In most states in the U.S., donating a car to charity is extremely simple. However if you want to donate a car to charity in California, there are a number of important issues you need to be aware of.
For some reason, the state of California has some of the highest rates of charity fraud in the U.S. This can take the form of websites claiming to give the proceeds of a donated car sale to charities, but not really doing so. Or it can take the form of organizations posing as charities, but actually just selling the vehicle and keeping the profits.
Thankfully, the California Attorney General has published an extensive guide on how to protect yourself when you choose to donate a car to charity in California. The following is an important how-to summary that includes the highlights you need to know.
How to Identify a Legitimate California Charity
According to the Attorney General, legitimate charities in California get about 80% of their funding from the public.
That means people like you who donate goods, money, or services make up the bulk of what keeps these charities in operation. This means your car donation is very important.
One of the first ways you can tell that a charity is legit is that it’s legally registered with the Attorney General’s Registry of Charitable Trusts.
How do you know if a charity is legit?
- Exempt from federal and state taxes: A real charity will be exempt via IRS revenue code 501(c)(3) and California’s tax code section 23701(d). The only way to get this exemption is if the charity operates “exclusively for religious, charitable, scientific, and testing for public safety, literary or educational purposes.”
- Registered to do Business: The charity should be registered with the state as a public benefit corporation, even though it’s non-profit. You can check if the charity you want to donate your car to in California is listed by checking the Secretary of State’s searchable database.
- Registered as a Charitable Trust: A legit charity will be registered on the Attorney General’s Registry of Charitable Trusts.
Important Things to Check
In California, you need to be very careful before you send your goods or money to an organization. You may think you’re supporting an important cause, but if you’re not careful your donation will only go to profit scam artists.
Some things you should always do before donating your car to a charity include:
- Getting Involved: It’s always smart to donate to a charity that you’ve personally had interactions with so that you know they actually run the community programs they claim they do.
- Investigate Practices: Not only are charity tax records available to the public for you to review, but a number of watchdog organizations are also available to help. Check out the Wise Giving Alliance, the Better Business Bureau, or the American Institute of Philanthropy.
- Request Documentation: Always verify the charity’s address, phone number, tax exemption, and whether it’s registered with the California Attorney General. These are all publicly available records and can be confirmed yourself.
- Confirm with the Charity: Many fake organizations claim to send donated car proceeds to charities like the American Red Cross or the American Cancer Society. Look up the phone number for the charity online and call them to see if they’ve ever heard of the organization handling your car donation.
- Beware gifts or “vouchers”: Many charities will do things like offer a “voucher” for a free hotel stay or vacation. While these vouchers are often legit, you still need to understand that the value of that voucher will reduce your tax deduction for your car donation accordingly.
- Verify percentages: Most of the time, especially when a charity uses a third party to manage donations, only a percentage of that donation goes toward actual charitable fundraising. Some of the donation pays the third-party service managing the donation. Under California law, if you ask for the percentage going to actual charity fundraising, that information has to be disclosed.
- Law Enforcement Phone Calls: If you receive a call from an organization seeking a vehicle donation to raise funds for your local or state police or fire fighter service, always call the state police or fire fighting department to confirm that the fundraising effort is actually legitimate. Sometimes this is a scam, so always verify before donating anything.
- Review the charity’s tax information: One of the easiest and most revealing ways to confirm the validity of a charity is to review its IRS Form 990. This form shows not only how much money the charity raises, but also how that money is spent.
Researching a California Charity’s IRS Form 990
The clearest picture you can get about a California charity you’re planning to donate your car to is from its IRS Form 990.
Legally, charity’s need to make the last three years of Form 990 available to the public upon request. From this form you can gather the following information about a charity.
- The Charity’s name and address of operation
- Source of income (annual revenue)
- Gains or losses the charity experienced in that year
- Expenditures and how the charity spent its money (review “management and general” for charities that are top-heavy)
- Programs that the charity has successfully run that year
- Financial stability of the charity
Importance of Car Donations
Don’t let any of the information above scare you. There are far more legitimate charities in California than there are scams. So long as you do your homework, you can rest assured that your car donation is going to go toward supporting important public charitable programs in California.
This is especially important given that starting in 2017 government subsidies for California charities began dropping significantly.
Those drops put even more pressure on public charities to increase their fundraising efforts and solicit the support of the community so they can continue their important operations.
There are a lot of fantastic causes in California to support with your car donation. Make sure to review legitimate charities that you can donate your car to.
Then, just do your homework and then contact the charity to initiate the donation process. Once you find a legitimate charity to support, the car donation process itself is extremely easy and quick.