Q & A Hotline

From the Chronical of Philanthropy

Q. A donor wants to donate a car to our foundation, and then have us conduct a raffle to give it away. Where can I find information about car donations, including the do's and don't about this type of gift?

A. Car donations became more complicated this year, when changes to the federal tax law governing such gifts went into effect on January 1, says Nancy J. Kellison, director of the Western service center of Cars for a Cure, in Long Beach, Calif. (Cars for a Cure is the vehicle donation program of the American Cancer Society.)

"In the past when a donor gifted a vehicle, that donor determined the fair market value for their donation utilizing such sources as the Kelley Blue Book," she says. Today, the new guidelines say that a donor may only deduct the actual sales price of the vehicle when it is resold by the charity.

It's not just the federal government that you'll need to worry about, though. To provide the donor with ownership-transfer documentation, you will need to notify your state department of motor vehicles, says Ms. Kellison. You will also need to check in with your state regarding the raffle, she says, as raffles are typically regulated by state law. Good places to start to learn about raffle regulations include your state's attorney general's office, and your state or regional nonprofit umbrella organization.

But try to avoid the raffle if possible, suggests Harvard E. Palmer Jr., cofounder of the Vehicle Donation Processing Center, in Monrovia, Calif. Mr. Palmer's company handles more than 1,000 vehicle donations a week for 300 charities, and he says that your donor's request is very unusual. If it's a run-of-the-mill car, he says, a raffle is probably going to cost you more than you'll gain from the donation.

"Vehicle donations are all about quantity -- there's darn little quality. Our gross average sales price for the vehicles we handled last year was $438. The big trick is get the vehicles in and get them sold in a hurry. The best and safest way is to do that by auction," he says. "For a donor to specify the manner of liquidation doesn't really make sense, unless the donor is putting on their own charity ball with their own rich friends, and they're raffling a 1961 Austin-Healey."

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