Auction

• Most donated cars are sold at auction with proceeds benefiting the charity that received the donated car. Charities must first have the car titled in their name before selling it at auction. If the charity or the donor fails to legally change the title, any accidents, tickets or illegal activity related to the car will be the responsibility of the owner listed on the title. Auction sales happen frequently, and charities try to turn the donated car into cash as soon as possible. After the donated car is sold at auction, the charity will send a receipt to the donor reflecting the sales price, which she may use as a deduction on her income taxes. If the donated car is worth less than $500, it is up to the donor to determine the fair market value for the tax deduction.
  
  

Charity Service

• Some donated cars stay with the charity and are used as transportation for the employees and volunteers during the course of doing business on behalf of the charity. Charities may also repair or otherwise fix up the donated car, then sell it for more money than in its original donated condition. Low income persons may purchase the car directly from the charity for personal use. If any of these situations apply to a donated car, the donor may claim the fair market value of the car as a deduction on his income taxes. Some cars are only valuable for parts or to a junk dealer. Charities may sell the car in pieces depending on the condition of the donated vehicle, or they may benefit from the scrap metal generated from a crushed car. There are many ways a charity can profit from your donated car.
  
  

Donation Services

• Cars donated to charity through a donation service may well benefit the "for profit" donation service much more than the charity. Some businesses prosper by accepting donated cars, selling them at auction and then pocketing 50 percent or more of the proceeds before making a donation to charity. If you're considering donating your car to charity, give it directly to the charity with no middleman making off with half of the profits or more. Your charity will also reap greater benefits from your kind donation if you take the time to transport the vehicle to the charity yourself, saving them the resources necessary to pick it up or tow it.