Donating old cars to nonprofits used to be a win-win: charities generated revenue from the re-sale or auction of vehicles, and donors got a nice write-off on their taxes. But automobile donations have slid as much as 90% from where they were just a few years ago, leaving charities to make up big holes in their operating budgets. What happened? The U.S. Congress.
In 2004, Congress passed the American Jobs Creation Act, a sprawling bill that, among other things, offered tax credits for the purchase of "sonar devices suitable for finding fish", cut taxes levied on "fishing tackle boxes", and gave credits for the manufacture and use of biofuels.
Buried in all the bill's legal mumbo-jumbo was also a clause that changed the credits that donors of motor vehicles, boats, and airplanes could take on their tax returns. Previously, they'd been able to claim the fair market value of the donation, but after the law was enacted in 2005, donors could only claim the amount that the car (or boat, or plane) sold for, which was often far below standard value. From a donor's perspective, that made giving to charity a much less attractive proposition.
