From Driveway to Pickup
Most non-profits have car donation programs. The appeal for the non-profit is the ease of management. In most cases, the organization contracts with a salvage yard to pickup and dispose of the vehicle.
When a donor contacts the nonprofit, the organization arranges for the car to be picked up by a tow truck or dropped off to a salvage yard. The salvage yard arranges an appointment with the car owner for the tow. The tow truck driver picks up the car. He takes the keys and title, and he provides a receipt to the donor.
From Pickup to Donation
Once in the hands of the salvage yard, the car's value is assessed. If the car is drivable and has evident resale value, the car will go to auction. If not, it is usually purchased by the yard and used for parts.
The salvage yard will take a service fee from the proceeds and turn the difference over to the nonprofit. The nonprofit issues a receipt to the donor for the sale amount, providing a tax write-off to the donor.
Amount Written Off
If the donated car sells for less than $500, the nonprofit is not obligated to provide a receipt with the full resale value. It only provides a receipt stating that the car was sold on the organization's behalf. It is up to the donor to determine the fair market value, as long as the car is less than $500.
If the car resells for more than $500, the nonprofit must provide a receipt for the value of the sale. You can write off the entire amount of the receipt from the nonprofit.
