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Are charities Cash for Clunkers victims?

Getting a rebate for a gas guzzler might be good for the vehicle's owner, but it's turning out to be terrible for some charities.

The rebate program, officially titled Car Allowance Rebate System or CARS, kicked off on July 24 and was originally scheduled to run through Nov. 1 or whenever the funds were exhausted, whichever came first.

However, the unexpected popularity of the rebates, which could be as much as $4,500 that can used to buy a more fuel-efficient vehicle, meant that the money was exhausted well before the cutoff date.

Last night, CARS got an infusion of new cash when the Senate followed the House's lead and approved an additional $2 billion to keep the program going.

The vote isn't good news for some charities.

Animal Services of Thurston County, Wash., depends on up to $20,000 in donations each year from Northwest Charity Donation Service. The service, in turn, relies on donated cars.

But since the Cash for Clunkers program began this summer, the nonprofit's source of funding is drying up, reports King 5 News in Seattle.

A similar sad tale is told in St. Joseph, Mo.

Kathie Conwell, manager of marketing and communications at Catholic Charities, Diocese of Kansas City-St. Joseph, told the St. Joseph News Press that her organization had seen a decrease in car donations.

That's a disturbing development, since  Catholic Charities last year netted $65,000 from donated cars.

Continuing to move east, the same story is told in Miami.

Lt. Jay Ward, administrator of the Salvation Army Adult Rehabilitation Center in that South Florida city, told the Miami Herald that car donations were off sharply in July.

"If the Cash for Clunkers program continued and our car donations stayed down, and if we could not find a way to restore income, we'd have to cut beds," Ward said.

Economy vs. empathy: While it's hard to fault people who take advantage of a program that gets them money for their jalopies, in these tough times more folks are depending on charitable organizations for help.

If those groups aren't getting as much money, that means their last-resort assistance to the needy could vanish, too.

So if you're getting a good deal on a new fuel-efficient car, especially one you bought with a CARS rebate, consider redirecting some of the gas money you'll save to your favorite charity via a donation.

It obviously won't be as much money as the group might have gotten if you had handed over your car, but every little bit helps.

Auto donation limits: If you've got a vehicle that you don't want, but that doesn't qualify for the Cash for Clunkers program, consider giving it to a charity.

Tax_tip_icon_pencil_point Yes, it's not as easy to get a tax break as it used to be.

When the hubby and I many years ago donated our old AMC Gremlin (hey, we needed a second car and we got it cheap), we just dropped it off at the local Goodwill car lot, signed over the title and then used the Kelley Blue Book value as our deduction amount when we filed our tax return the next year. (By the way, we later saw that car in the parking lot of the Capitals' hockey arena, and we were pleased that someone, especially a fellow hockey fan, found it useful.)

Today, however, things are a bit more complicated. Because people exaggerated the value of their donated vehicles, lawmakers in 2005 created a lot more tax hoops that auto donors now have to jump through.

First, remember that you must itemize to deduct the donation.

And since it's a deduction, that means that you'll only get a fraction of the car's value as a tax break. For example, if you donate an auto worth $1,000 and you're in the 28 percent tax bracket, it's worth just $280 in tax savings.

Now about that vehicle value: Once you decide to donate your car (or motorcycle or truck or boat), you must deal with the limits set on the vehicle's value.

The biggest hurdle comes if your car is worth more than $500. If the charity sells it, you have to wait to hear back from the nonprofit as to the price it got. That's what you can deduct.

If, however, the charity keeps the car and uses it for some of its services, such as delivering meals or driving the indigent to health clinics, you can go back to Kelley's and claim the fair-market value.

Yes, donating a car now is more of an administrative hassle. Feel free to bad-mouth the tax cheats who prompted the changes. But once you're through venting, don't make the charities suffer because of the tax miscreants' bad deeds.

If you can't or simply don't want to trade in your old auto, give to your favorite charity and deal with the ensuing tax deduction steps. Not only will you save a few tax dollars, but you'll build up some additional Karma currency.

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Comments

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Jason Wittman

We were victims long before Cash 4 Clunkers! I am the Exec.Dir. of L.A. Youth Supportive Services, Inc.[ http://la-youth.org ] in Hollywood, CA. I am very up on vehicle donation programs because it had been our primary funding for many years. The reason for the change in the donation rules was not because of inflated claim because most people just used the Kelly Blue Book (KBB) values. What happened was that the last Congress that was dominated by the Republicans decided that the government was losing revenue due to the difference between the KBB value and what the charity got when the vehicle was sold, so they changed the rules.

Although they probably got some more revenue from this move, the unintended consequence was that most folks with decent, running cars stopped donating them and sold them under the table on Craigslist and pocketed the cash which was a lot more than they would have gotten in a deduction under the new rules.

Our donations went from $140,000 before the change to $18,000 the next year! We went from a full service program serving teens and young adults on their own to a hotline without even an office. Many small organizations like ours just had to fold.

Most of the cars that are donated these days are junk cars worth less than $500. Most of those cars probably do not qualify for C4C anyway, so I'm not worried. It would be nice if we could get the more socially conscious current Congress to reverse the deduction ruling so we can get the donations coming in again.

Cars4Charities

Not only is cash for clunkers decreasing the number of charity car donations the flood of C4C at the scrap yards is decreasing the price of scrap metal. When a "junk" car is donated to charity the amount the charity receives for it a the scrap yard is less.

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