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Car donations are a great way for you to make a difference when you want to help fund a non-profit but cash is tight. From gently used rides to clunkers on their last legs, the ride you no longer care about can be the ride of a not-for-profit's dreams.

Car donation basics

Donating a car to charity is a relatively easy process if you have a clear title. In most states, signing the title over to the charity is enough to seal the deal and transfer ownership. However, some states do require you to sign the title in the presence of a notary public. The notary then stamps the document to verify the transaction.

After the title is transferred, the charity takes possession of the vehicle. Most non-profits who regularly accept car donations handle pickup arrangements extremely quickly and can even coordinate towing services for a ride that is no longer road worthy or otherwise non-moving.

What does a charity do with your old car?

Charities use donated vehicles in a variety of ways. A functional car, truck, or van may be used by employees at the charity for various tasks. For example, an older pickup truck is often a perfectly acceptable maintenance vehicle while a gently used passenger van is easily adapted by charities with transport needs.

Road-worthy vehicles can be sold for profit, and the funds can be used to support other endeavors. For less-than-stellar rides, the car or truck is often scrapped, and the charity earns money by selling it to a junkyard for parts or for the value of the metal.

What are the benefits when you donate a car to charity?

When you donate a car to charity, you receive the personal benefits of giving to an organization that will put your old vehicle to good use. There is also a monetary component for individuals or businesses itemizing deductions on an income return. Charitable entities registered as 501(c)(3) nonprofit organizations with the Internal Revenue Service can provide a written receipt either at donation or within a set time period stating the value of the vehicle.

The value provided on the receipt may be based on selling price or fair market value and serves as the basis for your charitable deduction on your next income tax return. The deduction is claimed as an itemized deduction in lieu of the standard deduction set by the IRS for individual and joint filers.

For more information about donating your car to charity, contact a charity such as Give 2 Kids.