At some point you decide your vehicle is no longer the one you want or need; then it’s time to trade it in or donate it to a worthy charity. The ROI on car donations was high enough that NPR and many other charities have been promoting it, even after Congress passed the 2017 Tax Cuts and Jobs Act.
It’s useful to evaluate IIC in the context of car donations. That’s because, while there is one important similarity, there are multiple important differences. Both methods of supporting your favorite charity are of interest to a relatively small percentage of supporters at any given time.
Don’t get me wrong. You feel good when, as NPR says, you “turn your old car into the programming you love.” But, while the donor gets an IRS tax write-off on the value of their donated car, the donation is still at the expense of that donor.
Let’s say a beater car could save you $1,000 as a trade-in. If you donate your car through a third party service, like Car Donation Wizard, you give up the $1,000 savings on a new car, but recoup only $240 in tax savings. (assuming a 24% tax bracket). It cost you $760 to donate your car, so your favorite charity could get $700-$800, after the third-party service takes their 20%-30% fee.
Hopefully, thousands of car owners will still donate their cars, though the increased standard deduction of the 2017 Tax Cuts and Jobs Act will likely result in fewer car donations. And some charities will still make an effort to remind their supporters of this option. All well and good.
Charities competing for donors’ attention need to evaluate the cost/benefit of their requests and maybe they should consider leading with requests that offer the highest impact. If there were a program that allowed your supporters to give something of significant value (often much more than the value of a donated car) at no personal expense, wouldn’t that be a good contender? If you answered yes to my rhetorical question, then it’s time to give your supporters the gift of Investing In Communities®.