Report to the Committee on Finance, 

U.S. Senate 

United States General Accounting Office 

GAO 

November 2003 VEHICLE 

DONATIONS 

Benefits to Charities 

and Donors, but 

Limited Program 

Oversight 

GAO-04-73 
www.gao.gov/cgi-bin/getrpt?GAO-04-73 

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Cathleen A. 

Berrick at (202) 512-3404 or 

berrickc@gao.gov. 

Highlights of GAO-04-73, a report to the 

Committee on Finance, U.S. Senate 

November 2003 

VEHICLE DONATIONS

Benefits to Charities and Donors, but 

Limited Program Oversight 

An estimated 4,300 charities have vehicle donation programs, based on a 

GAO survey of 157,500 charities with revenue of $100,000 or more. 

Taxpayers claimed deductions for donated vehicles on about 733,000 of the 

4.4 million tax year 2000 returns filed with noncash deductions over $500, 

lowering taxpayer liability by an estimated $654 million. 

For the charities surveyed, proceeds from vehicle donations ranged from 

$1,000 for one charity, to $8.8 million for another. However, proceeds 

generally constituted a small share of total charity revenue for the majority 

of charities GAO reviewed. In addition, for two-thirds of the 54 specific 

vehicle donations GAO examined, charities received 5 percent or less of the 

value donors claimed as deductions on their tax return. Differences in 

proceeds received by the charity and value claimed by a taxpayer were due 

in part, to vehicles being sold at auctions at wholesale prices, and proceeds 

being reduced by vehicle processing and fundraising costs. Due to a lack of 

available data on the condition of donated vehicles, GAO could not 

determine whether taxpayers appropriately valued their vehicles when 

claiming associated tax deductions. 

The IRS has some activities designed to detect noncompliant claims for 

noncash deductions, including vehicle donations. However, the IRS has not 

pursued potential leads from these activities because tax revenue yields are 

less than other potential noncompliance cases, such as abusive tax shelters. 

IRS’s ongoing National Research Program study may provide information on 

how to deal with donated vehicle compliance issues. Also, an IRS task force 

drafted recommendations for improving IRS’s oversight of charities’ donated 

property programs. State officials have filed legal actions in a number of 

cases involving problems with vehicle donation programs, such as an 

individual soliciting vehicle donations for fictitious charities. 

Charity Proceeds as a Percent of Donor Claims in 54 Selected Vehicle Donations 

Number of donations

0

5

10

15

20

25

30

Less than

1 percent

1-5

percent

6-10

percent

11-15

percent

Over 15

percent

Source: GAO analysis of 54 tracked vehicle donations.

Donating a vehicle to charity 

enables a donor to support a 

charitable cause, dispose of an 

unwanted vehicle, and receive a tax 

benefit. More charities are turning 

to vehicle donation programs as a 

means for raising funds. As a result, 

our objectives were to: (1) 

determine the number of charities 

with vehicle donation programs, 

and the number of taxpayers 

claiming deductions for vehicle 

donations; (2) compare the 

proceeds received by charities 

from vehicle donations to what 

donors claimed for those 

deductions; and (3) describe 

related Internal Revenue Service 

(IRS) and state compliance 

activities. 

In conjunction with its ongoing 

National Research Program study, 

which is to be completed in 

December 2004, GAO 

recommended that the IRS assess: 

(1) the merits of its compliance 

program for generating audit leads 

on taxpayers that may have 

overstated their noncash charitable 

contribution deductions and (2) 

whether forms charities submit 

when disposing of donated 

property should be recorded and 

retained. 

IRS agreed with the 

recommendations and stated that 

the actions it will take to 

implement them will depend on the 

results of its review of the level of 

noncompliance in reporting 

noncash contributions. 
Page i GAO-04-73 Vehicle Donation 

Letter 1

Results in Brief 2

Background 4

Few Charities Reported Having Vehicle Donation Programs, and 

Small Percentage of Taxpayers Claim Deductions for Donated 

Vehicles 7

Vehicle Donation Programs Varied for the Charities We Reviewed, 

but Most Used Third-Party Agents 10

Charities Receive Less than Donors Claimed as the Value of the 

Vehicle for the 54 Donations We Reviewed 15

IRS and States Compliance Activities Directed at Donated Vehicle 

Issues Have Identified Cases of Noncompliance 20

Guidance Is Available to Donors and Charities Regarding Vehicle 

Donations 25

Conclusion 27

Recommendations for Executive Action 28

Agency Comments and Our Evaluation 28

Appendix I Objectives, Scope, and Methodology 30 

Appendix II Sample Claims of Vehicle Donation Advertisements 34 

Appendix III Selected Vehicle Donations Tracked from Donation 

to Taxpayer Claim for Charitable Deduction 37 

Appendix IV Vehicle Donation Guidance 39 

Appendix V Comments from the Internal Revenue Service 41 

Appendix VI Staff Acknowledgments 43 

Acknowledgments 43

Contents 
Page ii GAO-04-73 Vehicle Donation 

Tables 

Table 1: Examples of Organizations That Do or Do Not Qualify to 

Receive Deductible Charitable Contributions 4

Table 2: Data Sources Used to Address Objectives 30

Table 3: Vehicle Donation Claims Related to Tax Deductions (by 

medium) 36

Table 4: Vehicle Donations Tracked from Donation to Taxpayer 

Claim for Charitable Deduction—54 Vehicles 37

Table 5: Sources of Guidance in Making Vehicle Donation 

Decisions 39

Figures 

Figure 1: States That Require Registration of Charitable Soliciting 

Organizations, Including the District of Columbia 6

Figure 2: Number of Sampled Charities Starting Vehicle Donation 

Programs from 1978-2002 8

Figure 3: Percentage of Dollar Amount of Deductions for Noncash 

Charitable Contributions over $500 by Type of 

Contributions, Tax Year 2000 9

Figure 4: Vehicle Donation Process 10

Figure 5: Example of Vehicle Solicitation on a Truck 12

Figure 6: Some Charities Accept Vehicles in Poor Condition 13

Figure 7: Example of a Vehicle Donation 16

Figure 8: Charity Proceeds as a Percent of Donor Claims in 54 

Selected Vehicle Donations 18

Figure 9: Most Common Claims in Newspaper, Radio, and Internet 

Advertisements Reviewed 34

Figure 10: Transcript of Actual Radio Advertisement for Vehicle 

Donations 36

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 
Page 1 GAO-04-73 Vehicle Donation 

November 14, 2003 

The Honorable Charles Grassley 

Chairman 

The Honorable Max Baucus 

Ranking Minority Member 

Committee on Finance 

United States Senate 

Some charities are turning to vehicle donation programs as a means for 

raising funds. While these donations create an important source of 

revenue for a number of charities, questions have arisen regarding the role 

third-party agents1

 play in the vehicle donation process, as well as the 

amount of proceeds that are actually received by charities from vehicle 

donations. Others have asked whether taxpayers know enough about 

vehicle donation programs to make informed decisions about donating 

their vehicles, and are claiming appropriate tax deductions. 

Given these questions, this report expands on our preliminary 

observations on vehicle donation programs in our April 1, 2003, testimony 

before the Senate Finance Committee2

 and discusses (1) the number of 

charities with vehicle donation programs and the number of taxpayers 

claiming deductions for vehicle donations; (2) the vehicle donation 

process; (3) proceeds received by charities from vehicle donations 

compared to what donors claim for vehicle donation deductions; 

(4) Internal Revenue Service (IRS) and state compliance activities directed 

at vehicle donations, and the results of these activities; and (5) guidance 

available to taxpayers and charities to help them make informed decisions 

regarding vehicle donations. 

To satisfy these objectives, we relied on two sources of nationally 

representative information and several anecdotal sources of information. 

To determine the number of charities that have vehicle donation 

 1

Third-party agents refer to commercial fund-raisers, vendors, and not-for-profit 

organizations that solicit and perform vehicle donation processing activities on behalf of 

charities. 

2

U.S. General Accounting Office, Vehicle Donations: Taxpayer Considerations When 

Donating Vehicles to Charities, GAO-03-608T (Washington, D.C.: Apr. 2003). 

United States General Accounting Office

Washington, DC 20548 
Page 2 GAO-04-73 Vehicle Donation 

programs, we conducted a national telephone survey of a statistically 

representative sample of charities. Second, to determine how many 

taxpayers claimed vehicle donation deductions, we analyzed a statistically 

representative sample of tax year 2000 tax returns (the latest data then 

available). We also obtained anecdotal information on compliance 

activities from officials at the IRS and 11 state attorneys general and 

secretary of state offices, and information on vehicle donation operations 

from a pool of 65 charities, six third-party agents, and related interest 

groups. Finally, we tracked a judgmental sample of 54 donated vehicles to 

compare the amount of proceeds charities received from vehicle sales and 

the amount claimed as deductions on donors’ tax returns. Appendix I 

contains a detailed description of our objectives, scope, and methodology. 

Our work was conducted between October 2002 and October 2003 in 

accordance with generally accepted government auditing standards. 

An estimated 4,300 U.S. charities with an annual revenue of $100,000 or 

more are operating vehicle donation programs, or less than 3 percent of 

the 157,500 charities with income at or exceeding this level. Based on our 

estimates, tax deductions for donated vehicles were claimed on about 

733,000 tax returns for tax year 2000, or an estimated 0.6 percent of the 

129 million individual returns filed that year. These deductions lowered 

taxpayers’ income tax liability by an estimated $654 million. 

The vehicle donation process generally involves four steps: (1) advertising 

and fielding donors telephone calls regarding donating their vehicles; 

(2) taking possession of vehicles, usually by tow truck; (3) disposing of 

vehicles, most often through auto auctions; and (4) distributing the 

proceeds from vehicle sales between charities and organizations involved 

in the process. Some charities operate their vehicle donation programs inhouse; however, most of the charities we interviewed relied on third-party 

agents to conduct some or all components of their programs for a share of 

the proceeds from vehicle sales. 

The proceeds received by charities from vehicle donations were 5 percent 

or less of the value donors claimed as a deduction on their tax returns for 

the majority of the 54 vehicle donations we tracked. Based on discussions 

with charities and third-party agents, we identified two factors that 

contributed to this difference. First, donated vehicles are often sold at 

auctions for wholesale prices rather than at the price a donor might expect 

if selling the vehicle to a private party. Second, vehicle processing and 

fund-raising costs are subtracted from gross vehicle sales revenue, further 

reducing the proceeds charities receive from vehicle sales. We could not 

Results in Brief 
Page 3 GAO-04-73 Vehicle Donation 

determine whether individuals claiming deductions for donated vehicles 

accurately assessed the fair market value of their vehicle due to a lack of 

available data on the condition of the vehicles donated. 

IRS and states compliance activities directed at donated vehicles issues 

have been limited. IRS has one compliance program that generates audit 

leads on taxpayers that may have overstated their tax deductions for 

noncash contributions, which include vehicle donations, but due to higher 

priority compliance demands, IRS has not audited any of the leads during 

the last 2 fiscal years. Also, IRS data on its returns processing procedures 

for disallowing deductions for inappropriately claimed noncash 

contributions on returns with relatively high deductions show that few 

deductions are disallowed. The IRS may be able to assess compliance 

problems associated with noncash deductions, including donated vehicles, 

with information it obtains from audits being conducted as part of its 

National Research Program. An IRS donated property task force 

developed recommendations, which could lead to better oversight of 

charities’ donation programs, such as recording and retaining charities’ 

donated property disposal forms to determine whether charities filed the 

forms and whether the forms are accurate. In addition, several of the 

officials we contacted in 11 states said they uncovered problems with 

vehicle donation programs, including an instance in which an organization 

posed as a charity to receive donations, a third-party agent inappropriately 

kept vehicle donation proceeds, and individuals solicited vehicle 

donations for fictitious charities. 

The IRS, state officials, and other organizations we contacted have 

provided guidance to taxpayers and charities to help them donate or 

accept vehicles. Guidance to taxpayers has included such things as helping 

them identify legitimate, well-run charities; avoid personal liability for 

their donated vehicles; claim appropriate tax deductions; and protect 

themselves from fraudulent marketing solicitations. Guidance to charities 

helps charities select and manage professional fund-raisers and suggested 

documentation to maintain for donated vehicles. 

We are recommending that IRS assess the merits of its program for 

generating audit leads on taxpayers that may have overstated their 

noncash charitable contributions, and whether forms charities submit 

when disposing of donated property should be recorded and retained. IRS 

agreed with our recommendations and stated that decisions on actions to 

be taken will depend on the results of its review of the level of 

noncompliance in reporting noncash contributions. 
Page 4 GAO-04-73 Vehicle Donation 

The tax code allows individuals and businesses to make noncash 

contributions (e.g., vehicles, paintings, used clothing, and household 

goods) to qualifying charities by allowing taxpayers to claim deductions 

for their donations on their tax returns. However, not all organizations are 

granted nonprofit or tax-exempt status by the IRS that qualifies taxpayers 

for tax deductions for items donated to them. Table 1 provides examples 

of organizations that do and do not qualify donors for noncash deductions, 

including vehicle donations. 

Table 1: Examples of Organizations That Do or Do Not Qualify to Receive 

Deductible Charitable Contributions 

Qualified for tax deductions Not qualified for tax deductions 

Charitable organizations (e.g. religious, 

educational, scientific, charitable literary, 

cruelty prevention, and some amateur 

sports competitions) 

Federal, state, and local governments 

Domestic fraternal societies and war 

veterans’ groups 

Certain nonprofit cemetery groups 

Childcare organizations 

Civic leagues, social welfare organizations, 

and local employee associations 

Political groups or candidates 

Labor, agricultural, or horticultural 

organizations 

Social and recreational clubs 

Farmer’s Cooperative associations 

Source: Adapted from IRS Publication 557 Tax Exempt Status for Your Organization, July 2001. 

IRS guidance instructs donors to establish the value for their donation 

based on its “fair market value” for donated vehicles, that is, what the item 

would sell for on the market, taking into account its condition, including 

mileage in the case of vehicle donations. As is the case for all noncash 

contributions, the IRS does not require donors to obtain an independent 

appraisal for a vehicle’s value unless they claim over $5,000 for the 

donated property. IRS guidance suggests that donors use used car guides, 

comparable sales, and other sources to assist in establishing the fair 

market value for their donated vehicles. 

Regulatory oversight over charities and their vehicle donation programs is 

diffused, shared between the IRS and state agencies. The IRS decides 

which charities are granted nonprofit status and whether the charity meets 

tax-exempt requirements and complies with federal laws. Many states 

Background 
Page 5 GAO-04-73 Vehicle Donation 

require charities soliciting within the states to register3 with the state 

attorney general’s office or the secretary of state’s office. Figure 1 shows 

the 39 states and the District of Columbia that require charitable 

organizations to register with state charity offices. In general, states 

prohibit unregistered organizations from soliciting for donations in their 

state. Some state agencies also review vehicle donation advertisements in 

response to consumer complaints, or when they discover a charity is 

soliciting for donations in their state without being registered. 

 3

Registration of charitable organizations may involve providing information such as the 

name of the organization and charitable purpose; office locations; information on key 

charity officials; and the general purpose for which the solicited contributions are to be 

used. 
Page 6 GAO-04-73 Vehicle Donation 

Figure 1: States That Require Registration of Charitable Soliciting Organizations, Including the District of Columbia 

In addition to oversight by the IRS and state agencies, some private sector 

organizations develop standards to promote ethical charitable practices 

and collect information on charitable organizations. Charity “watchdog” 

organizations, such as the Better Business Bureau’s Wise Giving Alliance, 

Council of Better Business Bureaus, American Institute of Philanthropy, 

Association of Fund-Raising Professionals, and the Independent Sector, 

provide insight to the public on various fund-raising activities. These 

organizations collect information on charitable organizations and develop 

HI

States that do not require charities to register.

States that require charities to register (including District of Columbia).

Source: GAO adaptation of National Association of State Charity Official's map.
Page 7 GAO-04-73 Vehicle Donation 

standards to promote ethical practices. They disseminate these standards 

in an effort to “inspire public confidence.” These standards include the 

voluntary disclosure of an organization’s activities, finances, fundraising 

practices, and governance. 

Based on our national survey of charities, few charities reported having a 

vehicle donation program. Correspondingly, a small percentage of 

taxpayers claimed tax deductions for donated vehicles. 

Despite frequent advertisements soliciting vehicle donations to charities, 

few charities reported having vehicle donation programs. Of U.S. charities 

with revenues of $100,000 or more, we estimate that 2.7 percent, or about 

4,300 charities nationwide, have vehicle donation programs.4

 This 

projection is based on our survey of 600 charities, of which 16 reported 

having a vehicle donation program. 

While the small number of charities with vehicle donation programs does 

not allow us to make national estimates, we found that most of the 

16 vehicle donation programs identified by the national survey were 

relatively new programs, as shown in figure 2. Only 4 of the 16 charities 

had vehicle donation programs prior to 1998. 

 4

We surveyed a statistically representative sample of charities from the 2002 core data set 

of the National Center for Charitable Statistics, of approximately 157,500 501(c)(3) 

organizations with incomes of $100,000 or higher. The 95 percent confidence interval for 

the number of charities with vehicle donation programs is between 1.5 to 4.3 percent, or 

between 2,400 to 6,800 charities. 

Few Charities 

Reported Having 

Vehicle Donation 

Programs, and Small 

Percentage of 

Taxpayers Claim 

Deductions for 

Donated Vehicles 

Few Charities Reported 

Having Vehicle Donation 

Programs 
Page 8 GAO-04-73 Vehicle Donation 

Figure 2: Number of Sampled Charities Starting Vehicle Donation Programs from 

1978-2002 

Our analysis of IRS tax return data for tax year 2000 showed that a small 

percentage of taxpayers claimed deductions for vehicle donations. We 

reviewed a representative sample of taxpayer returns5

 that claimed 

noncash contributions of over $500 for tax year 2000. We found that of the 

129 million returns filed that year, an estimated 0.6 percent,6

 or 

733,000 returns, contained tax deductions for vehicle donations. The 

733,000 returns represented about 17 percent7

 of the 4.4 million returns 

 5

We used IRS’s tax year 2000 Statistics of Income (SOI) file to select our statistically 

representative sample of returns. 

6

The 95 percent confidence interval for number of returns filed is plus or minus 0.4 percent, 

or between 0.2 and 1 percent. 

7

The 95 percent confidence interval for noncash contribution deductions over $500 is plus 

or minus 10.8 percent, or between 6 and 28 percent. 

Small Percentage of 

Taxpayers Claimed 

Deductions for Vehicle 

Donations 

0

1978

Year

1981 1984-1990 1993 1996 1999 2002

1

2

3

4

Number of charities

Source: GAO summary of data from 16 charities in national survey of charities with annual revenues of $100,000 or more. 
Page 9 GAO-04-73 Vehicle Donation 

filed with noncash contribution deductions over $500. We estimate that 

vehicle donation deductions lowered taxpayers’ income tax liability by an 

estimated $654 million.8

 The dollar amount of vehicle donation deductions 

totaled about 6 percent of the noncash contributions claimed,9

 while 

stocks and thrift store donations accounted for most of the deductions for 

noncash charitable contributions over $500, as shown in figure 3. 

Figure 3: Percentage of Dollar Amount of Deductions for Noncash Charitable 

Contributions over $500 by Type of Contributions, Tax Year 2000 

Note: Totals do not add to 100% due to rounding. Sampling errors associated with these estimates 

are large. The 95 percent confidence intervals are: stock donation 39-86%, thrift store donation 8-

38%; property donation 3-19%, and vehicle donation 2-15%. 

 8

The 95 percent confidence interval for the $654 million estimate is plus or minus 

$480 million, or between $174 million and $1.13 billion. 

9

This value may underestimate the taxes foregone because only vehicles valued over 

$500 are included. About 16 million taxpayers claimed an estimated $5.5 billion in noncash 

contributions of $500 or less. Some of these taxpayers may have claimed tax deductions for 

vehicle donations, but they were not required to list these transactions on their returns. 

63% •

•

• •

23% Thrift store donation

Stock donation

9%

Property donation

6%

Vehicle donation

Source: GAO analysis of a random sample of returns from IRS tax year 2000 Statistics of Income file. 
Page 10 GAO-04-73 Vehicle Donation 

While few taxpayers claim tax deductions for donated vehicles, 2 charities 

we contacted conducted surveys10 of their donors and found that the 

ability to claim a tax deduction was one of the important reasons 

individuals donated their vehicles to charity. Other important reasons 

cited in the surveys for donating vehicles were to help a charitable cause 

and to easily dispose of an unwanted vehicle. 

The vehicle donation process, for the charities we reviewed generally 

consisted of four steps: (1) solicitation/donor contact, (2) vehicle pick-up, 

(3) vehicle sale, and (4) distribution of proceeds. Forty-five of the 

65 charities we interviewed reported using third-party agents for some or 

all of these steps rather than relying on in-house resources, and some had 

arrangements with more than one agent. About half of the 45 charities 

used third-party agents to run the entire program, while other charities 

used a third-party agent for only certain functions. The vehicle donation 

process is depicted in figure 4. 

Figure 4: Vehicle Donation Process 

 10Two charities shared voluntary feedback provided by vehicle donors. Over 3,000 donors 

responded in one survey and about 400 responded in the other. We did not review the 

methodology for the surveys, and consider the results to be illustrative. 

Vehicle Donation 

Programs Varied for 

the Charities We 

Reviewed, but Most 

Used Third-Party 

Agents 

 Proceeds

distributed

 

Individual auto donors

replies to charity or

3rd party advertisement

Charity

3rd party

agent

Vehicle pick up

Charity

3rd party

agent

Source: GAO depiction of information obtained from charities and third-party agents.

Vehicle

sold

Step 1

Solicitation / donor contract

Step 2

Vehicle pickup

Step 3

Vehicle sold

Step 4

Proceeds distributed
Page 11 GAO-04-73 Vehicle Donation 

Step 1 – Solicitation/donor contact. The vehicle donation process 

generally begins with solicitations for donated vehicles through 

advertisements. Vehicle donations may be solicited directly by charities, 

third-party agents, or both, depending on the agreement between the 

charities and third-party agents. Of the 45 charities we interviewed that 

discussed their advertising practices, 26 reported that advertising was 

handled solely by the charity. Some third-party agents solicited donated 

vehicles for several charities using a common advertisement. Some of the 

most common mediums for vehicle donation advertisements include the 

radio, newspapers, and the Internet.11 (For Web version of this report, click 

here to hear a radio vehicle donation advertisement, or see app. II for the 

transcript.) Vehicle donations are also solicited through advertisements on 

billboards, truck banners (see fig. 5), and television, as well as in 

newsletters and even on small paper bags. 

 11We reviewed a nonprojectable sample of 147 radio, newspaper, and Internet 

advertisements for donated vehicle programs to determine the types of claims that 

charities and third parties made in soliciting for used vehicles. Appendix II provides 

information on the results of our analysis. 
Page 12 GAO-04-73 Vehicle Donation 

Figure 5: Example of Vehicle Solicitation on a Truck 

Also during this step, donors initiate contact with the charity and or thirdparty agent to donate their vehicle. Either charities or third-party agents 

may take the initial call from a potential donor, asking the donor questions 

that may be used to screen vehicles, such as the vehicle’s make, year, and 

condition, and if the donor has the title to the vehicle. Twenty-four of the 

65 charities we interviewed reported that they accepted donor calls inhouse, while 23 said that they used third-party agents to accept calls or 

shared this responsibility.12 Some charities or their agents limited the 

vehicles they accepted to those they anticipated would produce a profit 

after towing and other expenses. However, some charities reported 

accepting vehicles regardless of condition, as suggested in figure 6. One 

charity official stated that accepting vehicles with little value was a way of 

generating goodwill for future donations. 

 12We did not obtain information on donor contacts with the charity or third-party agents for 

the remaining 18 charities. 

Source: GAO, courtesy of The Salvation Army, Pasadena, California.
Page 13 GAO-04-73 Vehicle Donation 

Figure 6: Some Charities Accept Vehicles in Poor Condition 

Step 2 – Vehicle pickup. After the donor makes the initial call to donate a 

vehicle, arrangements are made to pick up the vehicle and deliver it to 

wherever it will be stored until it is sold. Vehicles are generally towed, 

according to a third-party agent, due to safety and liability concerns. A 

majority of charities we contacted used third-party agents to pick up 

vehicles. Once vehicles are picked up, donors are generally provided with 

a receipt to document the donation for tax purposes. At this time, the 

charity or third-party agent also obtains the title of the vehicle from the 

donor.13 Some charities may provide the donor with state-required forms 

(e.g., release of liability), or references for establishing the tax deductible 

value of their donated vehicle (e.g., car guides or IRS guidance). 

 13IRS ruled in November 2002 (REV. 2002-67) that a donor transfer of a vehicle to a charityauthorized agent can be treated as a transfer to the charity. 

Source: Article on charities that accept vehicles in poor condition, courtesy of Cartalk.com.
Page 14 GAO-04-73 Vehicle Donation 

Step 3 – Vehicle sale. Once collected, donated vehicles are most often 

sold. Charities or third-party agents typically sell donated vehicles through 

auctions to auto dealers, to the public, or to vehicle salvagers. The 

majority of charities we contacted said that charities do not handle the 

selling of vehicles themselves, but instead rely on a third-party agent. 

Charities and third-party agents said that they generally sold donated 

vehicles at auto auctions because (1) auctions allow high volume of auto 

sales and (2) charities do not have the resources, such as staff, storage 

space, or licenses required to sell vehicles themselves. Of the 65 charities 

we interviewed, 43 charity officials said they sold all of their donated 

vehicles, while officials at 16 charities said they used some donated 

vehicles for clients, charity staff, or other purposes.14 For example, 

1 charity official said that the charity used donated vehicles for student 

training for a community college auto course. 

Step 4 – Distribution of proceeds. After vehicles have been liquidated, 

the proceeds are distributed. Charities with in-house vehicle donation 

programs keep proceeds that remain after deducting costs associated 

with processing the vehicles. When charities use third-party agents, the 

financial agreement between the charity and the third-party agents 

dictates the proceeds that the charity and fund-raiser will receive from 

the sale. 

In addition to the in-house and third-party arrangements, we identified 

some variations in how vehicle donation programs operate. In one case, 

a consortium of 14 charities jointly runs a vehicle donation program in 

conjunction with a wrecking yard. The charities share in oversight of the 

operations, such as inspecting donated vehicles and monitoring vehicle 

donation reports. Donors can select 1 charity to receive the proceeds, or if 

no charity is designated, proceeds are split among members of the 

consortium equally. In another case, 1 large charity runs a national vehicle 

donation program and serves regional offices as a third-party agent would, 

charging its regions vehicle processing costs. However, some of the 

charity’s affiliates choose other third-party agents that are not part of the 

national program to run their program. Finally, in still another case, a large 

charity runs a national program and serves charity affiliates, but also has a 

nonprofit vehicle donation program for other smaller charities. 

 14We did not obtain information on donated vehicle disposals from the remaining 

6 charities. 
Page 15 GAO-04-73 Vehicle Donation 

Although proceeds from vehicle donations are a welcomed source of 

revenue, it was not a crucial source of income for the majority of the 

charities we reviewed. The proceeds charities received from vehicle 

donations varied in the 54 cases we tracked, but were generally 

considerably less than the amount donors claimed on their tax returns for 

the donated vehicles. Based on information from charities we spoke with, 

this difference is due in part to donated vehicles being often sold at auto 

auctions at wholesale prices, and processing expenses and third-party fees 

reducing the amount of proceeds charities receive. We could not verify the 

accuracy of taxpayer claims regarding the value of their donated vehicle. 

The annual net proceeds from vehicle donations for 2002 reported by the 

charities we interviewed ranged from as little as $1,000 for 2 vehicles 

donated to a senior center, to over $8.8 million for 1 national charity that 

received over 70,000 vehicles. The charities considered the proceeds 

received as a welcomed, but rarely crucial source of income to sustain 

their operations. Although the dollar amount received from vehicle 

donations was over $1 million for several charities we spoke with, for 

many, the revenue was a small share of total charity revenue. Charity 

proceeds constituted less than 2 percent of the total annual budget for 

15 of the 30 charities providing budget information; however, 2 of the 

charities stated that vehicle donation proceeds provided 90 percent or 

more of their annual revenue. Many of the charities we interviewed stated 

that their vehicle donation program provided benefits beyond revenue by 

providing an expanded donor base and name recognition for the charity. 

In the 54 specific vehicle donations we tracked, charity proceeds from 

vehicle donations were much less than the value deducted by donors on 

their tax returns. Based on charity and the third-party agent we contacted, 

two factors contributed to this difference: (1) vehicles are often sold at 

auto auctions for salvage or at wholesale prices, which are typically lower 

than prices that would be received if the donor sold the vehicle themselves 

and (2) processing costs and fees are deducted from gross sales revenue, 

further reducing charity proceeds. 

Figure 7 illustrates the amount a charity received from 1 of the 54 vehicle 

donations we tracked. In this case, a 1983 GMC Jimmy truck was donated 

in 2001 to a charity whose vehicle donation program is operated by a thirdparty agent. The gross sale price for the truck, which sold at an auction, 

was $375. After deducting third-party and advertising expenses, net 

proceeds from the vehicle sale totaled $62.00. This amount was split 

Charities Receive 

Less than Donors 

Claimed as the Value 

of the Vehicle for the 

54 Donations We 

Reviewed 

Revenue to Charities from 

Vehicle Donations Varied 

Charity Proceeds Much 

Less than Values Claimed 

by Donors in Cases We 

Tracked 
Page 16 GAO-04-73 Vehicle Donation 

50/50 between the third-party agent and charity, leaving the charity with 

$31 from the vehicle donation. The taxpayer claimed a $2,400 tax 

deduction for the donated vehicle on his/her tax return, based on the fair 

market value of the vehicle listed in a used car guidebook. Appendix III 

details the vehicle donation transactions for all 54 tracked cases. 

Figure 7: Example of a Vehicle Donation 

Donated vehicles are often sold at auto auctions for lower prices than 

what a seller might receive if the vehicle were sold to a private party. For 

the 54 donated vehicles we tracked, sale prices for donated vehicles 

ranged from 1 percent to 70 percent of donor tax deduction claims, and 

over half of the cases were 10 percent or less of what donors’ claimed. 

(See app. III) As one third-party agent stated, it is unfair to compare 

auction sale prices for donated vehicles to deduction claims because most 

donated vehicles are sold at auctions that cater predominantly to 

wholesalers who then resell the vehicle at higher prices. Of the 59 charities 

we contacted during our review that said they sell some or all donated 

vehicles, 42 used auctions to dispose of the vehicles. 

Another reason for the difference between the amounts deducted by 

donors for donated vehicles and the proceeds charities receive from 

vehicle sales is that sales proceeds are reduced by vehicle processing 

costs, such as towing, advertising, program administration, and third-party 

agent fees. California is the only state that collects data on the proceeds 

Source: GAO.

Vehicle

donation

1983 Truck

Gross sale

price

(wholesale)

Truck sold at auction

for $375.00

Proceeds

after

expenses

After deducting

$313.00 in

fundraising and

advertising costs,

the net proceeds of

$63.00 are split

with charity

For tax

deduction

Donors claimed

$2,400 on tax

return

Net

proceeds

to charity

Charity receives

$31.00, half of

the net proceeds

from donation
Page 17 GAO-04-73 Vehicle Donation 

received by charities from vehicle donation programs.15 According to the 

California Attorney General’s records, 145 charities using third-party 

agents who had filed the required financial reports received approximately 

$16 million, or 35 percent of the $45.8 million raised from reported 

donated vehicle sales, during 2001. The amount of proceeds these charities 

received in California ranged from 2 percent to 80 percent of proceeds 

after third-party costs were deducted. 

Taking both the lower sales price and deductions for processing costs into 

account, the proceeds received by charities from donated vehicles were 

much lower than the donor-claimed value for the vehicles in the 

54 donated vehicle cases we tracked. Charities received between 0 and 

54 percent of the value claimed by donors,16 with most receiving 5 percent 

or less, as shown in figure 8. For some vehicle donation sales, charities 

receive no proceeds after the costs of vehicle donations are deducted. For 

6 of the 54 donated vehicles we tracked, the processing costs exceeded the 

sales price for the vehicle (see app. III). For charities using third-party 

agents, whether the loss is absorbed by the third-party agent or deducted 

from charity proceeds from another higher value donated vehicle depends 

on the agreement between the parties. 

 15See the state Web site for reporting requirements and list of charities and third-party 

agents at www.caag.state.ca.us. 

16About half of the vehicles we tracked came from 1 charity that does its own advertising, 

which can be one of the highest cost elements of a vehicle donation program. Proceeds this 

charity received from its third-party agent are higher because the cost of advertising is not 

included. 
Page 18 GAO-04-73 Vehicle Donation 

Figure 8: Charity Proceeds as a Percent of Donor Claims in 54 Selected Vehicle 

Donations 

Because third-party agents and other donated vehicle processing costs 

vary among charities, comparing net vehicle donation proceeds between 

charities can be misleading. One third-party agent said that programs 

claiming a high percent of proceeds as profit are not including their full 

costs, that is, they are only counting towing costs and may not include 

space, advertising, or staff costs. Similarly, 1 charity managing its own 

vehicle donation program stated that its proceeds may be lower than some 

other charities, but they are accurately capturing the true program costs 

while others may not be. Proceeds also differ based on different 

agreements between charities and third-party agents for paying for the 

third-party’s services. Of the 45 charities we contacted during our review 

that reported using third-party agents, 20 said third parties were paid a 

percentage of net proceeds for their vehicle donation services, many 

splitting the net proceeds 50/50. Other charities reported paying thirdparty agents a flat fee per vehicle17 or had some other arrangement, such as 

paying for towing expenses incurred by third-party agents. 

 17Seven charities reported a flat fee arrangement, such as $45 or $50 per vehicle. 

Number of donations

0

5

10

15

20

25

30

Less than

1 percent

1-5

percent

6-10

percent

11-15

percent

Over 15

percent

Source: GAO analysis of 54 tracked vehicle donations.
Page 19 GAO-04-73 Vehicle Donation 

A number of charities interviewed had little insight into vehicle donation 

processing costs incurred by third-party agents because they received 

limited, or in a few cases, no information on charges for vehicle donations. 

Although most charities reported receiving an itemized list of revenue and 

costs of donated vehicles from their third-party agents, the detail was not 

always provided. For example, 1 charity received an itemized list of each 

vehicle sold that listed all costs under “cost of sales” except for the thirdparty fee. Another received an itemized list of sold vehicles with all costs 

under “tow fees” and “expenses.” Thirteen of the charities we contacted 

reported that they received a check from a third-party agent accepting 

vehicles for the charity without their knowledge, and only 4 of the 13 said 

that information on processing costs was provided. One well-known 

charity with its own vehicle donation program stated that they repeatedly 

contacted two third-party agents to stop them from accepting vehicles on 

their behalf. The charity estimated that in 1 year one of the third parties 

had deducted approximately $25,000 from proceeds to the charity over 

what it would have cost the charity itself to process the donated vehicles. 

An additional factor that may explain the difference between the proceeds 

charities receive from vehicle donation sales and what donors claim as the 

value of the donated vehicle may be an inaccurate assessment by donors 

of the vehicle’s value. Although many charities we spoke with said they try 

to limit vehicle acceptance to those in running condition, some charities 

accept vehicles in poor condition. Charities stated that a number of the 

vehicles donated are sold for scrap, and some said donor claims about 

vehicle value might be inflated. 

We could not determine in the 54 cases we tracked whether donors 

appropriately claimed deductions for donated vehicles. IRS guidance 

suggests that taxpayers consider using used car guides when estimating 

the fair market value for donated vehicles, while also considering the 

vehicle’s condition and mileage.18 Of the 54 cases, 25 assessments were 

based on nationally recognized used car guides.19 However, since we did 

not have additional information, such as the vehicle’s condition and 

 18IRS Publication 561, Determining the Value of Donated Property. 

19Seven of the 54 did not identify the basis for their vehicle’s claimed value; 6 used a 

“catalogue;” 8 stated they used comparable sale prices; and the remaining 8 out of 54 used 

the Internet or other miscellaneous sources. 

Limited Data to Assess 

Taxpayer Accuracy in 

Estimating Donated 

Vehicle’s Fair Market Value 
Page 20 GAO-04-73 Vehicle Donation 

mileage, we could not determine whether the reported valuations claimed 

by donors accurately reflected fair market value. 

The IRS has one compliance program that produces audit leads on 

potentially overstated noncash contributions, but it does not follow up on 

these leads. According to IRS officials, it does not audit cases with 

potentially overstated noncash contributions because it has higher priority 

compliance issues to address. Also, IRS data on its returns processing 

procedures that are directed to disallowing deductions for inappropriately 

claimed noncash contributions show that a small percent of returns are 

subject to these procedures and that few deductions are disallowed. As 

part of its National Research Program, IRS plans to gather information on 

noncash contribution compliance issues, which could provide it with data 

to determine how best to address noncash contribution compliance issues. 

An IRS donated property task force has drafted several recommendations 

that could lead to more emphasis being directed to vehicle donation 

programs and deductions. 

Data from the 11 states we contacted were limited regarding 

noncompliance by charities and third-party agents involved with vehicle 

donation programs. However, several states’ agencies have identified and 

initiated legal actions against individuals and organizations that have not 

complied with laws or regulations related to vehicle donations. These 

include instances in which an organization posed as a charity to receive 

donations, a third party inappropriately kept vehicle donation proceeds, 

and a charity was not following state requirements for processing vehicles. 

One of IRS’s compliance programs is designed to detect individual 

taxpayers who may overstate noncash contributions on their tax returns, 

including donated vehicles. However, due to higher priority demands for 

determining compliance with tax laws, IRS has not been following up on 

leads of potential noncompliance that are generated from this program. 

Under this program, about two full-time equivalent employees at IRS’s 

Ogden Submission Processing Center are used to compare the proceeds 

charities received from donated property shown on property disposal 

IRS and States 

Compliance Activities 

Directed at Donated 

Vehicle Issues Have 

Identified Cases of 

Noncompliance 

IRS’s Compliance 

Activities Results in Few 

Disallowed Deductions 

for Noncash Contributions 
Page 21 GAO-04-73 Vehicle Donation 

forms (Form 8282 Donee Information Return20) with the amounts claimed 

by taxpayers on their tax returns. If there is a wide discrepancy between 

the charity’s revenues for the property and the amount claimed by the 

taxpayer on their tax return, the case is referred to field offices for 

possible audit. 

An Ogden Campus official estimated that on average about 20,000 Form 

8282s are received annually, and that 4,000 to 5,000 individual tax returns 

are reviewed to determine whether they should be audited. An Ogden 

official estimated that the cost to retrieve a tax return from IRS files is 

between $100 and $150. Ogden officials stated that they do not track the 

number of cases that are referred for possible audit or the types of 

donated property involved in the cases, but estimated that 30 percent to 

40 percent of the returns reviewed are referred.21 An IRS official estimated 

that most referred cases related to donated land or boats, which generally 

have higher potential tax assessments than do vehicles. According to our 

analysis of the IRS audit data,22 none of the returns that were referred 

during fiscal years 2001 and 2002 were audited. IRS officials stated that the 

returns were not audited because the potential tax assessment yield from 

these cases was substantially smaller than from other types of compliance 

issues handled in the field. 

IRS also established processing procedures for returns to identify and 

disallow deductions for noncash contributions either when taxpayers 

claim noncash contributions over a certain amount or when they do not 

attach required Form 8283, Noncash Charitable Contributions 23 to their 

returns. These processing procedures cover relatively few noncash 

contribution deductions. For example, we estimate that for tax year 

2000 returns, IRS’s returns processing threshold for these deductions 

 20Under section 6050L of the Internal Revenue Code, charities are required to submit Form 

8282 “Donee Information Return” when they dispose of donated property within 2 years of 

receiving property for which the taxpayer valued for more than $5,000. The form describes 

the property, the donor, and the proceeds received by the charity. All Form 8282s are to be 

sent to IRS’s Ogden Campus. 

21According to Ogden officials, as of September 23, 2003, 516 cases had been referred to the 

field in 2003. 

22We analyzed IRS’s Audit Information Management System, which is a computerized file of 

audit cases, to determine whether any of the Ogden cases were audited in fiscal years 2001 

and 2002. We did not verify the accuracy of these data. 

23Taxpayers are required to attach Form 8283 to their returns when they have noncash 

contributions over $500. We did verify the accuracy of IRS’s disallowed deductions data. 
Page 22 GAO-04-73 Vehicle Donation 

would account for about 1 percent of the returns where noncash 

contributions of over $500 were claimed. According to IRS, returns that 

meet the threshold are given a special code and are reviewed by the 

examination staff to determine whether they have audit potential. Returns 

with audit potential are put in the audit inventory for possible audit 

selection by field agents. IRS found that these returns were not being 

selected for audit because field agents had other higher priority work. IRS 

expects this higher priority work to continue into the foreseeable future, 

and as a result, beginning in January 2004, returns processing staff will 

discontinue coding these returns for review by examination staff. IRS does 

not have data on the number of noncash contribution deductions that have 

been disallowed because of missing Form 8283s, but IRS officials estimate 

that few were disallowed. IRS also has returns processing procedures to 

identify and disallow noncash donations to individuals or nonqualifying 

organizations, such as political organizations. According to IRS, in 

2002 it disallowed noncash contributions of about $21.8 million on 154 tax 

returns for donations made to individuals and nonqualifying 

organizations.24

In addition to the above compliance activities that focus on taxpayers’ 

deductions for donated vehicles and other types of noncash contributions, 

IRS’s Exempt Organization Division has an examination program that 

focuses on whether charities meet tax-exempt requirements and complies 

with federal law, such as those governing the use of funds for a charitable 

purpose rather than private gain. IRS had little information on whether its 

examinations identified compliance problems with charities operating 

vehicle donation programs. At the time of our review, IRS officials 

informed us that IRS had seven vehicle donation program examinations in 

progress and had completed two cases. According to an IRS official, in one 

recent case, IRS revoked the exemption status for one Florida 

organization whose charitable purpose was to provide research, 

education, and technical training on the marine environment. The charity 

raised funds through the solicitation and sale of boats. IRS found that the 

organization’s charitable activities were insubstantial, and that private 

parties were benefiting from the substantial economic benefit of the 

organization’s activities. 

 24As of August 31, 2003, IRS data shows that 139 deductions valued at about $12 million 

were disallowed. 
Page 23 GAO-04-73 Vehicle Donation 

While more compliance resources are being devoted to higher priority 

audit issues such as abusive tax shelters and high-income nonfilers, IRS’s 

National Research Program is to provide data on compliance problems 

associated with noncash contributions, including deductions for donated 

vehicles. Under the program, the IRS randomly selected about 47,000 tax 

year 2001 returns to determine whether taxpayers complied with statutory 

income, expense, and tax reporting requirements. Returns with noncash 

contributions, including donated vehicles, could be subject to audit to 

verify donation claims. Once this project is completed in December 

2004, IRS plans to assess individuals’ compliance related to deductions 

for noncash contributions and determine what actions are needed to help 

ensure proper reporting in this area. 

In 2001, IRS established a donated property task force that examined 

various issues relating to such topics as property appraisals and valuations 

and coordination of compliance activities between various IRS 

organizational units. In July 2002, the task force developed several draft 

recommendations for improving IRS’s oversight of donated property 

programs and deductions. The recommendations included revising Form 

8283 to add a separate category for donations of motor vehicles on the 

portion of the form that identifies the type of property donated. Another 

recommendation made was to establish procedures to ensure that IRS 

records and maintains copies of Form 8282s that are filed with the Ogden 

Submission Processing Center. The task force noted that without such 

procedures, IRS could not verify the accuracy of the forms or determine 

whether charities filed them. The IRS’s audit procedures instruct auditors 

to determine whether charities submit required Form 8282 when disposing 

of donated vehicles. Auditors may assess penalties if they find that the 

charity did not submit required Forms 8282.25 However, determining 

whether charities filed the forms may be difficult because the forms are 

destroyed if they are not used in Ogden’s noncash contribution audit 

referral program discussed above. According to IRS officials, at the time 

of our review, IRS had not taken action on this recommendation. 

 25Under Internal Revenue Code section 6721, a $50 penalty can be assessed for each failure 

to file a Form 8282. 

Results of National 

Research Program and 

Donated Property Task 

Force May Lead to More 

Noncash Contribution 

Compliance Activities 
Page 24 GAO-04-73 Vehicle Donation 

Many states oversee charities to protect the public, and 39 states and the 

District of Columbia require charities to register with the state attorney 

general or the secretary of state offices. States have an interest in whether 

charitable fund-raising is fraudulent and whether charities are using funds 

to meet the charitable purpose for which they were created. We contacted 

11 state attorney general offices or secretaries of state to identify 

information related to vehicle donation programs. Only 1 state reported 

having data to identify charities with vehicle donation programs; however, 

several said that they would investigate a charity vehicle donation 

program if they received complaints from the public. As discussed in the 

following items, several of these states uncovered problems with vehicle 

donation programs, including instances in which an organization posed as 

a charity to receive donations, third-party agents inappropriately kept 

vehicle donation proceeds, a charity was not following state requirements 

in processing vehicles, and individuals solicited vehicle donations for 

fictitious charities. 

• In Massachusetts, a for-profit company representing itself as a charity 

solicited cars through newspaper ads leading potential donors to 

believe that the organization was a charity and that all, or a substantial 

portion of the proceeds would go directly to providing counseling to 

children and parents in Massachusetts. In May 2002, Massachusetts 

brought and won an enforcement action in which the company’s 

president agreed with state officials to cease all further activity related 

to the car donation operation. 

• Connecticut officials filed suit in July 2003 against a used auto 

dealership and a bogus charity that was created by the dealership’s 

owner. Vehicles were solicited, supposedly to help abused and 

abandoned animals, but virtually all of the proceeds were retained by 

the auto dealership, which maintained one checking account for both 

organizations, according to state officials. 

• Ohio’s Attorney General filed a complaint in 2003 against a nonprofit 

organization that solicited over 800 vehicles in the name of donor 

designated charities, but at least $258,000 in vehicle proceeds was not 

provided to the designated charities, according to the complaint. 

• The California Attorney General’s office filed a civil action against the 

incorporator of a nonprofit that solicited vehicles for charity, but there 

was never a charitable program, only a used car lot. The Attorney 

General’s office estimated that over $1 million was raised by the 

operation, none of which benefited charity. Criminal charges against 

the defendant resulted in a 5-year jail sentence. 

State Agencies Have 

Identified Compliance 

Problems with Donated 

Vehicle Programs 
Page 25 GAO-04-73 Vehicle Donation 

• In a case filed in June 2003, the California Attorney General’s office 

filed a case against a nonprofit organization selling donated vehicles to 

the public that had not met California’s safety requirements. Some 

vehicles sold for export to locations such as Belize and Mexico, which 

do not require the same state safety standards, were not actually 

exported. 

• An indictment filed in a U.S. District court in October 2002, charges 

that defendants established over 100 toll-free numbers with sound–

alike charity names, such as the National Mental Health Association, 

Cancer Society, or National Diabetes Association. According to the 

case filing, potential donors were fraudulently told that the sound-alike 

organizations were the national charities whose names they 

approximated or were affiliated with nationally known charities; 

however, according to the case records, the defendants kept all 

proceeds. 

A number of government and consumer organizations provide guidance to 

donors to assist them in making informed decisions about donating their 

vehicles. Guidance is also available to assist charities in accepting noncash 

contributions and in selecting, hiring, and managing third-party agents. 

Charitable donors in general, including those that donate their vehicles, 

can rely on guidance available from the federal government and other 

sources to ensure that they make informed donations. For example, IRS 

publishes guidance on claiming deductions for donations, and establishing 

fair market value for items donated. In addition, a Federal Trade 

Commission-led initiative highlights legal actions taken against individuals 

and organizations that engage in phony philanthropic activities, and 

provides tips on how to recognize and avoid fraudulent solicitations. Some 

states also offer guidance for potential donors and may have financial 

information on specific charities. A number of nongovernmental sources 

offer donors similar advice. For example, the Better Business Bureau’s 

Wise Giving Alliance, Guidestar, Charity Navigator, and the American 

Institute of Philanthropy offer tips for charitable giving or information on 

specific charities. 

Appendix IV lists specific sources for donor guidance. 

Guidance Is Available 

to Donors and 

Charities Regarding 

Vehicle Donations 

Donor Guidance for 

Donating Vehicles 
Page 26 GAO-04-73 Vehicle Donation 

The guidance generally identifies steps donors should take when donating 

vehicles and claiming associated tax deductions. These steps are listed as 

follows: 

• Verify that the recipient organization is a tax-exempt charity. Churches, 

synagogues, temples, mosques, and governments are not required to 

apply for this exemption in order to be qualified. 

• Determine whether the charity is properly registered with the state 

government agency that regulates charities. The state regulatory 

agency is generally the state attorney general’s office or the secretary 

of state. 

• Ask questions about how the donated vehicle will be used to determine 

whether it will be used as intended. Such questions include: Will the 

vehicle be fixed up and given to the poor and needy? Will it be resold 

and, if so, what share of the proceeds will the charity receive? 

• Itemize deductions in order to receive a tax benefit from the donation. 

The decision to itemize should be determined by whether total itemized 

deductions are greater than the standard deduction. 

• Deduct only the fair market value of the vehicle. The fair market value 

takes into account many factors, including the vehicle’s condition, and 

can be substantially different from the value listed in used car guides. 

• Document the charitable contribution deduction. IRS Publication 

526 identifies requirements for the types of receipts taxpayers must 

obtain and the forms they must file. 

• Follow state law regarding the car titles and license plates. Generally, 

the donor should ensure that the title of the vehicle is transferred to the 

charity’s name by contacting the state department of motor vehicles, 

and keep a copy of the title transfer. Donors are also advised to remove 

the vehicle’s license plate if allowed by the state. 

Some guidance is also available to charities with vehicle donation 

programs regarding accepting noncash contributions and hiring a thirdparty agent for fund-raising purposes. For example, IRS Publication 

1771, Charitable Contributions, Substantiation, and Disclosure 

Requirements, explain federal law for organizations that receive taxdeductible contributions. The IRS also plans to publish, by March 31, 

2004, a brochure advising charities on how to avoid problems raised by 

vehicle donation programs. State guidance to charities we reviewed was 

Guidance to Charities 
Page 27 GAO-04-73 Vehicle Donation 

generally not specific to vehicle donation programs, but rather provided 

general guidelines for selecting, hiring, and managing third-party agents. In 

addition, a number of nongovernmental sources offer charities similar 

advice. The Better Business Bureau, for example, publishes standards for 

charities in areas such as fund-raising activities, and issuing informational 

materials to donors. Appendix IV lists specific sources for charitable 

guidance. 

Some of the general guidance provided to charities that are relevant to 

donation programs are listed as follows. 

• Consult and adhere to IRS’s publications explaining federal law for 

organizations that receive tax-deductible contributions, and review 

IRS’s annual Exempt Organizations Implementing Guidelines. 

• Comparison shop for fund-raising agents, insist on a written contract, 

and do not relinquish control of a program to the fund-raiser. 

• Follow standards published by various nongovernmental sources for 

governance, oversight, fund-raising activities, and issuing informational 

materials. 

IRS will not have data on whether taxpayers are appropriately claiming tax 

deductions for noncash contributions, including donated vehicles, until it 

completes its National Research Program study at the end of 2004. In the 

meantime, IRS is using resources to produce audit leads on overstated 

noncash contributions that are not being audited because of higher 

priority compliance demands. To determine whether these resources 

could be used more productively, IRS could assess the merits of the 

noncash contribution compliance program to determine whether it could 

be modified to take advantage of the leads that are generated, such as 

auditing taxpayers through correspondence instead of sending them to 

field offices. 

The IRS has audit procedures that instruct auditors to assess penalties 

against charities that do not file the required Form 8282 when they dispose 

of property. However, as reported by its donated property task force, IRS 

does not have a way of verifying whether charities file the required Form 

8282 or whether forms that are filed are accurate. The task force’s draft 

recommendation to maintain and record Form 8282 is worth considering. 

This recommendation was made in July 2002, and has not been acted 

upon. 

Conclusion 
Page 28 GAO-04-73 Vehicle Donation 

In conjunction with IRS’s ongoing National Research Program study, 

which is to be completed in December 2004, we recommend that the 

Commissioner of the Internal Revenue assess (1) whether the Ogden 

compliance program should be modified to take advantage of the leads 

generated by the program and (2) the feasibility and usefulness of 

maintaining and recording the receipt of Form 8282 as recommended by 

IRS’s donated property task force. 

We received written comments on a draft of this report from the 

Commissioner of Internal Revenue (see app. V). The Commissioner agreed 

with our recommendations and identified some alternatives and actions 

that IRS is considering to ensure compliance by charities with reporting 

requirements. 

With regard to our recommendation that IRS assess its compliance 

program for generating audit leads on taxpayers that may have overstated 

their noncash contributions, the Commissioner stated that IRS actions 

related to the compliance program will be based on its review of the level 

of noncompliance in reporting noncash contributions. The Commissioner 

also agreed with our second recommendation to consider whether the 

Form 8282s that charities submit when disposing of donated property 

should be recorded and retained. He stated that decisions on the handling 

of the forms would be made in conjunction with decisions on the first 

recommendation and with other changes IRS has underway, particularly 

the redesign of the Form 990. IRS is considering changing the Form 990 to 

include information on the filing of Form 8282 as an alternative to 

retaining the Form 8282. 

The Commissioner noted that some steps have already been taken to 

improve the reporting of vehicle donation programs, such as the revision 

of Form 990 filing instructions for 2003 to provide organizations with an 

example of a vehicle donation, and other actions noted in our report. 

As arranged with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days after the 

date of this report. We will then send copies of this report to the Secretary 

of the Treasury; the Commissioner of Internal Revenue; the Director, 

Office of Management and Budget; and other interested parties. We will 

also make copies available to others on request. The report is also 

available on GAO’s Web site at http://www.gao.gov. 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 
Page 29 GAO-04-73 Vehicle Donation 

If you or your staff have any questions on this report, please contact me at 

(202) 512-8777 or Ralph Block at (415) 904-2150. Key contributors to the 

report are listed in appendix VI. 

Cathleen A. Berrick, Director, 

Homeland Security and Justice Issues 
Appendix I: Objectives, Scope, and 

Methodology 

Page 30 GAO-04-73 Vehicle Donation 

Our objectives were to determine: (1) the number of charities with vehicle 

donation programs, and the number of taxpayers claiming deductions for 

vehicle donations; (2) the vehicle donation process; (3) proceeds received 

by charities from vehicle donations to what donors claim for vehicle 

donation deductions; (4) the Internal Revenue Service’s (IRS) and state 

compliance activities directed at vehicle donations and incidents of 

noncompliance; and (5) guidance available to taxpayers and charities to 

help them make informed decisions regarding vehicle donations. To 

satisfy these objectives, we relied on two sources of nationally 

representative information and several anecdotal sources of information. 

Table 2 summarizes the primary data sources used to address each of the 

objectives. 

Table 2: Data Sources Used to Address Objectives 

Objectives 

National 

charity survey

IRS’s Statistics of 

Income file 

 Charity 

 officials 

Third-party agents 

and others 

IRS and 

 state 

officials 

Other data 

sourcesa

(1)Number of vehicle 

donation programs 

x x 

Number of taxpayers 

claiming deductions 

 x x 

(2) Vehicle donation 

process 

x x x x x 

(3) Vehicle donation 

proceeds 

x x x x x 

(4) IRS, state 

compliance activities 

 x 

(5) Taxpayer and 

charity guidance 

 x x 

Source: GAO. 

a

Other data sources include 54 tracked vehicle donation cases, Internet searches, and a judgmental 

sample of vehicle donation advertisements. 

To estimate the number of charities that have vehicle donation programs, 

we conducted a national telephone survey with a statistically 

representative sample of organizations registered with IRS as 501(c)(3) 

organizations (charities) with an annual income of at least $100,000. The 

sample was drawn from the 2002core data set (tax year 2001) of the 

National Center for Charitable Statistics (NCCS), which contains the IRS 

Form 990 data for all nonprofit organizations in the United States. A 

simple random sample of 600 charities was drawn from the population of 

Appendix I: Objectives, Scope, and 

Methodology 

National Charity Survey 
Appendix I: Objectives, Scope, and 

Methodology 

Page 31 GAO-04-73 Vehicle Donation 

157,512 charities. The NCCS data were determined to be sufficiently 

reliable for the purposes of our report, based on interviews with NCCS 

officials regarding reliability procedures and observation of the sampling 

process. 

Valid telephone numbers could not be obtained for 11 percent of the 

charities in the sample, and 6.8 percent of the charities did not answer the 

telephone after several contact attempts or did not return calls, yielding a 

total rate of nonresponse of 17.8 percent. We took steps to reduce errors 

in our estimates by pretesting the survey with charities of varying 

characteristics and performing computer analyses to identify 

inconsistencies and other indicators of errors. 

We received valid responses from 493 of the 600 charities, for a response 

rate of 82.2 percent. Interview responses were weighted to account for the 

initial sampling rate and response rate. As with most surveys, our 

estimation assumes that nonrespondents would have answered like the 

survey respondents, and we do not know of any evidence about whether 

our respondents were different from nonrespondents. Our confidence in 

the precision of the results from this sample is expressed in 95 percent 

confidence intervals. We are 95 percent confident that the results we 

would have obtained had we studied the entire population are within +/- 2 

percentage points of this result. 

To estimate the number of taxpayers that claimed deductions for donated 

vehicles, we analyzed a random sample of tax year 2000 individual tax 

returns from IRS’s Statistics of Income (SOI) individual tax return file. The 

SOI file is a stratified probability sample of income tax returns filed with 

the IRS. The tax year 2000 sample represented about 129 million tax 

returns. The SOI sample contained information on 34,942 returns where 

taxpayers itemized deductions and claimed a noncash contribution of over 

$500. We randomly sampled 600 cases from this sample population and 

requested the tax returns from the IRS. Weights were adjusted to represent 

all taxpayers claiming noncash contributions exceeding $500. Of the 

600 cases in our sample, actual returns were available for 509 of the cases. 

We determined that the SOI data were sufficiently reliable for the 

purposes of our report based on interviews with IRS officials and testing 

for bias in our sample. No bias was identified in a comparison of available 

returns and nonavailable returns in terms of taxable income, total 

contributions, and several other factors. 

Statistics of Income Data 
Appendix I: Objectives, Scope, and 

Methodology 

Page 32 GAO-04-73 Vehicle Donation 

To obtain information on vehicle donation program processes and 

proceeds from vehicle sales, we contacted 65 charities throughout the 

country. The 65 charities included: 

• 16 charities in our national charity survey that reported having a 

vehicle donation program, 

• 8 charities interviewed as pretests to the survey, and 

• 41 charities identified in advertisements or on taxpayer deduction 

claims. 

Not all 65 charities provided information on all topics discussed in the 

report. Where information is reported, the specific number of charities 

that provided information related to the topic discussed is included. 

These examples cannot be generalized beyond the charities responding. 

We interviewed six third-party agents that provide vehicle donation 

program services to charities for examples of how the vehicle donation 

process works for their organizations and the charities they served. Some 

of the agents represented more than 100 different charities; however, the 

information we received from these agents cannot be generalized beyond 

the agents responding. We relied on a number of sources to identify 

vehicle donation third-party agents, including state attorney generals’ 

office officials, donated vehicle advertisements, and charity officials. 

To obtain information on guidance provided to donors and charities, we 

interviewed officials or reviewed materials from several organizations 

involved with charity oversight or charity fund-raising, including the Better 

Business Bureau, Chronicles of Philanthropy, the Independent Sector, and 

the American Institute of Philanthropy. 

In addressing all of our objectives, we spoke with IRS headquarters 

officials from the Tax Exempt and Government Entities Operating 

Division, the Wages and Investment Operating Division, and the Small 

Business/Self-Employed Operating Division. We also conducted an on-site 

visit to IRS’s Ogden Campus to obtain information on its Form 8282 

compliance program. We also interviewed the Chairperson of the IRS 

Vehicle Donations Working Group. 

Charity Officials 

Third-Party Agent and 

Other Organizations 

Interviewed 

IRS and State Officials 
Appendix I: Objectives, Scope, and 

Methodology 

Page 33 GAO-04-73 Vehicle Donation 

We contacted state officials based on referrals from the IRS and the 

National Association of State Charity Officials. We also interviewed state 

officials in California, Michigan, Massachusetts, Florida, Pennsylvania, 

South Carolina, Ohio, Oregon, Connecticut, Washington, and Texas. 

To determine the amount of proceeds charities receive from donated 

vehicles relative to the amounts taxpayers claimed as tax deductions, we 

tracked a judgmental set of donated vehicles obtained from 4 charities in 

4 states. Two charities were local charities that used third-party agents to 

manage their vehicle donation programs; 1 was a national charity that 

used a third-party agent to handle processing (but not advertising) for 

their vehicle donation program; and the fourth was a national charity that 

managed its vehicle donation program in-house. The information we 

obtained from the charities included the vehicle description, selling price, 

net amount received by the charity after expenses, and donor information. 

Using the donor information, we requested tax return data from the IRS to 

determine the amounts donors claimed as deductions for their vehicles. 

Not all of the vehicle donors claimed deductions for their donations. Of 

the 70 donors the IRS was able to identify as filing returns, 12 did not 

itemize their taxes. Four additional cases were dropped due to data errors 

or missing information. We were able to track the remaining 54 vehicle 

donations. The individual cases or cases in aggregate are for illustration 

only, and cannot be used to generalize to vehicle donations overall. Our 

analysis of the 54 tracked vehicles is shown in appendix III. 

We reported summary data from the California Office of the Attorney 

General regarding the percent of proceeds received by charities from 

vehicle donation programs using commercial fundraisers. We discussed 

data reliability issues with state officials and determined that the data 

were sufficiently reliable for the purposes of our report. 

Other Data Sources 
Appendix II: Sample Claims of Vehicle 

Donation Advertisements 

Page 34 GAO-04-73 Vehicle Donation 

Based on a review of a nonprojectable sample of vehicle donation 

advertisements, we found that vehicle donation advertisements most often 

stated that individuals could claim a tax deduction for the donation, if the 

donation served a charitable purpose, and the donor’s vehicle would be 

towed free of charge. We analyzed 147 advertisements, including 

69 newsprint advertisements from a sample of 50 newspapers nationwide, 

33 radio advertisements from 19 radio stations in the top 10 U.S. markets, 

and 44 Internet advertisements. Figure 9 identifies the most common 

claims made in the newspaper, radio, and Internet advertisements we 

reviewed. 

Figure 9: Most Common Claims in Newspaper, Radio, and Internet Advertisements Reviewed 

Note: Claims classified as “other” included promises that vehicles would be picked up in 24 hours, 

title transfer would be handled, or contributions would be used locally. 

According to an IRS official, advertisement claims are potentially 

misleading when they do not specify that taxpayers must itemize their 

deductions to claim a deduction for vehicle donations, since many 

Appendix II: Sample Claims of Vehicle 

Donation Advertisements 

0

Ads with

no claims

Tax

deduction

Serves

charitable

purpose

Free

towing/

pick up

Vehicles

accepted

running or not

Avoid

hassles

Some

restrictions

Percent

going to

charity

Other

10

20

30

40

50

60

70

80

90

100

Percent of advertisements

Newspaper

Radio

Internet

Source: GAO.
Appendix II: Sample Claims of Vehicle 

Donation Advertisements 

Page 35 GAO-04-73 Vehicle Donation 

taxpayers do not itemize their deductions. Of the 147 advertisements we 

reviewed, 117 indicated that taxpayers could claim a tax deduction, but 

only 7 advertisements specified that donors must itemize in order to claim 

a deduction. 

In addition, IRS officials stated that advertisements could be misleading 

when they claim donors can value their vehicles at full, or maximum, 

market value when claiming a tax deduction, particularly when the same 

advertisements claim that vehicles are accepted whether they are running 

or not. Full or maximum market value, although not clearly defined, 

implies that a vehicle is in good running condition with no major 

mechanical defects. Fair market value equates to what a vehicle would sell 

for on the market, and takes into account a vehicle’s condition and 

mileage, among other factors. Of the 147 advertisements we reviewed, 

8 identified that a donor could claim full or maximum market value, while 

more commonly, advertisements identified that donors could claim fair 

market value on their tax returns when donating their vehicles. 

Responsibility for oversight of advertisements is diffused. The Federal 

Communications Commission defers regulatory authority regarding false 

advertising on radio or television to the Federal Trade Commission (FTC). 

The FTC does not have specific jurisdiction over charities, but may 

become involved in cases of fraud. State officials are primarily responsible 

for false advertising by charitable organizations. Officials we interviewed 

from 2 states said that limited resources prevent them from providing 

broad oversight over advertisements, and that they generally review 

advertisements in response to consumer complaints, or when they 

discover that charities or third-party agents are soliciting in their state 

without being registered. 

Table 3 identifies the number of advertisements we reviewed that 

specified taxpayers must itemize their deductions to claim a vehicle 

donation; that taxpayers could claim full, maximum, or fair market value 

for their deduction; and whether the advertisement referred potential 

donors to the IRS Web site, an accountant, the Kelley Blue Book,1

 or other 

source for guidance on claiming a tax deduction. 

 1

The Kelley Blue Book is a used car guide featuring 15 years of values for over 10,000 

models of cars, trucks, and vans and is available both in print and Internet format. 
Appendix II: Sample Claims of Vehicle 

Donation Advertisements 

Page 36 GAO-04-73 Vehicle Donation 

Table 3: Vehicle Donation Claims Related to Tax Deductions (by medium) 

 Newspaper Radio Internet Total

Must itemize 1 0 6 7

Full market value 3 1 2 6

Maximum value 0 0 2 2

Fair market value 7 7 24 38

Consult IRS Web site 0 0 14 14

Consult with accountant 2 3 17 22

Kelley Blue Book 1 4 22 27

Other (e.g. IRS) 12 3 7 22

Source: GAO. 

Note: Some ads contained more than one claim, so the total number of claims is greater than the 

147 advertisements we reviewed. 

The transcript from an actual radio advertisement identifying some of the 

benefits of vehicle donation programs is shown in figure 10. 

Figure 10: Transcript of Actual Radio Advertisement for Vehicle Donations 

That Car 

What to do with that car? Donate it to the Council of the Blind! 

Donating a car is trouble free; you get a tax write off, and do your 

part for a worthy cause. The California Council of the Blind has 

helped in the workplace since the thirties. Simply call, we’ll pick up 

that car, running or not, in most cases, plus boats--even real estate 

can be donated for a write off. Call our live operators for your free 

pick up now-- 800 xxx-xxxx. 800 xxx-xxxx, that’s xxx-xxxx. 

Source: Courtesy of Pete Palmer Advertising, San Francisco, California. 
Appendix III: Selected Vehicle Donations 

Tracked from Donation to Taxpayer Claim for 

Charitable Deduction 

Page 37 GAO-04-73 Vehicle Donation 

Table 4 details 54 specific vehicle donations identifying the amount of 

proceeds charities receive from donated vehicle sales relative to the 

amounts taxpayers claim as tax deductions for donated vehicles. 

Information on this judgmental set of 54 vehicle donations were obtained 

from 4 charities in 4 states. The individual cases or cases in aggregate are 

for illustration only, and cannot be used to generalize vehicle donations 

overall. 

Table 4: Vehicle Donations Tracked from Donation to Taxpayer Claim for Charitable Deduction—54 Vehicles 

Vehicle as described in taxpayer 

documents 

Vehicle 

gross 

sale price 

Net 

proceeds 

(loss) to 

charity from 

vehicle sale 

Donated 

vehicle 

value 

claimed on 

tax return 

Gross sale 

price as 

percent of 

amount 

donor 

claimed

Proceeds to 

charity as a 

percent of 

gross sale 

price (loss) 

Charity 

receipt 

(loss) as 

percent of 

donor 

claim 

1990 Mercury Station Wagon $30 ($130) $2,915 1% (433%) (4%) 

1989 Subaru GL $50 ($45) $3,100 2% (90%) (1%) 

1991 Plymouth Voyager $40 ($25) $1,700 2% (63%) (1%) 

1993 Ford $25 ($20) $2,000 1% (80%) (1%) 

1988 Ford Escort $25 ($20) $1,000 3% (80%) (2%) 

1990 Ford Taurus $30 ($15) $1,500 2% (50%) (1%) 

1986 Toyota 4-Runner $300 $5 $3,950 8% 2% 0% 

1981 Toyota Celica $100 $5 $500 20% 5% 1% 

1991 Ford Crown Victoria $300 $165 $3,100 10% 55% 5% 

1990 Nissan 240 SX $450 $293 $2,375 19% 65% 12% 

1993 Chevrolet Cavalier $450 $405 $750 60% 90% 54% 

1996 Ford Taurus $700 $480 $3,500 20% 69% 14% 

1991 Saab 9000S $950 $653 $4,500 21% 69% 15% 

1994 Saturn SL2 Sedan 4D $1,350 $968 $5,750 23% 72% 17% 

1988 Toyota Camry $900 $615 $2,680 34% 68% 23% 

1992 Pontiac Grand Am SE-V6 $325 $174 $2,750 12% 54% 6% 

1989 Toyota All Trac Wagon (Corolla) $600 $390 $1,000 60% 65% 39% 

1995 Toyota 1/2 Ton Pickup $1,800 $1,290 $4,999 36% 72% 26% 

1989 Plymouth Grand Voyager $200 $55 $1,900 11% 28% 3% 

1980 Datsun 510 $350 $213 $1,400 25% 61% 15% 

1992 Lincoln Continental $1,200 $1,065a $4,675 26% 89% 23% 

1989 Chevrolet Blazer S10-2DR $300 $180a $4,050 7% 60% 4% 

1989 Ford Taurus $225 $84a $1,500 15% 37% 6% 

1987 Chevy Pickup $350 $245 a $500 70% 70% 49% 

Red Honda Accord LXI 2D $150 $10 a $4,175 4% 7% 0% 

Appendix III: Selected Vehicle Donations 

Tracked from Donation to Taxpayer Claim 

for Charitable Deduction 
Appendix III: Selected Vehicle Donations 

Tracked from Donation to Taxpayer Claim for 

Charitable Deduction 

Page 38 GAO-04-73 Vehicle Donation 

Vehicle as described in taxpayer 

documents 

Vehicle 

gross 

sale price 

Net 

proceeds 

(loss) to 

charity from 

vehicle sale 

Donated 

vehicle 

value 

claimed on 

tax return 

Gross sale 

price as 

percent of 

amount 

donor 

claimed

Proceeds to 

charity as a 

percent of 

gross sale 

price (loss) 

Charity 

receipt 

(loss) as 

percent of 

donor 

claim 

1994 Dodge Caravan $650 $510 a $4,535 14% 78% 11% 

1993 Saturn SC 2 $225 $70 a $3,800 6% 31% 2% 

1990 GMAC Convention $400 $245 a $4,800 8% 61% 5% 

1991 Toyota Camry $675 $520 a $2,039 33% 77% 26% 

1995 Dodge Caravan $900 $715 a $4,692 19% 79% 15% 

1991 Toyota Camry $400 $285 a $4,500 9% 71% 6% 

1988 Toyota Corolla Wagon $35 $20 a $1,427 2% 57% 1% 

1986 Mazda B2000 LX Long Bed $35 $20 a $1,095 3% 57% 2% 

1985 Volvo 760 $35 $20 a $2,654 1% 57% 1% 

Automobile $50 $35 a $395 13% 70% 9% 

1987 Ford Thunderbird $35 $10 a $1,595 2% 29% 1% 

1994 Hyundai Elantra $25 $10 a $1,450 2% 40% 1% 

1988 Mazda Pickup $125 $75 a $1,525 8% 60% 5% 

1987 Volvo 740 $50 $35 a $3,000 2% 70% 1% 

1986 Chrysler Town & Country $35 $20 a $1,850 2% 57% 1% 

1988 Olds Cutlass Wagon $25 $10 a $1,000 3% 40% 1% 

1987 Honda $70 $10 a $1,500 5% 14% 1% 

1987 Subaru $25 $10 a $1,890 1% 40% 1% 

1987 Volvo $50 $35 a $2,175 2% 70% 2% 

1996 Dodge Caravan $110 $60 a $1,800 6% 55% 3% 

1986 Nissan Maxima $40 $15 a $1,250 3% 38% 1% 

1990 Ford Taurus L $25 $10 a $1,105 2% 40% 1% 

1988 Oldsmobile Cutlass $35 $20 a $900 4% 57% 2% 

1983 Audi 5000 4DR Turbo $100 $0 $1,500 7% 0% 0% 

1985 Toyota Celica $250 $10 $2,000 13% 4% 1% 

1983 GMC Jimmy $375 $31 $2,400 16% 8% 1% 

1982 Toyota Starlet $300 $22 $1,225 24% 7% 2% 

1983 Volvo 240 2 door $450 $55 $2,000 23% 12% 3% 

1991 Plymouth Acclaim Sedan 4D $475 $52 $3,285 14% 11% 2% 

Source: GAO summary of specific vehicle donations made to 4 charities and associated tax claims for those donations. All dollar amounts rounded to the nearest dollar. 

a

Excluding expenses associated with advertising. 
Appendix IV: Vehicle Donation Guidance 

Page 39 GAO-04-73 Vehicle Donation 

Government and consumer organizations provide guidance to donors to 

assist them in making informed decisions about donating vehicles. 

Guidance is also available to charities to assist them in selecting, hiring, 

and managing third-party agents. A partial list of resources is included in 

table 5. 

Table 5: Sources of Guidance in Making Vehicle Donation Decisions 

Sources Available information 

Internal Revenue Service 

www.irs.gov 

• Lists tax exempt organizations that may qualify donors for tax deductions 

(Pub. 78). IRS also suggests Guidestar (see below) as a resource. 

• Describes contributions that qualify for tax deductions and recordkeeping 

requirements (Pub. 526). 

• Describes information necessary for donors to value and deduct noncash 

contributions (Pub 561). 

• Provides guidance for exempt organizations on documenting charitable 

contributions (Pub. 1771). 

• Provides an annual brochure called Exempt Organizations Implementing 

Guidelines, Vehicle Donations, that advises how exempt organizations can 

avoid problems with vehicle donation programs. 

Federal Trade Commission 

www.ftc.gov 

Provides tips on how to recognize and avoid deceptive solicitations. In 

conjunction with state officialsa

 launched Operation Phony Philanthropy, to 

identify fraudulent fundraising activities, none of these cases to date have 

involved vehicle donations. 

State charity regulators 

-The National Organization of State Charity Officials 

www.nasconet.org 

• Lists contacts for state regulators overseeing charitable solicitations, including 

those with vehicle donation programs, and general information state 

regulators need to know. 

-Individual state Web sites, such as: 

California Attorney General 

www.caag.state.ca.us 

Michigan Attorney General 

www.michigan.gov/ag 

New York Attorney General 

www.oag.state.ny.us 

• Provide information to donors on making contribution decisions, including 

financial information on charities or their fund-raisers. 

Guidestar 

www.guidestar.org 

• Provides a national database of U.S. charitable organizations, and general 

information relevant to IRS-recognized nonprofits. 

Better Business Bureau’s 

Wise Giving Alliance 

www.give.org/tips/usedcar.asp 

• Provides a Vehicle Donations Checklist that, among its seven tips, advises 

the donor to take a photo of the car for tax records and to keep copies of 

current classified ads or guide value estimates for similar vehicles. 

• Provides general standards charities should meet, including those with 

vehicle donation programs, enabling donors to evaluate (1) how charities are 

governed, (2) the ways they spend money, (3) the truthfulness of their 

representations, and (4) their willingness to disclose basic information to the 

public. Standards also help charities maintain overall good governance of 

their vehicle donation programs. 

Appendix IV: Vehicle Donation Guidance 
Appendix IV: Vehicle Donation Guidance 

Page 40 GAO-04-73 Vehicle Donation 

Sources Available information 

Charity Navigator 

www.charitynavigator.org 

• Provides advice to donors of used vehicles, such as urging donors who have 

to use third-party agents to research the percentage the charity ultimately 

receives. 

American Institute of Philanthropy 

www.charitywatch.org 

• Provides search capability to locate tax exempt organizations that may qualify 

vehicle donors for tax deductions. 

• Provides tips to donors of used vehicles, such as encouraging them to get a 

receipt from the charity for their vehicle donation. 

Chronicle of Philanthropy 

http://philanthropy.com 

• Provides general information for subscribers on all matters involving 

philanthropic enterprises, including fund-raisers who may process vehicle 

donations. 

Source: GAO analysis of government and consumer organizations guidance. 

a

Participating states included Connecticut, Florida, Illinois, Kansas, Massachusetts, Maine, Michigan, 

Minnesota, Mississippi, North Dakota, New Jersey, New York, Oregon, Pennsylvania, South Carolina, 

and South Dakota. 
Appendix V: Comments from the Internal Revenue Service 

Page 41 GAO-04-73 Vehicle Donation 

Appendix V: Comments from the Internal 

Revenue Service 
Appendix V: Comments from the Internal Revenue Service 

Page 42 GAO-04-73 Vehicle Donation 
Appendix VI: Staff Acknowledgments 

Page 43 GAO-04-73 Vehicle Donation 

Leo Barbour, Carl Barden, Keira Dembowski, Michele Fejfar, Tre Forlano, 

Lemuel N. Jackson, Monica Kelly, Rosa Leung, Brittni Milam-Bell, Amy 

Rosewarne, Sam Scrutchins, Addie Spahr, and Wendy Turenne made key 

contributions to this report. 

Appendix VI: Staff Acknowledgments 

Acknowledgments 

(450208) 
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