Almost a year after the vehicle donation tax law changes were enacted, many organizations are still struggling to educate the public about the changes — reaching out and convincing them to give even in the face of rising gas prices, fewer new car sales, and a smaller tax break than ever before. In this issue of Fundraising Well, we'll learn how one organization is keeping their vehicle donation program afloat through public awareness and education about its program. Also in this issue, you'll learn 5 helpful tips on how to keep your vehicle donation program thriving. Don't have a vehicle donation program? You may know someone who does, so feel free to forward this newsletter along. Does your organization have a story you'd like to tell? Let us know: fundraisingwell@blackbaud.com. You have received this email because you are subscribed to Fundraising Well, a monthly newsletter about fundraising effectively in today's world. Subscription information is located at the bottom of this newsletter. |
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Editor's Note|
Courage Center, a nonprofit rehabilitation and resource center in Minnesota, is feeling such pain. The Center’s vehicle donation program, Cars for Courage, has been a critical source of income for 10 years. Courage Center helps people of all ages with physical disabilities become more independent through traditional therapy programs, independent living services, vocational services, drivers’ assessment and training, aquatics and fitness, and sports and recreation opportunities. Funds raised through vehicle donations help support Courage programs serving more than 16,000 people each year. “When we started Cars for Courage, we were looking for a new way to raise funds, and vehicle donation programs were just in their infancy. We launched the program and over the years saw it develop into a substantial source of revenue for Courage and a unique way for people to make a substantial donation they might not have otherwise been able to do with a cash gift,” said Rose Adams, director of Cars for Courage. Since the legislation, Courage Center has seen more of a decline than it expected. Before January 1, donors were allowed to deduct the fair market value of their donated vehicle as a tax deduction. But that changed when Congress amended the law. Now donors can deduct the gross sale price the nonprofit actually sells the vehicle for. If the charity makes a significant material improvement to the vehicle or uses it for a determined period of time in its program to further its mission, then donors may take a deduction based on the fair market value of their vehicle at the time of the donation. Once the vehicle is sold, nonprofits provide the donor with a receipt indicating what they are allowed to claim as a deduction on their taxes. There are other economic factors contributing to the decline of donations as well, such as fewer new car sales and higher gasoline prices. “In times of economic struggle, people tend to hold on to their vehicles,” Adams said. And with the recent popularity of employee pricing, new car sales are on the rise. The tax law change has created concern by many potential donors that the tax deduction is no longer available for donating a vehicle, or that it simply not as good a benefit as it once was. According to Adams, “The success of the Cars for Courage program over the years is largely due to exceptional customer service and a selling model that maximizes the value of the donated vehicle. We are continually fine-tuning our program to satisfy the expectations of our donors.” She added that some donors actually like the new law because it reduces the donor’s risk of overstating the amount they feel the vehicle is worth. Emotions typically weigh in when donors place a value on their vehicle, and they tend to attribute more value than a true fair market price. Despite the decline in donations, Adams remains positive about the future of Cars for Courage. “Donations have been picking up,” she said, and she believes the public will continue to recognize donating as a good alternative to selling or trading a vehicle and a great way to support Courage Center, a highly regarded community resource.
1. Educate the Public 2. Explain the Laws 3. Focus on the Positive 4. Be Straightforward 5. Sell the Cars Correctly
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As a result of January 2005 tax law changes, many people have the misconception that it is no longer an advantage for them to donate their vehicles to charity. This has caused serious problems for the many nonprofits that depend on vehicle donation programs for revenue support.
Regardless of legislation, vehicle donation programs can still provide a good stream of unrestricted funds. According to Rose Adams at Minnesota’s Courage Center, there are five things an organization can do to help ensure that its vehicle donation program still thrives despite the change in tax laws.
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