- Cash for Clunkers Program
- Tax Deduction Receipt Available, Even With Extension
- Tax Deduction for 2009 Car Donations
- Last Call For 2009 Clunker Tax Write Off
- The Vehicle Donation Processing Center, Proudly Announces its 800,000th Car Donation
- Charities happy to see end of clunkers program
- Charities Lament 'Cash For Clunkers' Program
- Used-car dealers want their 'clunkers' back
- Charities Wary of 'Clunkers'
- Proposed legislation may hurt nonprofits
- Car Donation Tax Law Leaves Donor & Charity Incentives Strong
- Q & A on Car Donation fundraising
- We Speak Up To Help Keep Car Donation Stories Accurate
- Overview of Contentious Car Donation Issues Seen In the Press:
- Who Gets The Most Money From Car Donation Programs?
- Why All The Advertising Expenses For Car Donations?
- Why Is the Percent to Charity So Small On Car Donations?
- How Palmer has explained the Percent of Auto Donation Proceeds Dilemma
- Failure of the Press to Grasp Necessary Costs in Vehicle Donations
- San Francisco Examiner Car Donation Op Ed Piece
- The Log Writes About Boat Donation
- Tacoma News Tribune Knocks Vehicle Donation Program Advertising
- The Non Profit Times Digs Into Auto Donation Programs
- The San Francisco Chronicle Sunday Magazine Re: "Donate a Car"
- The Seattle Times On Car Donation -- Blind Group Funds Scholarships
- KING5.com Does Extensive On-Line Auto Donation Study
- The Philadelphia Inquirer Describes Car Donation Tax Evaluation
- Beacon Journal Notes Funding Limitations When Donated Cars Are Junkers
- BECU Member's Magazine Details Automobile Donation Programs
- New York Times Scribe Seeks To Donate A Car For Re-Use Not Resale
- Washington Post Article on Car Donation
- San Francisco Business Times Discusses the Effects of Legislation on Car Donation
- Charities cope with tax rules Federal tax deduction formula for vehicle donors now more complex
- Wheels wanted - Fewer people donate vehicles under new tax law
- Charities Not Thrilled With Latest IRS Guidance on Vehicle Donations
For more than ten years both the traditional and electronic press has covered car donation programs from time to time. In discussing the coverage we believe it will be helpful for readers of this website to consider that to our knowledge such journalistic inquiries into car donation charities, their agents, or donate car fund-raisers have never been instigated by a complaint from either a car donor or a charity. As many of us have discovered in the last few years a lot of journalists and editors seem to act on the premise that bad news generates more readership than good news.
Vehicle donation reporting has apparently been driven almost exclusively by the curiosity of a particular journalist. A few vehicle donation articles have been prompted by a press release by a politician, again to our knowledge never having been instigated by a complaint by donor or charity, but possibly by that particular politician's interest in his or her own press coverage. Some car donation articles have coincided with the release of statistics on charity programs brought out by a governmental entity. For example the Attorney General's office of the State of California publishes an annual report on donations to charities including vehicle donation stats. N.A.D.A. Guides also issued a press release that resulted in press coverage, which was largely favorable, some of which is quoted below.
It is the opinion of the Vehicle Donation Processing Center that disreputable car donation programs are actually few and far between, though there have been some, just like there are disreputable operators in all walks of life. All too often the press really wants to focus on that "one bad apple" and, in our opinion, oversimplify the nature of vehicle donation programs. Journalists have the ability to tarnish the reputation of many honest and well run charity donate car programs in an effort to question the efficacy of all donate car operations vis-à-vis proceeds generated for charity.
Given the "gotcha" mentality so often observed in journalistic approaches to vehicle donation it is no surprise that by now most auto donation processing companies just refuse to speak with the press. Not Harvard E. "Pete" Palmer, Jr., the Vice President and one of the two founders of the Vehicle Donation Processing Center, Mr. Palmer feels as the company spokesman for the Vehicle Donation Processing Center that he has an obligation to try to help inform the public about the many positives associated with car donation, whether handled in-house by a non-profit's own vehicle donation personnel or through seasoned commercial professionals like the Vehicle Donation Processing Center and Pete Palmer Advertising. Please note that unless so authorized by our car donation charity client we do not disclose actual dollar figures to the press or other parties (which makes for another lovely opportunity for reporters to cast aspersions). You will see below that our vehicle donation charity clients are often quite proud of the revenue amounts from car donation programs that the Vehicle Donation Center conducts on their behalf, and are very willing to specify their vehicle donation proceeds for the press.
What follows are the pertinent sections from some of the articles we have become aware of about car donation. Mr. Palmer's quotes and references to him, the Vehicle Donation Processing Center, and charities for which we operate a vehicle donation program, have been highlighted.
We thought it might be useful to provide some background regarding a couple of the highpoints on vehicle donation articles we have seen.
Though certain reports in the press have taken a very negative tone about the percent of gross proceeds going to "out of state fund-raisers" it is interesting to note that in well over a dozen auto donation articles of which we are aware, not a single one followed up on the point made by Mr. Palmer that of all the participants in car donation, the ones who get more money from vehicle donation programs than any other, are the media themselves! (Case in point an article about auto donations in the Arizona Republic by Edythe Jensen dated 12/2/01, where Ms. Jensen states, "a large portion of Arizona's vehicle donations make big profits for out-of-state dealers, auctioneers and car dismantlers...." What she didn't say was that the Arizona Republic, owned by international media giant Gannett, hardly an Arizona company, has received more money from vehicle donation programs in Arizona than either charities or processors, whether in or out of state from advertising costs. This point was made very clear to Ms. Jensen in her lengthy telephone interview with Pete Palmer.)
It would be wonderful if prospective car donors at the point when they have decided that the want to dispose of an older vehicle would immediately think, "oh, boy, car donation" and then look in the phone book to call their favorite auto donation charity. Unfortunately it doesn't work that way. People are just so busy in our modern lives and, relatively speaking, the car donation concept is a new one to many folks compared with trying to sell, trade-in, or junk their old "donatable" car. After almost thirty years in the advertising business and almost ten years studying the car donation industry all of us at Pete Palmer Advertising believe that it is imperative for the fund-raising success of the charities for which we operate vehicle donation programs that we must find a way to get the car donor and charity mission information in front of those citizens who have concluded they might be in need of a donate car program. Specifically the charity's good name, a brief summary of their mission statement, and then a bulleted list of the benefits in time and money to citizens who are considering becoming a car donation participant help educate and inform the public about the resource of car donation.
This information must be advertised, as inexpensively as possible, over and over again so that when a prospective car donor has made the decision to dispose of a vehicle, the appropriate charity's car donation message is readily available in the prospective auto donor's geographical area. That is why auto donation advertising is what is known as "direct response" advertising and why you always see or hear the phone number in what is known as a "call to action."
The quick answer is high (and unavoidable) fixed and variable costs - here's the detail.
- Variable car donation cost: Advertising; as we have noted elsewhere in our website about auto donation, the average gross selling price of a donated car at auction nationwide is only $400. Without repetitive car donation advertising prospective vehicle donors will be both unaware of their car donation option, and unable to contact a charity car program because they will not have a phone number or appropriate website containing a vehicle donation application.
- Fixed car donation cost: Transportation from donor to auction - a donated car cannot be liquidated at the car donor's home! It must be transported to a vehicle donation liquidation facility, namely a charity car auction.
- Fixed car donation cost: Sale at Auction:
- Mini rehab, detailing and misc. fees:
Though reporters may not want to "get it" it isn't hard for the open minded and logical to see that if the average gross proceeds are $400 for the average car donation minus the necessary costs, the net profit on the average donate car is not very high. All of us at the Vehicle Donation Processing Center and the car donation charities with whom we reach agency agreements feel the answer is maximizing the car donation dollars to the charities without getting bogged down with worrying about the percent of gross auto donation sales received by the charity. (And given that the biggest vehicle donation program expense - advertising - is a variable expense, not a fixed, per car, expense like transportation, then the more car donations you can process for your charity, even at a tiny profit, the more that variable advertising cost comes down on a per donated car basis). Here's the way Harvard E. "Pete" Palmer, Jr. has explained it to the couple dozen journalists who have interviewed him about vehicle donation programs over the last few years.
"Let's say that the wonderful telephone service people at the Vehicle Donation Center who take the toll-free incoming auto donation calls from folks all across the country and parts of Canada who are interested in hearing more about car donation were omniscient. Yes, let's imagine for a moment that no prospective vehicle donor ever overstated the condition of their car donation to our Vehicle Donation Center operators and that in hearing the prospective auto donor describe her or his car donation over the phone our operators could conclude, then and there, exactly how much that car donation would sell for in a couple weeks or so when it would be liquidated at a charity car auction. Let's recall that we do know pretty accurately all the fixed costs like transportation (i.e. towing) of the car donates, the auction and misc. fees, etc. Therefore, if we knew the costs and we knew the car donation gross sales price, we could be correct, every time, in deciding whether to accept a particular prospective car for donation. By that we mean that we would decline any car donation offered that when sold would not cover the fixed costs entailed in liquidating it and we would accept any car donation that would sell for enough to cover the fixed costs -- even if that particular car donation would only sell for five dollars more than the fixed costs! Five dollars is better than no dollars, right?"
Well folks, that's exactly how we try to do it at the Vehicle Donation Center. Unfortunately, that was an imaginary perfect world we just described where no car donor ever exaggerated about her or his car donation and where the great tele-service people at the car donation center were all knowing - neither of which is the case in the real world.
But regardless of the world you inhabit we hope you are beginning to see why even in the most efficiently run car donation program the percentage of gross sales price of all the auto donations that is retained by the non-profit just has to be pretty low. It’s either that or the car donation charity or processing agent must decline the great majority of cars offered for donation, only accepting those that their omniscient car donation operators can predict will sell for thousands of dollars each. We are sorry to say that in almost ten years in the car donation field, having sold donated cars well into the six figure range, the number of auto donations that sell for many thousands of dollars each is still but a handful.
So why do journalists and the occasional politician refuse to accept that the fixed and variable expenses in operating a car donation program are legitimate, in fact essential, or no cars would be donated and if donated could not be sold? We don't have the definitive answer to that one, other than to surmise that explaining all this car donation detail takes a lot of space, does not make for a very sexy story and these gals and guys didn't go into journalism to explain boring details. Some of them probably became reporters to expose big time corruption which, in reality, is very hard to do and just can not be done from one's comfy home office. It occurs to us that in certain cases if the occasional reporter can't find big time corruption but they can find a car donation program where expenses darn near equal revenues then they get their "ink" where they can and tell their story quickly without pesky details from the charities and scuttle their subject by innuendo. But what do we know? That's just the little theory we're sticking to 'til proven otherwise.
See the Services to Charity Section of this website for the details and benefits of the Vehicle Donation Processing Center's dual guarantees to our car donation charity clients regarding the Center's absorbing any losses both in the aggregate and on any particular car donation.
Why Does The Press Talk To Palmer About Car Donation?
Mr. Palmer has operated a successful advertising agency since the Seventies and in the last ten years he has become one of the nation's leading authorities on promotion and operation of vehicle donation programs. Mr. Palmer has been quoted by the New York Times, San Francisco Chronicle, Philadelphia Inquirer, and more. We have excerpted those articles and present the relevant information on car donation below.
Mr. Palmer first wrote on the subject of car donation, in a 600 word op ed piece in the old San Francisco Examiner back on 5/13/96, where he pointed out some of the pitfalls of tarring good charitable organizations with a brush more suited to the very few miscreants. He also cited California's State Registrar of Charitable Trusts as a source for checking the records of particular charities soliciting in California.
In a nautical newspaper, "The Log" 12/5-18, 2003, the editor Capt. Alan Hugenot, in an article about boat donation mentions the Vehicle Donation Processing Center client the Polly Klaas Foundation as a worthy boat donation recipient. Hugenot cited a Klaas Foundation slogan, “Pick your charity well" as an important thing to remember for boat donors. We had not considered that to be a slogan of the Polly Klaas Foundation's vehicle donation program, we certainly agree with the sentiment. Capt. Hugenot also suggests that folks interested in donate a boat programs consider worthy nautical charities. We agree with the good Captain there as well, having a many year agency client boat donation relationship with Waterkeepers and an interest in supporting their important work in keeping San Francisco Bay and other waterways clean.
In an article originally published on 7/30/02, in the Tacoma News Tribune titled "Charities find bonanza in car donations," Tribune staff writer Stefano Esposito took a hard line against vehicle donation companies. In our opinion he utterly failed to grasp the concept that without the fixed costs entailed in transportation of car donations and auctioning the donated autos, etc., not to mention the variable cost of advertising, that there would be no vehicle donations and therefore no money whatsoever going to the car donation program charities. But negative slant or no, the Vehicle Donation Processing Center's charity clients let the truth ring out in their own words. Here are some quotes from Mr. Esposito's car donation article in the News Tribune, which, as of February 2004, was still available at the Tacoma News Tribune's website, at www.tribnet.com/business/story/1505747p-1623228c.html. This car donation story is one that (according Mr. Esposito's statements on the phone while interviewing Pete Palmer) was not driven by any kind of complaint but by the writer having become curious about vehicle donation promotion after hearing several donate a car radio commercials, some of which were written and voiced by Pete Palmer.
"Pete Palmer, vice president of the Vehicle Donation Processing Center. in Monrovia, Calif., said he's heard the complaints against fund-raisers like his company, but he's not apologizing. Palmer's company handles vehicle donations for the Washington Academy of Performing Arts, Washington Council of the Blind and Children's Wish Foundation, among others. Nationally, the company represents about 100 charities, he said. If charities only get a small share of the proceeds from a donated car, it's because most of the money is swallowed up by "fixed costs," he said. Palmer's company arranges to have the cars towed away, occasionally fixed up and then auctioned off. And it's one of his employees you'll talk to if you want to donate your car to one of the charities his company represents. The towing fee alone is about $75, and then there's the cost of advertising and a fee to the auctioneer, he said. The average car sells for about $400 at auction. Palmer wouldn't say what percentage of that $400 sale price his company takes. "We split the net proceeds with the charities," Palmer said. "We don't guarantee (the charities) will make money on the program, but we guarantee they won't lose money." And if clients want to know the percentage of the sale price that ends up in the hands of their chosen charity, his employees will tell them, Palmer said. Evidence of the program's popularity, said Palmer, is the 20 or so charities that call each week asking for information on signing up.
And several local charities say any money they get is a good thing.
"For us, it's worth every single penny," said Allison Nielsen, acting executive director for the Redmond-based Washington Academy of the Performing Arts. "From a fund-raising perspective, it's the easiest, the lowest effort with the highest return of anything we do." The majority of the academy's $1 million budget comes from tuition, Nielsen said, but her organization has no complaints about the $32,000 she expects this year in vehicle donation money.
For Berl Colley, state president of the Washington Council of the Blind, there's no debate about the value of the donation program.
Of the organization's annual $240,000 budget, about $170,000 comes from car donations, Colley said.
"Before we got into it, we had a budget of $40,000 to $50,000 each year," Colley said. "This has allowed us to expand our scholarship program. This has allowed us to do a lot of good things that we couldn't do before."
In an article originally published on 4/1/00, in the Non Profit Times "The Leading Business Publication for Non-Profit Management" titled "IRS Plans Inspections of Car Donations," staff writer Matthew Sinclair examined the auto donation industry in considerable detail and as might be expected for a non-profit industry specialty paper Mr. Sinclair well understood (this from an old phrase -- not Sinclair's) 'Ya gotta spend money to make money.' (Mr. Sinclair's piece, as of February 2004, was still available at the Non-Profit Times website at http://www.nptimes.com/Apr00/aprfro1.html )
Mr. Sinclair quoted our man Palmer, at some length, as follows:
Harvard Palmer, vice president with Vehicle Donation Processing Center (VDPC), which is headquartered in Monrovia, Calif., said proceeds from car donations often represent large percentages of an organization's revenues, even if the charity doesn't receive a large percentage of an auctioned car's sale price. VDPC represents nearly 50 organizations around the country, mostly based in West Coast states, where the company has registered as a charitable fundraising firm. Though he was reluctant to give figures, Palmer said, "A number of them get five-figure checks most months. A lot are less. And there are months they don't get (any) money." A recent article in the Wall Street Journal reported the California Department of Justice found nearly $24 million in revenue generated by California car donation programs in 1997, of which less than $6 million went to charities. VDPC would not disclose a range of income for the charities. "There's tremendous variance depending on the two factors: price at auction and the number of donations versus the cost of the media." He continued, "This is not collecting checks from people at swell parties. It's a totally different thing.… Even though we do our darnedest to match the media and market to the charity, to a great degree that's not the motivation of the donor. As opposed to most charitable fundraising, (this is about) getting rid of a car. "He added, "It's been a godsend for the significant charitable enterprises whether it's a two-person Council for the Blind or the Red Cross. "Palmer said that nearly half the cars VDPC receives don't run at the time they're accepted. The average auction price for the cars is $400, which factors in those that might sell for $10. "We have had a few quality cars through the years," he said. "But I'm sure the number of 'quality' cars, if you want to define it as late model, nothing wrong with the car, is less than 2 percent. It might even be less than 1 percent." Palmer said he thought programs in which charities receive a flat fee per car, "screws it up from a tax perspective - according to Marcus Owens at least." In light of the IRS's recent losses in other royalty issues, it's reasonable to think there's more to be heard on the tax status of royalties from car donation programs. "Clearly, if it's strictly a royalty," Palmer said, "it makes the tax deduction - or tax shelter - more questionable." Palmer said not enough notice is paid to the static costs involved with car donations when legislators or the press evaluates programs. For example, he said, "The tow is, on average, $75," he said. "There's no way getting around it." On top of that, auction fees and costs to the company are in the neighborhood of a couple hundred bucks." If a donated car costs $200 to present at a dealer auction and sells for $205, he said, that's going to do serious damage to the percentage that goes to the charity. "All our charities would rather have the five dollars than zero dollars," he said. "I would hope we're good enough at this that the lost cars [where no money is made] are less than 15 percent," Palmer said, "but that's going to vary by market and by media. There are charities that we've tried our hardest, the charities tried hard the media people worked hard, and for whatever reason we lose five figures before we give up."
In an article originally published on Sunday, November 11, 2001, in The San Francisco Chronicle's Sunday Magazine section, titled "Converting Cars into Cash - Donating your car to charity seems like a good idea. But how much of the money really ends up with the cause?" Chronicle staff writer Craig Marine took the usual tough reporter's stance vis-à-vis the costs of operating vehicle donation programs but he still did at least explain the charities and vehicle donation processors position as well. Mr. Marine kindly identified the Vehicle Donation Processing Center as "one of the larger and more reputable middlemen" and quoted Pete Palmer at some length on his insight into the car donation field. (We especially enjoyed Mr. Marine's Palmer quote zinger, at the very end of the article, "...we're hard-working, middle class businessmen. No jets, no limos.")
(Mr. Marine's piece, as of February 2004, was still available at the sfgate website at
In fairness to those upstanding, for-profit commercial fund-raisers, they are the ones doing all the work. The commercial fund raisers absorb all the costs associated with soliciting, collecting, repairing, reselling and/or auctioning off what are largely - according to Pete Palmer, vice president of the Vehicle Donation Processing Center, one of the larger and more reputable middlemen - Junkers worth an average of $400.
Palmer, in fact, bristles (to put it mildly) when the topic of percentages comes up in the vehicle donation business.
"The whole issue is bogus and I'll tell you why. I can only speak for our business and yes, there are bad guys out there, but in truth, there are a high percentage of fixed costs associated with trying to get cars for charities. If this is combined with the fact that the average worth of a donated car is around $400, then it's much clearer why charities don't get a higher percentage of the total revenue.
"We have towing, we have DMV costs - the fixed costs run to about $200 per car," Palmer continues. "There are lots of cars we take a loss on, and we turn all of our cars over to auction, it's the only way we do it because it's the reputable way to do it, in my opinion. Some of the cars we get might be worth $5 or $10, honestly, and we're going to eat that cost. If every car we got in was worth $10,000, then I'm sure we could turn 90 percent of the money over to charity. But I've been doing this for quite a few years, and I think I may have seen two donated cars worth 10 grand."
Perhaps because the case was more recent or eventually solved and therefore received more publicity, the Klaas Foundation received $2,429,174 in total revenue through its 1999 commercial fund-raising campaign for vehicle donations with the aforementioned Vehicle Donation Processing Center The Amber Foundation, while not approaching that total, still took in $15,045.92 during the same time period, using a different commercial fund-raiser, Charity Funding Services the percentage paid to the foundation was 39.95 percent.
Of those totals, the Klaas Foundation actually received $1,265,473.10, or 52.09 percent of its total, while the Amber Foundation pocketed a mere $6,011, or 4 percent of its original $150,000-plus total revenue.
Paula Skuratowicz, the executive director of the Polly Klaas Foundation, doesn't have a problem with 48 percent of more than $2.4 million going to a for-profit organization.
"Frankly, I think it is a win-win situation for us as a nonprofit. This is the agreement we entered into, and the fund-raiser does have to absorb a tremendous amount of expenses," Skuratowicz says. "I think people out there are looking for a way to help, and this gives the public a way to help. We're very satisfied with the relationship - after all, it's more than a million dollars that we would not have otherwise gotten, and its money that we badly need."
As an aside, Skuratowicz also points out that the consistent advertising, not just for her own charity but others of a similar ilk, keeps the issue of missing children before the public.
"It can be very easy for people to forget about this issue if there isn't some highly publicized case going on at a given time," she contends. "When you hear our ads or see the billboards with the foundation's name on them, it serves as a reminder that children are being kidnapped around the country all the time; it breeds certain vigilance and an ongoing compassion." At the risk of appearing crass, it might seem that it's one thing to be satisfied with half of $2.4 million and quite another to run a charity receiving about six grand out of $150,000. However, even Kim Swartz, whose Amber Foundation took in the low end of the second total, still can't quite bring herself to rip her fund-raiser.
Back in the world of vehicular giving, Palmer explains the discrepancies one sees between various campaigns his company runs quite simply: Vehicle Donations runs different campaigns for different companies, and there is no way to control what might be towed in for whom.
"Different cars come in to different companies. If we had omniscient telephone operators, we could only accept the best cars. But we don't. And, naturally, the highest cost comes from the media - advertising. Without it, we can't reach enough people, and it can get quite expensive placing advertisements in various places, but we do the best we can by all our clients, that I can promise," he says.
Palmer's arrangement with the charities is simple.
"We guarantee that the charity will not lose money. We split the net proceeds down the middle. Are there crooks out there? You bet - people with side deals with used car lots, all kinds of things. But then again, there's crooks everywhere,” Palmer continues, before concluding with his own description of himself and the people at his company. "I like to say that we're hard-working, middle class businessmen. No jets, no limos."
In this following article, Berl Colley, now recent past President of the Washington Council of the Blind, and a long time client of the Vehicle Donation Processing Center gives good reasons (and some kind, appreciative words for us) concerning his car donation program. (As of 2/04 we were unable to find a link directly to this auto donation article, however, should readers of this site wish to receive, by email, the entire Times article about vehicular donation programs, please email a request to that affect to: firstname.lastname@example.org )
The Seattle Times: Business & Technology: Sunday, July 06, 2003
Tow away a tax break: Donate a car to get a deduction
By Suzanne Monson
Special to The Times
It shouldn't bother donors to learn that many legitimate, tax-exempt 501(c)(3)-registered charities contract with other companies, says Bert Colley, president of the Washington Council of the Blind, considered one of the pioneers in cars-for-charity in this region.
Most charitable groups don't have the overhead to run this kind of program, he explains.
"We're an all-volunteer program," Colley says. "We'd have to purchase a fleet of a dozen trucks, run maintenance, employ people, pay out all the Labor and Industry things you have to when you have a business. That would probably knock it down to 12 to 13 percent actual net for us."
Instead, he says, the council receives about 22 percent of the vehicle's sale price. The money supports scholarships, crisis programs and education support. Since starting its program in 1998, the council has gone from a nonprofit group that collected $75,000 in donations to one that made $270,000 last year. Colley calls the 3,600 vehicles it collected in 2002 the council's "best year ever."
To Tom Williamson of Renton, a little money to a charity is better than none at all. That's why he has donated two vehicles to Washington Council of the Blind. "I knew some of the work they did, saw the ads in the newspaper, and I actually did call to see if they were who they said they were," Williamson says. "They made it painless. In both cases, I called the number. They asked me a few questions about the cars — its brand, age, condition — and they sent me a packet in the mail within five days.
"They gave me information on how to calculate the fair market for the tax deduction," Williamson says. "But honestly, I just wanted them to be moved."
Jim Klockow, of KING5.com , the on-line division of one of Seattle's oldest and most respected commercial TV stations, spoke at some length to the Vehicle Donation Center's Harvard E. "Pete" Palmer Jr. and to Patty Turnberg of Habitat for Humanity Seattle. This resulted in a thoughtful piece on the ins and outs of car donation as a way for charities to do fundraising. Our hat goes off for Mr. Klockow for including our point about the fixed and variable costs entailed in operating a vehicle donation program even if the overall tone of the piece still felt critical that the Vehicle Donation Center could not magically eliminate these car donation program costs. (As of 2/04 we were unable to find a link directly to this piece, however, should you wish to receive by email the entire KING5.com article please email such a request to: email@example.com )
Who profits from donating cars to charity
By JIM KLOCKOW / KING5.com
The Seattle chapter of Habitat for Humanity recently began using California-based Vehicle Donation Processing Center -- which collects and resells cars for almost 300 charities nationwide.
The calculation for Habitat is easy.
"I don't have to do anything. They do all the paperwork. They do all the towing. They take it to auction," said Habitat Development Manager Patty Turnberg.
The Vehicle Donation Processing Center even pays for advertising, subject to the approval of the charity.
Turnberg said Habitat could arrange to do that work itself, but it would be a distraction from the charity's mission.
"We would rather have our volunteers out building houses," Turnberg said.
At the end of the day, however, Habitat and the 10 other charities the Vehicle Donation Processing Center works with in Washington get on average about 15 percent of the gross proceeds from the car's sale at auction, according to the Washington Secretary of State.
"I look at it as, I know I'm probably going to get about $5,000 a month from this," Turnberg said.
The Vehicle Donation Center's co-founder Harvard E. "Pete" Palmer Jr. said that's just the economics of disposing of old cars. He said the average car fetches about $400 at auction. Fixed costs such as towing, minor repairs and whatever fees the auction companies charge run about $200. Advertising can run another $100 per car, Palmer said, which leaves $100 to be split between the charity and his company.
If the amount the car sells for doesn't cover the processing expenses, Palmer's company eats the loss.
Palmer is familiar with the criticism that charities don't get enough out of the deal. He says that's because most donated cars aren't worth much, so the fixed costs eat away at a bigger chunk of the proceeds of the sale.
"But if we said we're only going to accept vehicles that sell for $10,000, we'd have very few cars," Palmer said.
Even Palmer, the man whose business it is to get people to donate their car to charity, says the charities would be better off if donors would just write a check.
"The charity is infinitely better, but the donor doesn't get rid of this junk in their front yard."
Prompted by a press release from N.A.D.A Guides, Jeff Gelles, the very able Consumer Watch columnist for the Philadelphia Inquirer wrote a quick but informative piece for Philadelphians interested in car donation where he was kind enough to include a couple of the points we think are important when discussing vehicle donation programs. Here are some excerpts including quotes from our V.P., Pete Palmer.
Posted on Sat, Nov. 08, 2003
Consumer Watch -- Donating a car? Homework first
By Jeff Gelles
A useful shortcut
If your goal is simply to do well while doing well, a new service sponsored by the National Automobile Dealers Association may be just the ticket.
Go to http://www.nadaguide.com/ , the trade group's consumer Web site, and click on "Donate Your Car." You'll find one-stop shopping for giving away those worn wheels.
The site touts the advantages of donation, promising free pickups whether the car is running or not. It says donating can help you "avoid all the headaches of selling a used car."
The service acts as an intermediary, enabling you to donate your car to one of more than 200 charities listed on the site. But don't confuse a charity's presence on the list as an endorsement from the dealers association.
Pete Palmer of Vehicle Donation Processing Center, which runs the car-donation program, says the charities "were vetted by a variety of processes."
How much do the charities get? Palmer says that all the cars are auctioned and that his company splits the net profit - the revenue minus about $300 per car for processing and advertising - with the charity.
The bottom line: It may make sense to donate the car instead of junking it. But if it's a beater, don't expect the gift to do anybody else a huge amount of good.
Prompted by a press release from Jennifer Lange of N.A.D.A Guides, Betty Lin-Fisher, a business reporter for the Beacon Journal of Akron Ohio wrote a thorough piece about charity car programs where the advantages to charity and donor alike were spelled out in some detail. All of us at the Vehicle Donation Center were pleased that the limitations in fundraising potential for the bottom rung of donated cars was not overstated. Nice job Ms. Lin-Fisher! (As of 2/04 we were unable to find a link directly to this piece, however, should you wish to receive by email the entire Beacon Journal article please email such a request to: firstname.lastname@example.org )
Here are some excerpts including pithy quotes from the ever loquacious Harvard E. "Pete" Palmer, Jr.
Beacon Journal Monday, Nov. 17, 2003
Donating old cars or cell phones - Here's how you can roll that clunker away or ring up a good deed
Beacon Journal Business writer
If you don't want (or can't) drive your car to the Goodwill lot, you might consider donating the car through a new partnership between NADAguides.com and the Vehicle Donation Processing Center NADAguides.com is an on-line resource and pricing guide run through the National Automobile Dealers Association.
Cars donated to the Vehicle Donation Processing Center are sold at an auction and proceeds are split between the processing center and a charity chosen by the consumer from a list of more than 200 charities.
The best part of the process is that after either filling out an application on-line at http://www.nadaguides.com/ or calling 800-792-2095, someone comes to pick up your car and take it away.
You can then look up fair market value for the car, either on NADAguides.com or another pricing guide of your choice for your tax purposes.
That's it. There are no costs to you or the charity you choose.
Mark Perleberg, lead automotive expert at NADAguides.com, said he chose to partner with Vehicle Donation Processing because it was a straightforward process. There's no concern that the charity or group is skimming money for itself, he said. NADAguides.com does not get any part of the proceeds from the donation.
Harvard E. ``Pete'' Palmer Jr., vice president of the Vehicle Donation Processing Center, said more than half of the vehicles accepted by the group don't run.
Typically, a car at auction gets less than the fair market value that the consumer will claim on taxes. Palmer said the average car will get $400 at auction and after everyone is paid -- including the tow truck operator and the auction house -- the charity usually gets 25 percent of the sale price, or $100.
Often, charities don't even get that. Sometimes a charity may get $10 by the time a junker car is sold and costs are taken out. But Palmer said the benefit for the charity is that anything they get is more than they would have gotten without the donation. And they don't have the headache of trying to get rid of the donated vehicle. The cash also adds up.
The most successful charity benefactor has been the Polly Klaas Foundation, a national missing child organization. When Palmer's group approached the organization in 1993 to become its first charity, the foundation was about to close its doors because it had one month's worth of operating costs left.
Proceeds from donated vehicles now make up 85 percent of the foundation's $1 million yearly budget, said Jenni Thompson, director of public affairs for the foundation.
Palmer said the donation process works well for everyone involved.
`You get a warm, fuzzy feeling that you're helping a charity. If it's a junker, don't think you're helping them a ton, but it adds up,'' he said.
Palmer said there are some instances when the organization will not accept a vehicle, but the customer service representative will be able to help a potential donor determine that.
There are a few general rules for the donated vehicles, which can be cars, trucks, vans, RVs and boats: the owner must have the title and all four tires must be at least three-quarters inflated. There are some totaled or badly damaged vehicles that will be accepted, but again, that will depend on the situation.
Laura Christianson, a freelance writer working out of the Seattle WA area, wrote a well thought out story about auto donation programs where she identified many informational resources from State Agencies to participating charities, including some quotes from our man Palmer, while pointing to the Vehicle Donation Processing Center as a key national player in the car donation industry. (As of 2/04 we were unable to find a link directly to this piece, however, should you wish to receive by email the entire BECU article please email a request to: email@example.com )
Following is the excerpted paragraph with the Palmer quotes:
BECU Member's Magazine, Winter '04
Unloading Old Reliable -- How to donate your used car to charity
By Laura Christianson
....Brown's program, which sold 3,434 cars last year, is a relatively small one, compared to those of brokers that solicit donations nationally. The Vehicle Donation Processing Center, for example, administers donation programs for over 200 charities, including many small organizations that couldn't afford to run such programs themselves.
Pete Palmer, the company's co-founder and vice president, believes that his company's services benefit all involved parties. The charitable organizations don't front any money, but split the net proceeds of vehicle sales with his company. His company, in turn, is able to "give millions to charity through our efforts." Plus, added Palmer, vehicle donation programs "allow people to get into charitable giving who otherwise wouldn't do it." He noted that 80 percent of those who call donate their car.
(BECU Article © 2003 by Laura Christianson)
James Schembari, a talented consumer reporter for the world famous New York Times, saw Jennifer Lange's terrific press release announcing the partnership between N.A.D.A Guides and the Vehicle Donation Processing Center and wrote an interesting piece for the Times where the importance of their car donation programs to Vehicle Donation Center clients, the Polly Klaas Foundation and the California Council of the Blind, was discussed as well as Mr. Schembari's own angle re: the viability of donating a car to charity where the charity would actually use the auto donation for their purposes or for helping disadvantaged citizens get to work, etc. As Jim Schembari discovered when he called around to several non-profits, the fact that car donations are so consistently vehicles that have been largely worn out, and their attractiveness to charities for other than fundraising purposes is severely limited by insurance, repair, and maintenance issues. Harvard (Pete) Palmer was found to be a good source of information even by the illustrious New York Times. (Suffice it to say, Palmer was "stoked" to be so quoted by the nationally distributed and superbly major league New York Times, even though the Times apparently has a policy whereby they will not print a quoted nickname in their paper. Ah, well, they spelled the rest of his name right...).
Here are some excerpts including quotes from Harvard E. (not "Pete" in this case) Palmer, Jr.
Old Cars Can Become Good Deeds
By JAMES SCHEMBARI
Published: December 28, 2003
Donating an old vehicle to a charity has long been a popular option. The charity makes money by reselling the car, and the owners get a tax break and the satisfaction that they're doing some good. Many charities accept old vehicles. The Polly Klaas Foundation and the California Council of the Blind say they receive most of their income this way.
Just last month, the National Automobile Dealers Association announced a donation program that lets owners choose a charity from a list of 200 (www.nadaguides.com or 800 792-2095). The dealers work with the Vehicle Donation Processing Center in Monrovia, Calif., which runs the donation programs for these groups.
The Vehicle Donation Processing Center says it generally will not take non-running domestic cars that are more than 15 years old.
"This is a fund-raising exercise, so we only want cars that we believe will have a net profit," said Harvard E. Palmer Jr., vice president of the processing center.
Many of the organizations make donating incredibly easy. They mail the paperwork to the owner, who signs over the title and mails everything back. Usually within days, a tow-truck operator calls to make an appointment to haul the car away.