Donated Cars Are A Bad Deal

Alex Mayyasi finds little reason for charities to be involved with used cars:

An IRS loophole has lead to a quirky situation where charities are in the business of acquiring and selling used cars. Charities can make some money from car donations and often outsource selling donated cars and other aspects of fundraising. By doing so, they can focus on their programming: running after school programs, sending care packages to soldiers overseas, or running awareness and outreach events for terminal illnesses.

But car donation drives, along with other forms of commercial fundraising like telemarketing and canvassing, seem to be an inefficient means of supporting charitable work. Less than half of the proceeds accrue to charities, with private companies retaining the rest, and fees eat up over half of the value of the donations. This not only means that people support charities less than they intend, it also cheats the US government of revenue.