold or stripped for parts. Since most donors do not have these outlets, they are stymied.
3. If a person or an organization sells more
than 4 vehicles in a year in MA, they are considered a used car dealer. This invokes a whole set of different consequences.
4. Vehicles don't fit into donation boxes... they take
up space... and space costs money. Yet, older cars are a prevalent asset which can bring revenue to the charity.
5. Charities which sign solicitation agreements do so willingly.
No one twists their arm for them to sign any given arrangement or at all. Consequently, if charities
are happy to receive this amount, donors should be pleased to offer a way for them to receive it. An unstipulated gift is
a gift!
6. If despite #5, the donor is displeased with the arrangement,
the donor can sell the vehicle him/herself, assume the time, costs, and risks of selling the vehicle and donate
100% of the net money.
7. If #6 is not acceptable to or possible for the donor, then the
donor can make a private arrangement with the seller of such assets to sell the asset under separate arrangement with
the donor giving the remainder, which will be less than #6, to the charity. In truth, there will be little difference
in this approach over the straight donation approach. Why? The costs and risks are ever present; it never
goes away. The only question is which party will take the responsibility.
People Understand the Concept of Risk Reward
Certainly the charities signing solicitation agreements do.
Certainly the taxing authorities writing codes do.
Certainly donors ridding assets do.
People against vehicle donations either do not understand the economics,
or do, but don't want to accept them as reality.
This is not to say that there are not, or have not been scams where charities have been fleeced out of the money the
agreed to get. They have. There are good and bad people in every field of endeavor... including charities
themselves. However, to toss away this valuable form of donation because of the small percentage of wrong-doers
is the equivalent of throwing the baby out with the bathwater.
In the end, it is the very revenue motives of both the charity and the reseller that are the glue
that hold this donation process together, for most charities cannot use all of the assets which are donated to them.
Further, donors should be thankful for the reseller's profit motive as it -- and it alone if the vehicle is not
used by the charity -- maximizes the final sales price which becomes the basis for the donor's deduction..
While charities don't use the word "profit," after all is said and done, it is the EXCESS money after expenses, which
may include salaries, that goes toward the actual charitable endeavor. If one does not argue against the concept of
salaries being paid in organizations which also have volunteers, one should not argue with the concept of resellers making
an income, appropriate to the risks, while helping charities do the same.
