The "Consumer Assistance to Recycle and Save Program" or "Cash for Clunkers" means that an individual with a vehicle with a fair market value of $1500 can turn it into a $3500-$4500 reduction on the price of a new car. In exchange for the voucher, the "clunker" must be scrapped by the dealer. Although people can still donate their cars to charity and receive a deduction, what is the advantage to the donor? Should charities bother to continue appeals for donated vehicles? After all, the program is so madly popular, it ran out of money in the first week- and was just granted $2 billion to continue.
How Should Charities React?
Charities that have historically sought donated vehicles may want to maintain their "donate your car" campaigns but change the language and perspective to open donor options. Nonprofits that have not sought donated vehicles might put such solicitations aside. However, all charities may yield an unintended benefit from the "Clunker" program.
Unintended Benefits to Charities
In annual appeals and other "asks", development professionals may consider presenting donors with an opportunity for maximizing their charitable contributions this year.
- Consumers who participate in the "Clunker" program arguably have "saved" on the purchase of a new vehicle- and have more to give to charity.
- Nonprofits that appeal to their regular donors authentic sense of philanthropy can shift the focus from the "Clunker" and open the door to a gift.
- The person who traded in a $1500 car may or may not have been a prospect for a major gift of $4500 prior to the "Clunker" program. However, the individual who traded into the "Clunker" program for the higher priced qualifying vehicle may have the interest and capacity to make a charitable contribution for a tax deduction.
Nonprofits that relied substantially on donated vehicles may need to frame their appeals to ask for charitable gifts in lieu of a vehicle. Those nonprofits possibly have better donor lists than other charities; they must provide a letter of acknowledgment for the donor to have for the IRS and have the donor's basic profile. Such nonprofits can turn to their contributors and ask for a gift, stressing that 1) the vehicle they gave was so useful to the charity and 2) the charity needs cash contributions this year to make up for the loss of donated automobiles it previously counted on.
Best Prospects "Missed" the Clunker?
There is also the possibility of reaching out to donors who haven't participated in the "Clunker" program to donate their vehicle because they "missed" the government program. This presents an ideal segue for reaching out to people who never thought about donating their car in the first place. They didn't get "in" on the government program but they can still reap the benefits of the fair-market value of their vehicles, as outlined in IRS publication 4043. It's a chance for the nonprofit to tell its story to a new audience who may donate a car for the first time or make a gift of cash instead. Either way, the "Clunker" starts a new conversation with donors and prospects.
Shift Gears to Market Changes
The "Clunker" will seek outcomes at the end of its promotion, including the energy and economic impact of the program. Public interest in charitable giving may change materially from cars to cash. Nonprofits need to be creative and stay focused on the road ahead. The "Clunker" promotion is brief but its benefits can be lasting to charities who are listening to their donors and prospects. People give to people, after all- not to cars.
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