Vehicle Donations For Nonprofits

Have you ever had someone ask you to take a vehicle that they no longer need? Chances are, if you've never done it before, it can feel a little bit scary.

 Or maybe you've done it before, but you didn't know all the requirements for accepting a vehicle donation.

What Are Vehicle Donations?

Vehicle donations can be viewed as another way to help fund your nonprofit, whether you use it in your mission or to forward the blessing to someone you serve. 

How to Use The Vehicle Within Mission

Vehicle donations are intended to help fulfill the nonprofit's mission. Here are a few examples of ways vehicle donations can be used within your program

• As a way to serve/bless a person you serve that needs transportation
• Use within your nonprofit, such as food delivery to the needy or a Pastoral Care Program that requires someone to travel to and from the hospital.

Different Types Of Vehicle Donations

• Significant Intervening Use: If a nonprofit uses the vehicle inside its mission, it has to be for significant intervening use. What's that mean? It simply means that your use of that vehicle and your mission must be intentional and core to how you operate your nonprofit.

           EXAMPLE: Traveling to deliver Food, pastoral care, and hospital visits.

• Gift The Vehicle: If you gift the vehicle, you must show that it furthers your charitable and nonprofit purpose.

          EXAMPLE: Serving a population in need with a means of transportation.

Also, if you're gifting the vehicle to an individual, there are a couple of extra details to consider - registration and title transfer and insurance. Your state may have some additional resources or tools. Some states make it easy to make that transfer so that the nonprofit doesn't have to title it and then title it to the individual.

Check out your local state laws to see what's possible for you!

• Selling The vehicle: If you are selling the vehicle for more than $500, then you have to do some additional reporting, and there will be an impact potentially on that.

Vehicle Donation Guidance

The guidance in IRS publication 4302 states that written acknowledgment is required to be given to the donor. And what to include in that communication varies depending on how you use the vehicle donation.

Another necessary guidance you should know about vehicle donations is that they must be done at an arms-length transaction.

Funny phrase, right? The IRS uses it a lot. This phrase denotes the idea of someone not being too close to you; they're essentially at an arm's length. That means you cannot sell the vehicle to an individual who is not within your mission's target and you cannot give improper benefits to private parties.

I hope you found this article helpful and next time you are offered a vehicle donation you can feel more confident.