Charities described in section 501(c)(3) of the Internal Revenue Code need funds to operate their charitable, educational, or other tax-exempt programs. These charities may choose from a number of fundraising activities for financial support. An increasingly popular fundraising program is the sale of donated cars.
Through this Publication 4302, the Internal Revenue Service (IRS) and state charity officials provide general guidelines for charities operating car donation programs. The information in this publication applies to the most common types of section 501(c)(3) organizations, commonly referred to as “charities.”
A companion brochure, Publication 4303, A Donor’s Guide to Car Donations, provides guidelines for individuals who donate cars.
Tax-Exempt Status and Deductible Contributions
How a charity operates a car donation program may have tax consequences. The program can –
■ affect a charity’s exempt status; and
■ impact the tax-deductibility of the donor’s contribution.
TAX-EXEMPT STATUS – A charity must be organized and operated exclusively for one or more exempt purposes described in section 501(c)(3). If a charity operates a car donation program in a manner that confers improper benefits on private par