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These articles by Barbara Fox were published in U.S. 1 Newspaper on September 2, 1998. All rights reserved.
Keep Your Clunker? Why Not Donate It?
In my family we keep our cars until they die on the road. Literally die. My clunkers always collapse when I am alone and far from home. For instance, my gas tank fell to the asphalt when I was on a deserted road, at night, in a South Philadelphia marsh famous as the favorite place for murderers to dump corpses. Several years later, at a busy intersection on Route 301 in Delaware, on a day when the temperature was 98 degrees, and when the telephone company was on strike, my engine caught on fire and totaled the car.
But for eight years now I have driven a very sturdy white Ford Taurus station wagon, affectionately dubbed "The Egg." In 1990 it was my first new car ever; all my other cars have been hand-me-downs. It has scrapes on both doors (don't ask why) and a coffee stain on the front seat, but I use a premium brand of oil, and it runs like a top, so far.
Yet at 96,000 miles I fear The Egg is approaching clunker-hood. Simultaneously I am approaching senior citizen status. Clunkers, I think, are not appropriate for senior citizens who take long trips. Should I run The Egg into the ground until it collapses? Trade it on a newer used car? Or respond to the advertisements and public service announcements urging me to donate my car to charity?
Ready to say goodbye to your old car? asks the National Kidney Foundation in a press release. "Put some `good' in the goodbye."
Don't Trade It -- Donate it, says the American Lung Association in a two-inch, two-column newspaper advertisement. "Get a tax write-off. We take almost any car."
Donating a vehicle, I discovered, is a free-and-easy way to get rid of a vehicle you don't want, if you are:
"If you are in a 40 percent tax bracket," says John Stahl, general manager of Princeton Nassau Conover Ford Lincoln Mercury, "the deduction on a 1987 Dodge Omni worth $2,000 at retail is worth far more than the trade-in value of only $400." Forty percent of $2,000 is $800 of your tax bill. For those in the 28 percent tax bracket, the deduction would be $560. Watch out, though. Donation of more expensive cars jeopardizes your savings on the sales tax when you buy a new car. (See side bar.)
So I began to think more seriously about a donation. Any charity can accept car donations, but four Princeton-area chapters of national charities actively solicit them with newspaper ads and press releases: American Lung Association, American Cancer Association, National Kidney Foundation, and Big Brothers & Big Sisters.
With the idea that one of them might allow me a better tax deduction than another one, I responded to all four but learned that they all require you to put your own "fair value" on the car. Basically they give you a book value and tell you to allow for condition and options. If you overvalue your donation, it's on your conscience, not theirs. (An alternative is to go to a car dealership like Stahl's; he appraises six or seven cars a year as a courtesy for area charities.)
All four charities use a car broker to dispose of the cars by selling to dealers, and three of them use the same broker. In contrast American Lung claims that because it runs its own in-house donation brokerage, it has lower overhead, so more money gets to the charity.
All give similar instructions:
The only requirements are that you have a certificate of title, an engine in the car, and that the car have four inflated tires at the time of pickup. "We have done very well with the car donation program," says Elaine Fisher, director of field services for the American Lung Association of New Jersey, one of 13 lung associations belonging to a regional center that handles the car donations. "In the past three years, 1,400 cars have been donated, 94 in April, 1998, and 155 last December. In 1997 we averaged 70 per month."
Fisher has worked at the ALA for 19 years; she began by doing smoking cessation programs. Formerly overweight and a smoker, she now runs three miles a day, lifts weights, and is dedicated to "clean lung" causes. "Both my parents had lung diseases," she says. "My father was a coal miner and had pneumoconiosus, and my mother developed chemical asthma due to chemicals she inhaled while cleaning college dorms."
Tom Horan directs the ALA's in-house three-year-old brokerage program (315-736-1195, extension 102; fax 315-736-5215) that takes care of cars from four states and spends just 20 percent on administration and advertising. This program also provides the income tax forms you need.
A junker car is towed away for free, the parts salvaged, and the fluids recycled. "Half of them are fairly decent cars," says Fisher, "but for the junkers we get $50 per car after costs, no matter what."
Donations aren't limited to cars, says Fisher, but some simply aren't accepted. "One gentleman wanted to donate a mummy's hand to an affiliate in New York State. Another tried to get rid of terrible property in Detroit."
Mercer County cars go to the Delaware Valley branch of the kidney charity, while the New York/New Jersey branch of the kidney charity picks up in Middlesex or Somerset county.
Karen McGrath says the Delaware Valley chapter sold more than 800 cars last year and made more than $200,000 profit. Nationally, the foundation recovered more than 44,000 cars, grossed $9.1 million and made a net profit of $6.5 million.
"Obviously we make more money on later model vehicles that are sold rather than salvaged," says McGrath. "The people who do that are in a bracket where the tax deduction means something to them." Many are from the Mercer, Burlington, and Bucks counties.
"We take any type of vehicle -- airplanes, farm equipment, tractors, trucks, boats. A little town bought a garbage truck we were happy to take the old garbage truck off their hands. For other types of property we refer them to Goodwill or to a thrift shop," says McGrath.
Like most of the charities, the Kidney Foundation works through the Auto Placement Center brokerage, which does all of the administrative work. "Part of our mission is increasing organ donor awareness and promoting support groups and mentor programs," says McGrath.
The Foundation is careful to funnel funds to the locations from which it receives cars. Robert Wood Johnson, for instance, is one of the hospitals benefiting from kidney foundation funds. "You can call and get pamphlets on the myriad of kidney diseases, referrals to doctors, and educational programs for health care workers, but the majority of money goes to research grants and care for indigent patients," says Kara Callahan of the national group.
The average car sells for $275, and the Salvation Army nets a high percentage, 70 to 75 percent, which it uses for capital purposes.
If your car is in good enough condition for someone to drive it, consider turning it over to the United Way, which will assign the car to a charity that needs it to carry out its programs.
The Princeton YWCA has its own system for car donations. "We have an arrangement with Nassau Conover Ford and they do all the middle person work," says John Jorgensen, executive director. The Y gets a couple of cars donated every year, and they may not be perfect but they are drivable.
Stahl, of Princeton Nassau Conover Ford Lincoln Mercury, appraises cars donated to the Princeton Family YMCA, one of the charities for which he serves on the board. An accounting and economics major at Susquehanna University, Class of 1981, he has been at the car dealership on State Road for nearly five years.
"The IRS has learned to question what someone is putting down in value," says Stahl. "Many of the cars donated do not have their value listed in books, and no car matches the guidebook exactly, because the guidebook does not add options like the CD player or how often you changed the oil. When I tell you what the retail value is, it is likely to be more accurate."
Stahl treats the donation like a trade in and often sells it to a wholesaler. "Nassau Conover sends us a check and we send the donor a statement with the amount," says Jorgensen.
"Most people are donating junk cars," says Stahl. "Very rarely is anyone donating anything over $3,000 to $4,000. Someone who is giving a $15,000 car isn't doing it because of tax consequences but because they love the charity." Owners of late model cars would save by trading them in and slashing their sales tax than by using them as a donation. "Unless the charity has a use for it, the charity is probably better off with cash," says Stahl. And, he adds, "The person disposing of the vehicle isn't making any money."
-- Barbara Fox
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