This year fewer people are donating used cars, partly because the recession is forcing them to drive their old cars longer, while others turned their rusting wheels into the Cash for Clunkers program.
The dwindling number of car donations, while not a major source of revenue for most nonprofits, couldn’t come at a worse time. Charities nowadays need every penny as overall donations shrink and the need for their services grow in a bad economy. Those who run car donation programs say they typically see a surge the week after Christmas because people want to be able to claim the charitable deduction this year.
The Salvation Army estimates that vehicle donations and related revenue nationwide are down at least 25 percent this year.
At the Animal Rescue League of Boston, Susan Ruderman said car donations … took a “definite dip’’ during Cash for Clunkers this summer. During the federal rebate program donations dropped off by an estimated 70 percent.
Even before the recession and Cash for Clunkers, car donations started shrinking in 2005 when the Internal Revenue Service made it harder for those donating a vehicle to predetermine how much money they might get back on their taxes. Previously, taxpayers could deduct the “fair market value’’ of their car. But under current rules, deductions typically are limited to what a charity realizes from the sale of the car, and that amount must be verified by the charity beforehand.
The most recent data published by the IRS show that from 2004 to 2006, the number of income tax returns reporting used car donations dropped 68 percent.