Cars that might have been donated for tax breaks instead turned in to dealerships
Charities that depend on vehicle donations for fund-raising are suffering under the popular Cash for Clunkers program, which gave rebates of up to $4,500 to people who traded in old gas-guzzlers for new, more fuel-efficient vehicles.
Rather than handing over running cars and trucks to nonprofit agencies and receiving small tax rebates, potential donors drove them into auto dealerships, where they reaped greater financial benefits.
The program ended Monday.
The exact effect on Sonoma County charities is not yet known, but hundreds of cars that might otherwise have been donated to charities wound up with dealerships.
In a time when the recession and new tax laws are already cutting into fund-raising, the loss will be significant.
“It's a big hit,” said Cindy Roach, development director for the Sonoma Humane Society, where car donations dropped in August. “It's on top of other losses that are very difficult to make up.”
Over a one-month period, Cash for Clunkers ignited new car sales across the North Coast and the nation. It offered rebates of $3,500 and $4,500 to people who traded in running cars that were no more than 25 years old and got 18 miles per gallon or less, and bought new cars with improved efficiency.
The offer proved irresistible.
For the first time in months, dealers were swamped with customers and tired trade-ins piled up on back lots, waiting to have their engines disabled as required.
Although charities continued to receive car donations, they tended to be less valuable vehicles that didn't qualify for the clunkers program, said Pete Palmer, co-founder of Vehicle Donation Processing Center.
As a result, gross receipts for the 400 charities Palmer represents, including the Petaluma-based Polly Klaas Foundation, are down 7.5 percent for the month, he said.
Car donations were already suffering because of a tax law that took effect in 2005 limiting write-off amounts, he said.
“Any tax deduction can't possibly be worth what someone will get on a clunkers deal,” said Palmer, who hopes pending legislation before Congress will provide new incentives for charitable donations. “If they wanted a new car, the likelihood they would donate to charity would be slim.”
The Klaas Foundation also got fewer cars. In the first three weeks of July before the clunkers program began, the group had 306 donations compared to 278 for the first three weeks of August.
Executive Director Robert De Leo said it is difficult to know if the trend is caused by the clunkers program. He said contributions already were down by as much as 35 percent compared to previous years.
“Now that the program is over, we may be in a better position to examine that question in future months,” De Leo said in an e-mail.
At the Sonoma Humane Society, car donations were off about 50 percent from last year. Roach said things appeared to be picking up until July, right before the clunkers program started.
The reduction comes as the nonprofit deals with a 46 percent increase in animal drop-offs and pet surrenders, caused mostly by the recession.
“It's one more insult on top of an already-difficult year,” she said.