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Five steps for avoiding car donation scams.

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Follow these 5 steps so you don't fall victim to scams when making tax-deductible vehicle donations

Thinking about donating old cars to charity for a tax deduction? There's no shortage of people fighting for your attention! Unfortunately some of the so-called charities that dominate local airwaves and billboards are nothing more than wolves in sheep's clothing – people who operate very profitable businesses by taking advantage of the laws regarding tax-deductible vehicle donations. Sure, they donate a portion of their profits to charity – they have to in order to keep their status with the IRS. But the percentage they donate to charity can be surprisingly low, sometimes as low as 1%. Some even form their own charity and staff it with friends and family!

So how do you cut through the clutter to find the best legitimate charity for donating old cars? Here are 5 key points that will help you make sure your tax-deductible vehicle donations do the good you want them to:

1: Cut out the middleman

When donating old cars, donate directly to the charity whenever possible. Questionable charity car donation programs are almost always middlemen who take your tax-deductible vehicle donations, sell them, donate a fraction to a charity, and keep the rest for 'operating costs'. When you deal with a middleman, your donation gets sliced twice, once for the overhead of the middleman charity vehicle organization, and once for the overhead of the charity. Your donation goes farther when you give a car or truck to a charity that accepts vehicle donations directly, like Volunteers of America Michigan. An average of 88% of donations made to Volunteers of America go to local programs like helping homeless veterans in Detroit, Lansing and Flint, permanent senior housing from Benton Harbor to Redford, and emergency food and shelter programs in Lansing.

2: Do a charity check-up

Finding the best charity to donate a used car doesn’t have to be a stab in the dark – the internet has a couple of easy ways you can evaluate any charity you are thinking of donating cars to. The Better Business Bureau is a natural place to start. At bbb.org the Better Business Bureau evaluates charities on 20 Standards of Charity Accountability including how they spend their money, whether the organization represents itself honestly, and the charity’s willingness to disclose important information to the public. Another valuable resource for people looking to donate a used car for a tax deduction is GuideStar Exchange, found at guidestar.org. GuideStar's mission is "To revolutionize philanthropy by providing information that advances transparency, enables users to make better decisions, and encourages charitable giving." We display the Guidestar and Better Business Bureau seals on all our web pages, which link to their reviews of Volunteers of America.

Better Business Bureau Charity Reviews:

GuideStar Ratings:

3: More is always better

When you're making any kind of tax-deductible vehicle donations, the higher percentage of your donation that goes into programs that help people, the better. The IRS doesn't have a set percentage that a car donation program has to contribute to charity – some actually give less than 10%. When you're thinking about donating old cars it's smart to take the time to investigate just how much of your donation will make its way into programs that help people. Reputable charities will offer that information on their website, or in an online copy of their annual report. You can also find that information online through the Better Business Bureau or GuideStar. Volunteers of America puts an average of 88% of all donations to use in local programs that provide emergency food and shelter, job training, senior housing and youth services for nearly 2 million people nationwide, including tens of thousands right here in Michigan.

4: Look for a local connection

If the charity you're thinking of donating a car to is vague about the programs they offer and where they offer them, it can be a red flag. If you like the idea of helping people close to home, look for a charity that does good work in your area or state. When you make tax-deductible vehicle donations local programs can provide another plus – you can look in on the programs you donated to, and see how your donation is changing lives. Right here in Michigan, Volunteers of America serves 175,000 meals a year to people fighting the tough economy, shelters thousands of homeless veterans while providing job training and other support, and provides a Merry Christmas to 22,000 Michigan children.

5: Double check that the charity is an official IRS designated 501 ( c )(3) charity

If you're interested in tax-deductible vehicle donations, make sure your donated car or truck goes to a 501( c )(3) charity – an official designation only the Internal Revenue Service can provide. If the charity car donation program you're looking into doesn't have a 501( c )(3) designation, your deduction may be disallowed, and you could end up writing the IRS a check for the taxes you owe, plus interest and penalties. If you want a tax deduction for donating old cars, donate to an official 501( c )(3) charity.

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Here are 5 ways Volunteers of America Michigan rises above the scammers:
  1. No middleman
    We don't donate money to charity – we are the charity. When you donate old cars and trucks to Volunteers of America Michigan, you are donating directly to the organization that helps hundreds of thousands of people right here in Michigan
  2. Highly rated by GuideStar and the Better Business Bureau
    Volunteers of America GuideStar Rating
    Volunteers of America Better Business Bureau Review
  3. We pour 88% of all donations into life changing programs
    If you want to do the most good with your donation, you're in the right place.
  4. Volunteers of America helps thousands of people right here in Michigan
    We pull together in Michigan. Whether you make tax-deductible vehicle donations in Detroit, Kalamazoo, Ann Arbor, Flint, Lansing, Marquette, Bay City or Grand Rapids, you can be certain your donated vehicle is helping people close to home.
  5. Volunteers of America Michigan is an official IRS designated 501 (c)(3) charity
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