NEW YORK, April 10 /PRNewswire/ -- A new government report, published just in time for tax season, is a timely reminder that donating your car is still a great way to contribute to a local charity. But fewer people seem to know that because the number of vehicle donations has plummeted -- and charities are feeling the pain.
In 2004, the Congress changed the rules governing vehicle donations. Since then, car and truck donations have decreased by 39 percent, according to the new report by the US Government Accountability Office (GAO). The GAO also reported that, during 2005 and 2006, revenues from vehicles donated to the surveyed charities dropped by 25 percent.
The changes were intended to address tax abuses and enforcement shortcomings. During congressional debate, proponents argued that the changes would not adversely affect charitable contributions.
But the report documents that charities have had to curtail homeless and public health services, a microcosm of the cutbacks in service to the sick and needy by hundreds of charities across the country. From 2004 to 2006, for example, the volume of donations to the National Kidney Foundation had declined by 42,000 vehicles or 52 percent. The resulting revenue decreased by $8 million or 44 percent. The Kidney Foundation, based in New York, has worked since to diversify its fundraising base but smaller charities have found it particularly difficult to compensate for lost vehicle donation revenue.
"They meant well but these changes went overboard, and it's cancer victims who are paying the price," said James T. Reynolds Jr., vice-president of Tennessee-based Cancer Fund of America. Like many charities -- from Massachusetts Meals on Wheels to the California Council of the Blind -- Reynolds expressed hope that the new government report will prompt a fresh congressional review.
Meantime, as the April 15 tax deadline approaches, charities are urging donors to take full advantage of the existing tax incentives. "Believe it or not, many Americans who donate vehicles fail to claim the benefits they deserve," Reynolds said.
Beginning in 2005, taxpayers could deduct only the sales price of the donated vehicle when sold by the charity or commercial auction for over $500. Previously, taxpayers could claim the estimated fair market value for any donated vehicle. Charities cite the uncertainty about the timing and amount of the final sale as reasons for public confusion about the rule changes.
The GAO study documented overall decreases in vehicle donations of 15 percent in 2005 and another 28 percent in 2006. The study also showed declines in resulting charitable revenues of nine percent in 2005 and an additional 17 percent in 2006.
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SOURCE National Kidney Foundation