- The Washington Times - Sunday, January 30, 2005

Charities are bracing for a decline in vehicle donations this year in response to a change to federal tax regulations.

Under the change, which went into effect Jan. 1, taxpayers no longer are able to deduct the market value of a vehicle that they donate to charity. Instead, they must deduct the amount the organization receives from selling or auctioning the vehicle, which is often less than its market value.

Organizations such as Melwood, Goodwill Industries and the Salvation Army are hoping to make up for decreased revenue by increasing donation solicitation, opening new retail stores and educating the public about the change in the tax law.

Some organizations reported a surge in vehicle donations last month before the law took effect, and a dip this month. However, many say it is too soon to predict whether the decline will continue.

Officials at Melwood, a nonprofit organization that offers assistance to people with developmental disabilities, said they would explore options to make up for revenue loss if vehicle donations decline significantly. Thomas Roberts, director of development, said such options include increasing direct-mail marketing and soliciting major financial gifts from individual donors.

“It’s really too early for us to measure the impact of the law,” he said. Revenue from the Upper Marlboro organization’s vehicle-donation program, which has existed for nine years, accounts for about 15 percent of its budget.

Mr. Roberts did not have specific numbers of vehicle donations for this month or December, but said vehicle donations last month far exceeded those in December 2003.

Goodwill of Greater Washington, which helps people who have workplace disabilities, will open three new retail stores in the D.C. area this year and hold special fund-raisers to offset any lost revenue resulting from a decline in vehicle donations, said Gene Ficarra, vice president of retail operations.

Vehicle donations to the organization have dropped from 31 last January to 23 this year, Mr. Ficarra said.

“We’re experiencing a change,” he said. “We’re monitoring the numbers. I know we’ll certainly make it up with the new store openings.”

Mark Loesberg, president of Capital Auto Auction in the District, which auctions off the vehicles donated to many local charities, estimates that car donations are down about 20 percent from a year ago. But, he said, January is typically a slow month for vehicle donations, because so many people give away their cars in December, before the end of the tax year.

He said he expects vehicle-donation programs to continue because they eliminate some of the hassles involved with selling a used vehicle.

The Salvation Army Adult Rehabilitation Center in Alexandria plans to increase public awareness about the changes in the tax law and add retail store locations this year, said Maj. William Madison, the administrator.

The center’s vehicle donation program, which accounts for a third of the organization’s budget, has received about half as many car donations as last January, he said, but “I don’t think it will continue.”

He said he thinks the decline may be a result of misconceptions about the new law. Some people, he said, think they cannot claim any tax deduction at all from a vehicle donation.

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