Sunday, July 18, 2004
Today, George Will takes on a subject he doesn't really understand - the business behind "charity car donations". He correctly points out that some charities take in a lot of money from car donations, and concludes that, as it might reduce the number of donations, the Senate is per se wrong to try to limit the amount of donor deductions to the actual value of the donated vehicle or control for fraud.
There are some charities of sufficient size and scope that they can collect donated cars throughout the nation. There are some local or regional charities which can also collect cars on their own. But most charities who accept donated cars do so through an intermediary - a commercial outfit which collects and auctions the cars, then takes an enormous cut of the proceeds as a handling fee, passing on perhaps 10 or 20 cents on the dollar.
The donors are encouraged by the representation that they can deduct the blue book value of the car, no matter what its actual condition, and can be quite confident that the government won't be able to prove that the actual value of the car, whatever the sale price at auction. As Will notes, it is only where the deduction claimed exceeds $5,000 that an independent appraisal is presently required. Some of the companies which act as intermediaries for charities seem to encourage, albeit through suggestion rather than instruction, donors to exaggerate the value of their cars. They promise a receipt which indicates the make and model of car you donate, but without any indication of its condition or value. Wink wink, nudge nudge.
As long as no independent appraisal is required below a particular threshold, fraud will occur at significant levels below that threshold. It may be that the suggested threshold of $250 is too low, but it is not unreasonable for Congress to be concerned that the present threshold of $5,000 is too high.