CHARITY SELLS DONATED CARS

This program is similar to the one above, except here the charity sells the donated cars and uses the proceeds to fund its charitable programs. The program should not have an adverse impact on the charity’s tax-exempt status. Donors may deduct their contributions (if all requirements are met).

CHARITY HIRES AGENT TO OPERATE CAR DONATION PROGRAM* – The charity hires a private, for-profit entity as an agent to operate its car donation program. The charity and the for-profit entity must establish an agency relationship that is valid under the applicable state law. Generally, an agency relationship will be established where the parties agree that the for-profit entity will act on the charity’s behalf and that the for-profit entity’s activities covered by the agreement are subject to the charity’s oversight. Accordingly, the charity should actively monitor program operations and have the right to review all contracts, establish rules of conduct, choose or change program operators, approve of or change all advertising, and examine the program’s books and records. If the charity follows these guidelines, the program should not have an adverse impact on the charity’s taxexempt status. Because the for-profit entity is an agent of the charity, donors may deduct their contributions (if all other requirements are met).